Wall Street's meltdown threatens Tribune Co. CEO Sam Zell's plan to get top dollar for the Cubs — and he's prepared to delay the sale in response.
Mr. Zell has urged bidders to finance the purchase with debt, which would cut his tax bill on the sale. But buyout loans have become more expensive and harder to come by as credit markets contract, potentially limiting any price offered for the team.
"It's costlier to borrow money, and the banks may not extend as much credit as before," says Dave Novosel, a Chicago-based analyst at debt research firm Gimme Credit LLC. As a result, bidders may pull back, and the ball team could fetch "less than the expectations were just a month-and-a-half ago," he says.
In July, Tribune picked five bidders, each offering $1 billion or more for the team, to advance to a second round. The five — Dallas Mavericks owner Mark Cuban and bond salesman Thomas Ricketts among them — have been poring over financial information on the team as they prepare their next offers. Mr. Ricketts declines to comment and Mr. Cuban didn't respond to a request for comment.Then came a global stock market plunge that sent the U.S. financial system into a tailspin and choked off the flow of credit for a range of transactions. Debt-financed deals across the country have been put on hold, and even borrowers with good credit are paying far higher interest rates than they used to.
Bidders for the Cubs now face an increase of up to two percentage points in the interest rate they would have to pay on an acquisition loan. They are still waiting for some key information from Tribune, including details on broadcast revenue. So while many expected final bids to be due soon, it now appears that the deadline may not come for several weeks.
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