The rumors about Mexican billionaire Carlos Slim investing in The New York Times Co. (NYSE: NYT) are heating up.
Andrew Ross Sorkin reports that Slim is near a deal to invest up to $250 million in a deal that could be approved by the company's board of directors today. According to Sorkin, "As part of Mr. Slim's investment, which resembles a loan, he is expected to get a special annual dividend, perhaps as high as 10 percent or more on this investment, these people said."
What is interesting is that Mr. Slim is not set to receive any control of the company's corporate governance. The company's dual-class voting structure that provides the Sulzberger family with total control of the company in spite of an equity stake of less than 20% has been a sore spot with many investors. Slim is also not looking to influence the company's operations.
But the nature of the deal may make that OK from Mr. Slim's perspective: A special annual dividend of 10% and warrants that allow him to benefit from stock price appreciation if things go well is a pretty good deal.
And while the cash infusion is good news for shareholders because it gives the company a liquidity breather, it will do little to solve any of the company's longer-term issues that created the balance sheet problem in the first place.
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