In a recent announcement, the New York Times Co. made public the finalization of its sale-leaseback agreement that includes a portion of its Manhattan area headquarters. This agreement was a fundraising effort by the company to help reduce its debt. According to the statement, the Times raised $225 million as part of its agreement with W.P. Carey & Co. LLC, a successful investment firm.
The terms of the lease allow W.P. Carey to move into a total of 21 floors of the Times’ 52-story headquarters located on Eighth Avenue. Additionally, the newspaper company retains the option to repurchase its share in the building for $250 million in ten years, five years prior to the expiration of the lease.
This transaction with W.P. Carey is just one of several strategies enacted by the New York Times in recent months to eliminate long-term debt. Other approaches are being added to this one in order to maximize the company’s potential for debt reduction.
For instance, the Mexican billionaire Carlos Slim has stated that he will provide the Times with a loan for $250 million. The newspaper is also trying to broker a deal with prospective buyers to purchase its share in New England Sports Ventures properties, most notably the Boston Red Sox along with legendary Fenway Park. The company’s stake is reported to be 17.75%.
Slim’s contribution alone has take a significant slice out of the Times’ more than $1 billion in debt accrued at the close of 2008. Additional fundraising options will reduce this number even more.
Further disclosures by the New York Times state that the company has a payment on its principal long-term borrowing of approximately $49.5 million this upcoming November. In March of 2010, the Times will have to pay $250 million.
Figures released by the company note that the Times’ net profits for the fourth quarter of 2008 actually fell a whopping 47%. At about the same time, the Times also made the difficult decision to suspend its dividend for the first time since it went public.
Both print and online advertising revenues experienced losses at the close of the previous year. Online revenue experienced a 3.5% drop, to $81.9 million while regular streams of advertising revenue fell 17.6%. This is not a unique situation for the Times as many U.S. newspapers are experiencing severe declines in their print advertising revenues. Added to these problems are issues of reduced circulation and the general trend of readers seeking free news content on the web.
Tags: wp carey, carlos slim, new york times debt
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