Sinclair Refinance Deal Near

August 22, 2009|By Lorraine Mirabella | Lorraine Mirabella,

Sinclair Broadcast Group Inc., which had said it might be forced to file for bankruptcy protection because of substantial debt coming due, said it has reached a tentative deal to pay off nearly $438 million in convertible notes.

Under an agreement reached with a committee of note holders, Sinclair subsidiary Sinclair Television Group would issue notes that would mature in 2014 and be secured by a second lien on assets securing the television group's bank credit facility.

The broadcaster would use the proceeds to repurchase outstanding debt from note holders who are entitled to exercise options in May 2010 and January 2011. The company said it has a total $438 million of those convertible notes outstanding.

Sinclair said it would pay note holders 90 cents to 93.5 cents on the dollar, an offer that would depend upon getting at least 95 percent participation by note holders and raising sufficient funds from the private placement of notes.

The Hunt Valley owner of TV stations, facing declining advertising revenue amid the recession, said last month that it might consider filing for bankruptcy protection if it fails to restructure its debt or secure debt and equity financing through capital markets.

The agreement reached Aug. 10 with note holders and announced Thursday would alleviate a portion of Sinclair's debt burden.

Earlier this month, the broadcaster announced that Cunningham Broadcasting Corp., whose debt obligation also could trigger a Sinclair bankruptcy, has received an extension until Oct. 30 to pay off $33.5 million. The extension allows Cunningham, whose six television stations are operated by Sinclair under an agreement, more time to work with its lenders on a solution, Sinclair said.

The company, which owns or operates 58 television stations, including Baltimore's Fox 45, depends heavily on the struggling automotive sector for advertising. Sinclair reported that second-quarter net income fell to $2.8 million, or 4 cents per share, from $11.8 million, or 13 cents per share, in the second quarter of 2008, and said net broadcast revenue from continuing operations fell nearly 19 percent to $133 million.

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