Mexican billionaire Carlos Slim Helu is near a deal to invest about $250 million in The New York Times Company, helping to shore up the publishing company's struggling finances, a media report said.
The company's board is expected to approve the deal and an announcement could be made as early as tomorrow, the New York Times said, quoting people briefed on the transaction.
However, they also warned that several details still needed to be completed and that it remained possible the agreement could collapse.
The deal, the Times says, would come as the Times Company moves to raise money amid flagging advertising sales and approaching deadlines to pay back hundreds of millions of dollars of debt over the next two years.
The company has put its stake in the Boston Red Sox up for sale and said last year that it would borrow as much as $225 million against its new headquarters in Manhattan through a sale-leaseback agreement.
Under the terms of the deal, Slim, who already owns 6.4 per cent of the Times Company, would invest $250 million in the form of 10-year notes with warrants that are convertible into common shares, these people said.
As part of Slim's investment, which resembles a loan, he is expected to get a special annual dividend, perhaps as high as 10 per cent or more on this investment, the paper reported, citing these people.
Slim is not expected to get any representation on the company's board or any shares with special voting rights like those of the Sulzberger family, which controls the company.
Nonetheless, when Slim exercises the warrants, he would become the largest shareholder in the Times Company, owning about a third of the common stock.
The Sulzbergers own about 19 per cent of company and control it with a special class of voting shares.
Slim, one of the wealthiest people in the world, controls cellular and landline phone companies and has major investments in retailing, construction, banking, insurance, railroads and mining. In March, Forbes magazine estimated his fortune at $60 billion.
The Times said it is unclear what motivated Slim's investment. He approached the Times Company in November, people briefed on the discussions told the paper, offering to make a sizable investment.
He never sought a governance role and did not express interest in influencing the company's operations, these people said. The talks were intended to be private.
Slim's latest investment in the Times Company would be the second time in less than a year that the company's falling stock price has attracted interest from deep-pocketed outsiders, the paper said.
The hedge funds Harbinger Capital and Firebrand Partners bought just over 20 per cent of the company's nonvoting shares and secured two seats on its board last year, promising to shake up its business strategy.
In 1990, Slim headed the group of investors that bought the Mexican government's fixed-line phone company, Telfonos de Mxico, which he still controls. He also controls the largest cellular phone company in Latin America, America Movil.
The Times is trying to secure enough cash to pay off debts that start coming due in May, the paper said. The company has a $400 million credit facility that expires then, followed by $100 million in bonds due later in the year.
A further $250 million will come due in 2010, and a $400 million credit facility expires in 2011. As of September, the company had about $46 million in cash; its total debt load is $1.1 billion, the Times reported.