The New York Times Co. will repay a $250 million, high-interest loan from Mexican telecommunications billionaire Carlos Slim earlier than expected, allowing the company to reduce interest payments.
Companies affiliated with Slim, a shareholder of the Times Co., lent the money at a hefty 14 percent interest rate at the height of the recession in January 2009. It came at a time when credit markets were tight and revenue prospects were bleak because of declines in print advertising.
Since then, the Times Co. has found other sources of cash, including the sale of $225 million in notes late last year at a lower rate of about 6.6 percent. The company also sold most of its midtown Manhattan headquarters for $225 million and is renting back the offices from the new owners. Print advertising revenue remains weak, but the company's flagship newspaper has begun charging for full access to its website.
"Over the past two years we have significantly strengthened the Times company's cash position," said Janet L. Robinson, president and chief executive.
The Times Co. said Wednesday that the early payment of the loan will result in a pretax charge of about $46 million in the third quarter. But the company will save at least $39 million per year in interest and fees over the next three years.
The company plans to repay the $250 million in notes due in 2015 on Aug. 15. It previously planned to repay the notes after Jan. 15, 2012, which was already three years ahead of the original schedule. The total payment will be about $279 million, which includes interest and about $26 million in fees for repaying the loan early.
The company also recently sold more than half of its 17.8 percent stake in the Boston Red Sox for $117 million and said the deal gave it a pretax gain of $64 million. It said earlier this month that it will continue to look for a buyer for the remaining shares it owns in Fenway Sports Group, the parent company of the Red Sox, the Liverpool Football Club and other properties.
Forbes lists Slim as the world's richest man. Slim's fortune is estimated at $74 billion, well ahead of Bill Gates' $56 billion and investor Warren Buffett's $50 billion. Slim built his fortune by amassing a range of retail, industrial and telecom companies. A civil engineer by training, he has bought troubled or government-owned companies of all types, fixed them and resold them for huge profits. Slim and his family own about a 6.9 percent stake in the Times Co., though he has no special voting rights or representation on the Times' board.
Shares of the Times Co., which owns The New York Times, The Boston Globe and other newspapers, increased 11 cents, or 1.25 percent, to close Wednesday at $8.89. The stock had dropped nearly 8 percent to $5.91 on the first trading day after the company announced the Slim loan in 2009.
AP Business Writer Samantha Bomkamp contributed to this story.