Another good deal?

Hey maybe The Messiah will force the banks to do this deal...

The New York Times Company plans to borrow up to $225 million against its mid-Manhattan headquarters building, to ease a potential cash flow squeeze as the company grapples with tighter credit and shrinking profits.

The company has retained Cushman & Wakefield, the real estate firm, to act as its agent to secure financing, either in the form of a mortgage or a sale-leaseback arrangement, said James Follo, the Times Company's chief financial officer.

The Times Company owns 58 percent of the 52-story, 1.5 million-square-foot tower on Eighth Avenue, which was designed by the architect Renzo Piano, and completed last year. The developer Forest City Ratner owns the rest of the building. The Times Company's portion of the building is not currently mortgaged, and some investors have complained that the company has too much of its capital tied up in that real estate.

The company has two revolving lines of credit, each with a ceiling of $400 million, roughly the amount outstanding on the two combined. One of those lines is set to expire in May, and finding a replacement would be difficult given the economic climate and the company's worsening finances. Analysts have said for months that selling or borrowing against assets would be the company's best option for averting a cash flow problem next year.

Let me educate those not familiar to credit standards. In general, lines of credit are usually extended for seasonal cash needs. For instance, let's say you are a retailer who has to buy inventory in September and October for your Christmas sales season. You would access your line of credit to take advantage of sales discounts and short term cash needs and pay it back when you turned your inventory.

Typically, a bank would want to see a 30 day payout on a line to assure them that the line was used for seasonal needs and not to fund operating losses.

In this case, the Times have tapped out two 400 million dollar lines of credit with no ability to repay them.

Now they want to borrow $225 million more using their real estate as collateral.

If you are a junior credit analyst for a local savings and loan you would probably ask Pinch and the boys this question, "you don't have the cash flow to pay back $800 million on your lines and now you want another $225 miilion? Exactly how do we get paid back?"

But of course, as we know from the previous post, it will be the bank's fault that the NY Times decided to alienate millions of potential customers by reprinting the Communist Manifesto.

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