Hedge fund Alden Global Capital, which became the largest shareholder in Tribune Publishing last month, has named two representatives who were added to the newspaper company's board, while agreeing to cap its ownership stake at 33% through June.
Chicago-based Tribune Publishing announced the appointment of Dana Goldsmith Needleman and Christopher Minnetian on Monday, agreeing to expand the board from six to eight members, effective immediately. Needleman and Minnetian are top executives with funds affiliated with Alden Global Capital.
As part of the agreement, Alden is restricted from increasing its stake in Tribune Publishing to more than 33% until June 30. Alden also agreed it would not mount a proxy fight or form a group with other shareholders to "seek to control or knowingly influence the management, board or policies of the company," according to a Dec. 1 filing with the Securities and Exchange Commission.
However, the so-called standstill agreement would be terminated if another investor with at least a 15% stake buys an additional 5% of the company's outstanding shares, or seeks to control the company, the SEC filing said.
"This standstill agreement is consistent with other agreements executed between Tribune Publishing and other large shareholders," Tribune Publishing CEO Tim Knight said in an email to employees Monday. The Tribune Publishing board "continues to be in discussions with Alden, exploring our new business relationship and the onboarding of our new board directors."
Last month, Alden bought the 25.2% stake of Tribune Publishing's largest shareholder, Michael Ferro, for about $118 million. The deal priced Ferro's 9.07 million shares at $13 each.
It subsequently added another 1.6 million shares of Tribune Publishing common stock in block purchases in a private transaction disclosed in an SEC filing. New York-based Alden had previously acquired about 861,000 shares of Tribune Publishing on the open market.
Alden now owns 11.5 million shares, or 32% of Tribune Publishing's common stock, at an aggregate purchase price of $145.4 million.
Ferro had a 30% ownership cap as part of his modified February 2016 securities purchase agreement. Barring a standstill agreement, there is no limit to the amount of stock a single investor can own in a publicly traded company.
"There is no regulatory issue," said Charles Elson, director of the John L. Weinberg Center for Corporate Governance at the University of Delaware. "The only time there would be an issue is if you're in the same business -- an antitrust issue -- but not just acquiring the common stock."
Biotech billionaire Patrick Soon-Shiong is Tribune Publishing's second-largest shareholder at about 8.7 million shares, or 24.3% of the company. Soon-Shiong did not sell any of his shares to Alden, a spokeswoman said last week.
Heath Freeman, Alden's president, did not immediately respond to a request for comment Monday.
Launched in 2007, Alden owns about 200 publications through an operating company now known as MediaNews Group, formerly Digital First Media. The chain has come under fire for sweeping layoffs at its newspapers, including major dailies such as the Denver Post, San Jose Mercury News and the St. Paul Pioneer Press, as well as smaller weeklies.
In addition to the Chicago Tribune, Tribune Publishing owns the Baltimore Sun; Hartford Courant; Orlando Sentinel; South Florida's Sun Sentinel; the New York Daily News; the Capital Gazette in Annapolis, Maryland; The Morning Call in Allentown, Pennsylvania; the Daily Press in Newport News, Virginia; and The Virginian-Pilot in Norfolk, Virginia.
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