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Court OKs Gray to Run Young Broadcasting Stations

NEW YORK: The federal bankruptcy court has approved the sale of Young Broadcasting and the management of its TV stations by Gary Television. Judge Arthur J. Gonzalez of the U.S. Bankruptcy Court for the Southern District of New York dismissed the objection of unsecured creditors who said Young’s asset sale was conducted improperly. The sale scheduled for mid-July was cancelled when no bids materialized to counter an offer made by Young’s senior lenders.

Judge Gonzalez wrote that Young had “diligently and in good faith marketed the… assets to secure the highest or best offer.” The best offer came from investors Credit Suisse, Oppenheimer, Highland Capital and Eaton Vance, which collectively bid $200 million in secured obligations plus another $20 million in assumed debt. Only two other qualified bids, each of $120 million, came in. Another for $215 million was submitted but considered unqualified since no deposit was posted by the bidder.

The newly formed company will be “New Young Broadcasting.” Gray will run New Young’s TV stations for $2.2 million a year, plus a portion of cash flows above a baseline set at $38.6 million next year; $33.5 million in 2011 and $44.7 million in 2012.

The stations Gray will manage include WKRN-TV in Nashville, Tenn.; WTEN-TV in Albany, N.Y.; WCDC-TV in North Adams, Mass.; WRIC-TV in Petersburg, Va.; WBAY-TV in Green Bay, Wis.; KWQC-TV in Davenport, Iowa; KELO-TV in Sioux Falls, S.D.; KDLO-TV in Florence, S.D.; KPLO-TV in Reliance, S.D.; KLFY-TV in Lafayette, La.; and KCLO-TV in Rapid City, S.D.

Gray is based in Atlanta and owns 36 TV stations that generated a 1Q net loss of $8.9 million on revenues of $61.4 million. A shares of Gray were trading at around 75 cents at mid-day. The company plants to release its second-quarter results Aug. 6.
-- Deborah D. McAdams

More TVB coverage of Young’s Chapter 11 odyssey:
July 22, 2009: “GrayTapped to Run Reorganized Young Stations
NEW YORK: Gray Television will run the 10 TV stations that went to senior lenders in the Young Broadcasting bankruptcy, pending court approval. Documents made public today by the U.S. Bankruptcy Court for the Southern District of New York indicate that Gray tentatively was named the third-party operator acceptable to the new owners Terms of the management agreement were negotiated by Young “at arm’s length,” the document said.

July 14, 2009: “Lenders to Take Over Young TV Stations
Senior lenders will take over the 10 TV stations in the Young Broadcasting bankruptcy, according to insiders at attending a related hearing today. An asset auction had been scheduled for yesterday but was cancelled when it appeared to be moot.

July 14, 2009: “Young Broadcasting Auction Cancelled
“The Debtors, pursuant to the terms of the Bidding Procedures Order, have determined that the Auction is not necessary and hereby provide notice that the Auction is cancelled.”

July 2, 2009: “Young Broadcasting Auction Date Set
The assets of Young Broadcasting will be put on auction July 14 in New York. Sonnenschein, Nath & Rosenthal, the law firm representing Young, told the media outlet there was a “healthy amount of interest” in the auction. Young owns 10 TV stations, including WKRN-TV, the ABC affiliate in Nashville, Tenn.

March 4, 2009: “Young Files for Chapter 11
“Our decision to restructure through a Chapter 11 filing will allow the company to bring its debt in line with current economic realities so that we can emerge a stronger and more financially secure company. It is important to note that we are restructuring our debt, not our operations,” said Vincent Young, YBTVA chairman.