Granite Broadcasting followed through on its anticipated bankruptcy, voluntarily filing for Chapter 11 reorganization on Monday. The petition, filed in United States Bankruptcy Court for the Southern District of New York, includes a plan already negotiated with the company's secured debt holders that will take Granite private, the company said. Granite owns and operators and/or manages 23 stations in 11 markets, covering approximately 6 percent of U.S. TV households.
The company last month warned that it might have to file for reorganization in light of a cash shortage on payments due in December of $90 million. In its quarterly report to the Securities and Exchange Commission, the company said it had a $19.7 million interest payment and $70 million loan payment due Dec. 1, while its cash position amounted to a little over $18.2 million, with an accumulated deficit of nearly $514 million.
"The company is reviewing all potential reorganization alternatives with respect to its debt obligations and preferred stock, including a reorganization under Chapter 11 of the bankruptcy code," the filing said.
Granite markets include San Francisco and Fresno, Calif.; Detroit, Mich.; Buffalo, Syracuse, Utica, Binghamton and Elmira, N.Y.; Fort Wayne, Ind.; Peoria, Ill.; and Duluth, Minn.-Superior, Wis. The stations are affiliates of NBC, CBS, ABC, CW and My Network TV.
Regarding the bankruptcy filing, Granite Chairman and CEO W. Don Cornwell said, "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."
Cornwell said once the reorg is approved by the courts, it will reduce Granite's debt from over $275 million to $230 million. The restructuring is expected to be completed in the first six months of 2007. According to Granite, "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 currently trades over-the-counter, with a 52-week share price high of 28 cents as of Dec. 7, according to Granite.
