Alden Global Capital closed its deal for Tribune on Monday. The hedge fund wasted little time installing new leadership and saddling the newspaper chain with $278 million in debt it took on for the acquisition, according to regulatory filings. Alden, which owns the MediaNews Group newspaper chain and is the second-largest newspaper company by circulation, has a reputation as a ruthless cost-cutter in pursuit of profits. Shifting debt to Tribune's books raises concerns that the publisher would make cuts that hurt coverage in the company's communities, the AP reports. Tribune's papers include the Chicago Tribune, Orlando Sentinel, and Hartford Courant. Tribune reporters tweeted Wednesday that the company was offering voluntary buyouts. The union that represents Tribune journalists had warned that Alden would use borrowed money to pay for Tribune, a tactic that would limit its ability to invest in its papers, it said.
While Alden said in December that it could "fully finance the transaction with cash on hand" and "will not require third party debt or equity," a filing in April noted that Alden had a right to finance up to $375 million with debt. Tribune shareholders on Friday approved the sale, which valued Tribune at about $637 million. That ended a hard-fought struggle by Tribune's journalists to find alternative local buyers out of fear that Alden ownership would hollow out their papers and staffs. On Monday, Alden transferred $278 million of debt to Tribune, $60 million of which Alden effectively borrowed from itself—technically, from its other newspaper company, MediaNews Group—at a high interest rate of 13%. Alden also removed Tribune Publishing CEO Terry Jimenez, who publicly opposed the deal, as CEO. The hedge fund's co-founder and president, Heath Freeman, is Tribune's new president. Freeman has said in interviews that the business model of local news was broken and that Alden has bought papers that were "left for dead." (Published criticism of Alden cost an editor his job.)