Oaktree Capital, the No. 2 shareholder for Tribune Publishing, warned Tribune's board Wednesday afternoon that spurning a takeover bid from Gannett would "destroy enormous shareholder value."

The Los Angeles-based investment firm urged executives and directors to close a deal with Gannett. Oaktree's letter says a strategy orchestrated by Tribune Publishing Chairman Michael Ferro, which includes turning the Los Angeles Times into a standalone enterprise covering entertainment globally "involve(s) great execution risk."

We have met with Michael Ferro and spoken with him on the phone, and we have listened to his ideas about building value as a standalone company through a digital transformation of Tribune. The ideas we have heard appear to be preliminary and involve great execution risk. Companies with much greater resources than Tribune and with a substantial head start are struggling in a rapidly changing environment to effect digital change that is profound enough and quick enough to overcome the outgoing tide of print revenues.

Oaktree controls nearly 15 percent of Tribune Publishing.

Gannett, America's largest newspaper company, originally offered $815 million for the publisher of the Los Angeles Times, the Chicago Tribune, and nine other major dailies. When that offer was rejected, Gannett re-upped its bid to $864 million.

In response to Oaktree's letter, a Tribune Publishing spokesperson told Poynter the company is still examining Gannett's second offer.

“As previously disclosed, the Tribune Publishing Board of Directors is reviewing Gannett’s revised proposal in consultation with its independent financial and legal advisors," the spokesperson said in an email. "The Board remains committed to continuing to act in the best interests of all shareholders.”

Oaktree had earlier declared that Tribune should enter into negotiations on Gannett's offer, but this expression of no confidence in Ferro and CEO Justin Dearborn's strategy is a significant further step.

An earlier Gannett filing indicated that the company conducted a phone conference with Oaktree and other large institutional investors late last week before upping its offer to $15 a share. If other shareholders get behind Oaktree, pressure on Ferro and others on the board will increase.

Here's the full letter:

Dear Directors of Tribune Publishing Company:

Investment partnerships managed by Oaktree Capital Management, L.P. are long-time holders of approximately 14.8% of the common stock of Tribune Publishing Company (“Tribune”). Thus we have followed very closely the Gannett proposal to purchase Tribune and your response to date.

We have met with Michael Ferro and spoken with him on the phone, and we have listened to his ideas about building value as a standalone company through a digital transformation of Tribune. The ideas we have heard appear to be preliminary and involve great execution risk. Companies with much greater resources than Tribune and with a substantial head start are struggling in a rapidly changing environment to effect digital change that is profound enough and quick enough to overcome the outgoing tide of print revenues.

In summary, we have not seen anything to give us any confidence that Tribune on its own, with the resources and competitive position it has today, can achieve over any reasonable period of time the value for shareholders that we believe can likely be achieved through a transaction with Gannett. And we see very substantial risk that through pursuing an independent course, Tribune will destroy enormous shareholder value.

We have also met with Gannett management and advisors and listened to their description of their interest in acquiring Tribune and what they believe they can do through integrating Tribune’s properties with their system.

Our conclusion is that we are convinced that you and Tribune’s management should engage Gannett immediately and seek to negotiate a transaction in the interest of all Tribune shareholders. We expect you to carry out the fiduciary duty that you owe to all shareholders, and believe that the only possible conclusion consistent with your fiduciary duty is to engage with Gannett with the objective of maximizing value to all Tribune shareholders.