THE NEW YORK TIMES COMPANY 
By 
By Robert MacMillan
The loan is part of a package that would give the telecommunications tycoon a prominent financial role in the Times, one of the most famous newspaper publishers in the world, but one that has been struggling to fix its financial difficulties amid a sharp drop in advertising revenue.
Most importantly for the Times, it allows the publisher, under family control for more than a century, extra time to find ways to sell assets and improve its business.
Times shares fell 50 cents, or 7.8 percent, to $5.91 on the New York Stock Exchange, worse than the 3 percent drop in the Dow Jones Industrial Average on Tuesday afternoon.
The agreement, announced on Monday night, is for 6-year unsecured notes with a 14-percent interest rate, with 11 percentage points paid in cash and 3 percentage points in accrued interest.
"Frankly, New York Times should be pleased they were able to get this financing at all, in our view, given all the pressures going against the company," Barclays Capital analyst Craig Huber wrote in a note to investors.
"Nevertheless, the interest rate is very expensive on an absolute basis and is not a good sign for peer newspaper companies should they try to follow suit in the debt markets," Huber wrote.
The deal gives Slim warrants to buy 15.9 million New York Times Class A shares, which, when added to the 6.9 million shares that he already owns, would make him one of the largest Times shareholders with 17 percent of the stock. The loan pays a dividend, but does not give Slim a board seat.
The money would help pay for a $400 million credit facility that expires in May. Wachovia analyst John Janedis said the interest rate differential would result in an incremental $21.9 million in interest, or 9 cents a share, on the Times's books.
While expensive, he said, the deal gives the Times time to pursue selling other properties, such as its stake in the holding company of the Boston Red Sox baseball team, as a way to pay off more debt. He said the agreement "at least allays some concern around potential near-term funding issues."
The Times has $1.1 billion in debt and $46 million in cash.
Barclays analyst Huber cut its price target on Times shares to $2 from $3. He also said the Times should kill its dividend after cutting it by almost three-quarters late last year.
Huber cut his 2009 and 2010 earnings per share estimates to 25 cents and 14 cents from 37 cents and 27 cents, citing poor advertising. He said Times newspaper ad revenue would fall 17.9 percent in 2009 at its namesake New York paper, and 18.9 percent at The Boston Globe.
The high interest rate on Slim's loan is a sign that other newspaper publishers might have to look beyond tough credit markets to find ways to pay their debt and survive.
On Tuesday, Richmond Times-Dispatch publisher Media General Inc
Other papers, such as Hearst Corp's Seattle Post-Intelligencer and E.W. Scripps Co's
(Reporting by Robert MacMillan, editing by Gerald E. McCormick)
