Carlos Slim slashes New York Times holdings

Friday, December 22nd, 2017

Mexican billionaire Carlos Slim has long held an enormous stake in the New York Times, but now he plans to slash his holdings:

Billionaire Carlos Slim is planning to sell more than half of his 17 percent stake in the New York Times Co. to U.S. hedge fund investors, reducing his sway over one of the world’s most influential publishers.

Slim’s businesses earlier this month sold $250 million of mandatory exchangeable trust securities in a private offering that gives the buyers a claim on a 9 percent stake in the New York Times, according to a person with knowledge of the matter. The newspaper’s shares have surged more than 50 percent since Slim boosted his stake in 2015 and became the biggest shareholder.

The deal, which was referenced in a Dec. 6 statement but has gone largely unnoticed, means that when the securities mature three years from now and they automatically convert into Class A shares of New York Times, Slim and his companies will be left with about 8 percent of the publisher’s shares, said the person, who asked not to be identified because the information is private. In essence, the billionaire created a trust, pledged New York Times shares to it, locked the shares up for three years, then sold rights to that stock to investors.

Slim built his stake in the New York Times after lending the company $250 million in 2009 to help it get through the financial crisis. In 2015, he exercised stock options to become the Times’s biggest single investor in a display of confidence in the company even as readers and marketers flocked to the Internet where content is often free and ad rates are cheaper.

With the smaller stake, he’ll lose some of the power he had to vote for Class A directors, a group that can include no more than a third of board members. The Ochs-Sulzberger family — the paper’s controlling owners — hold Class B shares that give them a firm grip on the company. Publisher Arthur O. Sulzberger Jr. will retire at the end of this year after a quarter-century of overseeing the newspaper. His 37-year-old son, A.G., will take over.

Transferring the shares through the hybrid instruments allows Slim to take advantage of deferred tax payments until the transaction is completed, the person said.

My passive investments seem even more passive now.

Comments

  1. Sam J. says:

    How their stock can go up 50% when they’re doing such a crappy job and competing with the internet is beyond me. I wonder if they had actual gains, or is this all inflated stock prices?

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