Handwriting on the Wall

Brad DeLong looks at the 14% interest rate the NYT got on its loan from Carlos Slim and thinks that the game is just about up.

Good God almighty! 14% interest with short-term inflation at zero plus a share of the upside if the stock price recovers!

Duncan Black:

Eschaton: NYT Co is taking out a subprime loan.

The New York Times Company said Monday it had reached an agreement with the Mexican billionaire Carlos Slim Helú for a $250 million loan intended to help the newspaper company finance its businesses.

Under the terms of the deal, Mr. Slim, who already owns 6.9 percent of the Times Company, would invest $250 million in the form of six-year notes with warrants that are convertible into common shares, the company said in a statement. The notes also carry a 14 percent interest rate, with 11 percent paid in cash and 3 percent in additional bonds.
Not bad! If they'd let me I'd scrape together the pennies under my couch cushions and lend it to them for 14%.

Hard to see this deal as anything other than a forecast that the New York Times will be in bankruptcy court within a decade.

It's going to be weird to live in a country without a newspaper.

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