Tribune Publishing Collapses 30% on Cash Infusion

Tribune Publishing Co. (NYSE: TPUB) announced Thursday morning that it had completed a private placement of 5.22 million shares with Merrick Media in a transaction valued at $44.4 million. On a per-share basis, the discount to Wednesday’s closing price of $9.00 is only $0.50, but the company took the occasion to suspend its $0.175 quarterly dividend payment. The combination sent shares tumbling 30% in the opening half-hour of trading Thursday.

Tribune also posted a preliminary fiscal year 2015 financial update. The company expects revenues of $1.66 to $1.67 billion for the year and adjusted EBITDA of $154 to $157 million. At the end of the third quarter, the company reported adjusted EBITDA for the first nine months of the year at $88.7 million and last 12-month adjusted EBITDA of $157.4 million. The Tribune also had $54.65 million in cash at the end of September.

The company is also looking to acquire assets in a bankruptcy auction of Freedom Communications, publisher of the Orange County Register. The auction is set for March 16, and Tribune is currently in discussions about becoming the stalking horse bidder for the assets.
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Tribune also gets a new nonexecutive chairman of the board, Michael W. Ferro Jr., the chairman and CEO of Merrick Media. He replaces Eddy W. Hartenstein, who has held the position since August 2014. Hartenstein will remain on the board of directors.

The stock traded down more than 23% at $6.86 in the late morning, after posting a new 52-week low of $6.28 early in the session. The 52-week high is $21.94, and the consensus price target is $13.00.