So Where's Alden Getting Money to Acquire Tribune Publishing?

In its bid to acquire Tribune Publishing, the hedge fund Alden Global Capital vowed to provide $375 million in cash to the owner of the Chicago Tribune, the Baltimore Sun and other titles — a theoretically welcome influx to an investment-starved newspaper chain.

But, according to The Washington Post, industry and financial experts have looked at the fine print and see something starkly different: Alden, they say, has already signaled that it plans to saddle Tribune with debt that could further hollow out the company, and it may not have $375 million available to begin with.

Alden has made the certainty of its finances a central part of its push to acquire Tribune, saying in a December letter that it "can fully finance the Transaction with cash on hand" and "we will have no financing conditions and will not require third party debt or equity to finance the Transaction."

"One would think if they're saying that, they can fund it out of their own pocket," said Doug Arthur, and analyst with Huber Research. Indeed, Tribune's board praised Alden's bid for being "not subject to any financing condition," when it supported the proposal in a Securities & Exchange Commission filing.

But the deal includes a brief but potentially critical passage saying that Alden "has the right to seek to finance a portion or all of the $375,000,000 in cash with the proceeds from debt and/or equity financing from its affiliates or third parties."

"That means they're going to try to borrow money," Arthur said. He said it would not surprise him to see Alden borrow heavily against Tribune's revenue and put in as little of its own money as possible.

"I think they're mostly interested in the fact that the stock is cheap, there is a lot of cash flow, a lot of cash, and they think it's a sitting duck," he said. "Very few people want to own newspapers, and they're taking advantage of that."

Alden representatives say their $630 million bid is clearly the best option for Tribune's shareholders. The hedge fund and its managing partner, Heath Freeman, are in the driver's seat to acquire Tribune since one of the investors in a competing bid by Maryland hotelier Stewart Bainum Jr. recently backed out. Tribune shareholders are now preparing to vote on Alden's deal May 21.