Voluntary action will result in the station group becoming privately held and it says it will operate its stations “in the ordinary course.”
Granite Broadcasting Corp. announced Monday afternoon that it, along with certain of its subsidiaries, has voluntarily filed petitions for reorganization under chapter 11 of the United States Bankruptcy Code in the United States Bankruptcy Court for the Southern District of New York.
This filing, Granite said, “included a plan of reorganization that has been negotiated with the company’s secured debt holders and is designed to protect Granite’s operations, allow for an orderly reorganization, and restore financial health to the company’s balance sheet.” Under the reorganization process, Granite said it will continue to operate its businesses “in the ordinary course.”
W. Don Cornwell, Granite chairman and CEO, said: “We operate competitive and profitable television stations, and despite our need to restructure our corporate balance sheet, we have continued to successfully grow the business. The strategic arrangement we entered into in 2005 with Malara Broadcast Group in Duluth and Fort Wayne is off to an excellent start. Our acquisition of the CBS affiliate in Binghamton earlier this year added an exceptionally strong station to our portfolio and expanded our reach to almost 60 percent of upstate New York households. During the past year we launched additional news programming in Buffalo, Fresno, Fort Wayne, Peoria and Duluth, and introduced new channels affiliated with the CW Network and My Network TV in Detroit, Duluth, Fort Wayne, Peoria and Binghamton. We are very proud of our colleagues who have worked diligently to expand the services we provide to our communities.”
“We have been candid about the company’s need to restructure its corporate balance sheet. In that regard, we explored a wide range of alternatives, including the sale of stations formerly affiliated with The WB Network in San Francisco and Detroit. Our ability to sell those stations on an acceptable basis was directly impacted in January 2006 by The WB Network’s announcement that it would cease operations. This unexpected and damaging decision forced us to seek other alternatives. Together with our financial advisor, Houlihan Lokey Howard & Zukin, we evaluated and exhausted a number of strategic options. However, we were unable to find an alternative long-term solution that would have permanently addressed our capital structure.”
Cornwell concluded: “We are pleased to report that we enter this filing with the support of our secured debt holders, who have worked with us to complete a comprehensive plan of reorganization that, once approved by the courts, will have a positive impact on our business by reducing our corporate debt by over $275 million to approximately $230 million. The advanced agreement with our secured debt holders should expedite the restructuring process and enable us to complete the reorganization by the first half of 2007. This restructuring will provide us with additional resources to re- invest in and grow our local television businesses, and enables us to continue to seek out new stations and markets.”
Under the proposed reorganization, the company will become privately held, and the current secured debt holders will exchange their existing notes for a combination of new notes and new common stock, and the current common and preferred stockholders will exchange their existing stock for shares of the newly reorganized company.
Granite owns and operates, or provides programming, sales and other services to 23 channels in the following 11 markets: San Francisco; Detroit; Buffalo, N.Y.; Fresno, Calif.; Syracuse, N.Y.; Fort Wayne, Ind.; Peoria, Ill.; Duluth, Minn.-Superior, Wis.; Binghamton, N.Y.; Utica, N.Y.; and Elmira, N.Y. The stations include affiliates of NBC, CBS, ABC, CW and MNT, and reaches approximately 6% of all U.S. television households.