ION Creditor Takeover Rejected

NEW YORK: A federal judge rejected a $250 million offer from a creditor of bankrupt ION Media to takeover the company, reports indicate. Judge James Peck of the U.S. Bankruptcy Court for the Southern District of New York rejected the offer from Cyrus Capital Partners last week. Cyrus claimed ION’s reorganization plan was based on invalid liens against its broadcast licenses, according to Reuters.

During a hearing on the matter last Thursday, the judge said he would approve ION’s reorganization plan, which eliminates more than $2.7 billion in debt and converts its $150 million in debtor-in-possession financing into equity.

ION filed for Chapter 11 in May. It’s expected to emerge shortly after the court issues its written confirmation of the reorganization plan, which had the support of first-lien debt holders.

Cyrus Capital Partners made an offer last Monday to refinance ION’s DIP funding at $250 in return for a 62.6 percent stake in the reorganized company. ION’s board rejected the offer, fearing it would delay the company’s emergence from bankruptcy. Reuters said Cyrus has been in litigation with ION over its reorg plan because it’s based primarily on the value of the FCC spectrum licenses, which cannot be used as collateral for liens.

The judge said the licenses represented “purported capital” and determined that Cyrus didn’t have grounds to oppose the plan. His formal written approval of ION’s reorg is expected within a week or so.

More on ION:

October 6, 2009: “Court Approves ION’s Disclosure Statement”
The disclosure statement proffered by ION Media Networks on its proposed reorganization has received the court’s blessing.

July 6, 2009: “Court Approves DIP Financing for ION Media”
ION Media said it received final approval for its $150 million debtor-in-possession financing plan.

July 2,2009: “ION Media’s Creditors Object to DIP Terms
ION Media’s creditors are objecting to the terms of the company’s $150 million debtor-in-possession loan.

May 21, 2009: “ION Files for Bankruptcy
ION Media Networks has filed for Chapter 11 in U.S. Bankruptcy Court for the Southern District of New York, listing assets of around $10 million and liabilities of more than $1 billion.

June 29, 2009: “ION Mobilizes TV in Manhattan and D.C.
The service marks the for-real commercial debut of mobile digital TV broadcasting in the United States, though for whom is unclear.