NEW YORK: The judge handling the Young Broadcasting bankruptcy case rejected a plea from unsecured creditors to halt the company’s reorganization. Judge Arthur J. Gonzalez issued a 20-page order Monday in the U.S. Bankruptcy Court for the Southern District of New York, affirming a plan for senior lenders to take over the company.
A committee of unsecured creditors filed an objection with the court May 5, saying that market conditions had improved, and an asset sale should be attempted. They had earlier petitioned for an alternative reorganization plan, which Judge Gonzalez rejected on the grounds that its market projections were too aggressive. An auction scheduled last July was cancelled after Young executives determined that bids would not exceed the one for $220 million put forth by senior lenders, who then agreed to take over the company.
The committee’s legal advisor, Tom Kuhn of Allen & Co., said the enterprise value of Young’s 10 TV stations and its national rep firm is now nearly $424 million, based the valuation at 7.2x projected 2010 broadcast cash flow of $58.5 million. An asset sale at roughly $424 million would yield around $65 million for unsecured creditors, who stand to receive only $1 million under the plan approved by Judge Gonzalez April 19. According to the ballot tabulation in court documents, their claims totaled around $8.45 million.
That plan, approved April 19 and reaffirmed Monday, creates a new company for the Young Broadcasting assets, the New Young Broadcasting Holding Co., or NewCo. All common stock is to be placed in NewCo, with secured lenders receiving equity interests of $338 million. Credit Suisse, Oppenheimer, Highland Capital and Eaton Vance are among Young’s senior lenders. Young had $640 million in publicly traded debt when it filed for Chapter 11 in February 2009. The new company emerges debt free.
Young’s assets include a national TV rep firm and 10 TV stations-- Five ABCs: WKRN-TV in Nashville, Tenn.; WTEN-TV in Albany, N.Y.; WRIC-TV in Richmond, Va.; WATE-TV in Knoxville, Tenn.; and WBAY-TV in Green Bay, Wis. Three CBS affils: WLNS-TV in Lansing, Mich.; KLFY-TV in Lafayette, La.; and KELO-TV in Sioux Falls, S.D. It has one NBC, KWQC-TV in Davenport, Iowa; and one MyNetwork station, KRON-TV in San Francisco, Calif.
Gray Television of Atlanta will run the Young TV stations. The court approved Gray last July for managing the stations, but the subsequent maneuvers by the unsecured creditors delayed Young’s emergence from bankruptcy. Judge Gonzalez confirmed its emergence with his order dated May 10.
-- Deborah D. McAdams
