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Gray Television Avoids Default

ATLANTA: Gray Television scored some wiggle room in its allowable leverage and avoided default today through an amendment on its senior credit facility. Among other parameters, the amendment resets the leverage ratio at 9x for the quarter ending March 31, Gray said. The previous ratio was 8.75x, set to drop today to 7x. Gray warned March 15 that it would likely default at that factor.

The amendment, reached today with senior lendors, also reduces the lenders’ revolving commitment from $50 million to $40 million and allows Gray to issue certain debt securities. Upon issuance of new debt securities and repayment of at least $200 million in existing obligations, Gray’s new leverage covenant will be replaced with a first-lien leverage test and a minimum fixed-charge coverage ratio.

Gray, which owns and/or operates 36 TV stations, reported preliminary 2009 revenues of $270.4 million, down 17 percent from 2008. No preliminary income figures were provided. Gray (NYSE: GTN) ended 2009 with $16 million in cash and $791.8 million in long-term debt.