New York Times' Loan Sharks Betting on Paper's Bankruptcy
Is the New York Times going under? Company officials have scoffed at the suggestion. The moneymen who just gave it a much-needed cash infusion are betting on it.
On Monday, the Times essentially mortgaged 21 floors of its headquarter building to W.P. Carey, a real-estate investment firm. The $225 million purchase price was bargain-basement, but in exchange, so was the rent, notes the Financial Times. The complex transaction, known as a sale-leaseback, pencils out to the equivalent of a sky-high, subprime interest rate paid to real-estate mogul William P. Carey. It's a rotten deal for the Times, any way you analyze it.
As is Mexican telecom billionaire Carlos Slim Helù's $250 million loan, which carries an 11 percent cash interest rate (and another 3 percent paid in additional bonds).
At Newser, Michael Wolff hasn't let his own personal scandal distract him from observing the Times swoon. He writes today that it's not like Slim needs the money. The debt puts him in a position to take over the Times should it default. In the Carey deal, the best outcome is that the Times goes under, leaving them with its share of the building, which it can then lease out at higher rents.
So Times management keeps saying they're not going to go bankrupt. But their lenders are cutting deals that suggest otherwise.