/ 10.12.2009 12:00AM
Moody's Reviews Sinclair for Upgrade
NEW YORK: Moody’s Investor Service placed Sinclair on review for a
potential upgrade after the broadcaster commenced a debt refinance and a new
agreement with an operational partner. The review will supersede one that
Moody’s started in July to possibly downgrade Sinclair (NASDAQ: SBGI). Moody’s
has Sinclair at Caa2, “about eight notches into junk territory,” according to The Associated Press.
Sinclair announced an arrangement last week to pay off $438 million due
over the next two years with new debt due in 2018 and 2027. The company also
entered into a Memo of Understanding with Cunningham Broadcasting. Cunningham
is Sinclair’s local marketing agreement partner in several markets, generating
around $77 million a year for SBGI. Cunningham defaulted on a loan this summer,
spurring a bankruptcy warning from Sinclair. SBGI will pay $33.5 million of
Cunningham’s debt over the next three years, contingent on completion of the
refinancing.
“SBGI announced that it will tender its converts for $980/$1,000 principal and intends to amend its LMA agreement with Cunningham to help its ’sister’ company avoid bankruptcy. These actions
should eliminate investor worries over SBGI’s ability to continue as a
going-concern,” said Wells Fargo’s Marci Ryvicker in an investors note.
Shares of SBGI made some headway on the news, rising from around $3.50 last
Thursday to $3.71 in today’s trading.
More on Sinclair:
October 8, 2009: “Sinclair Commences
Tender Offer”
Sinclair also announced that it has entered into a Memorandum of
Understanding with Cunningham Broadcasting Corp., contingent upon the
refinancing of the notes. SBGI makes around $77 million a year from local
marketing agreements with Cunningham, which defaulted on a loan over the
summer.
July 15, 2009: “Analyst Deems Sinclair
Bankruptcy ‘Remote’”
“To be blunt, we think management is posturing. We believe that management is
painting the most dire scenario in a public forum as part of its negotiations
with convert holders. There are still 10 months before these converts can be
put to the company.”
July 14, 2009: “Sinclair Positions for
Bankruptcy”
Sinclair Broadcasting group may have to file for bankruptcy if it can’t
renegotiate the terms of some of its debt. In a filing with the Securities and
Exchange Commission dated July 10, the company said it had $488.5 million due
over the next 18 months.
June 19, 2009 “Standard & Poor’s
Cuts Sinclair”
“We believe that sluggish TV advertising in a nonelection, recession year will
cause Sinclair’s EBITDA to decline further and leverage to continue to rise,”
wrote Deborah Kinzer, an S&P credit analyst. “The negative rating outlook
reflects our concerns about the company’s deteriorating credit metrics and its
ability to refinance potential upcoming puts.”