Times Looking for Rescue by Mexican Monopolist

How desperate is the New York Times for cash? So desperate that the company's talking with shady Mexican billionaire Carlos Slim, already the fourth-largest shareholder, to give them "several hundred million dollars" more.

Slim, whose personal fortune was pegged at $60 billion last year, is Mexico's version of a robber baron, leveraging his purchase of the country's telephone monopoly into control of businesses throughout Latin America and the U.S. Last September, he scooped up $127 million worth of the Times' publicly traded stock, giving him a 6% stake in the company. Now, the Wall Street Journal reports that he is in talks for a preferred-stock deal. Though the Journal notes "The talks are ongoing and may yet fall apart," the fact that the Times is even pursuing a deal underscores just how badly it needs a cash infusion.

As the Journal notes, the Times is carrying more than $1 billion in debt and has just $46 million in cash on hand. A $400 million credit line is expiring in May and it has another $650 million in credit payments due over the next two years. To raise money, it's already been contemplating a sale of its stake in the Boston Red Sox and a sale-leaseback of its brand new corporate headquarters. If it gets more desperate, its web property About.com would probably be the next to go on the block.

A preferred stock deal would work a bit like a loan. Slim's shares wouldn't have voting power, but he would be owed hefty dividend payments. Voting power at the Times Co. is held in a class of super-voting stock that the Sulzberger family controls. But the magnitude of the deal that the Journal describes could put Slim in position to be the paper's largest shareholder — even larger than the Sulzberger family — if he ever exercised his right to convert preferred shares into common stock. Right now the Sulzbergers and the hedge fund Harbinger Capital Partners each own about 20% of the Times Co. At Friday's closing price of $6.41 those stakes are worth about $180 million, far less than $300 million or more that the Journal describes Slim contemplating.