Early Doubts on Tribune Deal

An investment bank declined to give Tribune Company a clean bill of financial health in 2007 that would have cleared the way for Sam Zell's $8.2 billion leveraged buyout of the media conglomerate.

Houlihan Lokey, a Los Angeles-based bank, rejected overtures from Tribune around March 2007 to provide what is known as a "solvency opinion" that would label Zell's takeover financially sound. Houlihan believed the deal would saddle the newspaper-and-television company with too much debt. Tribune needed solvency opinions to complete Zell's buyout. Houlihan was concerned about Tribune's financial health to begin with, but also the declining fortunes of the newspaper industry. Houlihan viewed Zell's deal as "DOA" and felt it was "going to fail."

Tribune instead turned to a smaller firm to get a solvency opinion. Valuation Research Corp. A bankruptcy-court examiner criticized Valuation Research in a recent report, saying the firm used faulty methods to reach its conclusions.