A look inside the Interep reorg


Interep is on the verge of emerging from its Chapter 11 bankruptcy reorganization. Creditors will soon receive ballots to vote yea or nay, so here’s a look at what has been proposed for the radio and TV national rep company.

US Bankruptcy Judge Robert Drain Friday signed off on the materials to be sent to creditors of Interep National Radio Sales and its various subsidiaries who filed the pre-packaged Chapter 11 reorganization plan in March.

Oaktree Capital Management and Silver Point Capital, who collectively say they hold more than 90% of Interep’s outstanding bonds (with an original face value of $99 million) have already indicated their support for the reorganization plan. They will end up as the equity owners of Interep and have also agreed to provide new lending for the company to grow.

All of these classes of creditors are expected to receive 100% of their claims: Administrative Claims; Priority Tax claims; Priority Non-Tax Claims; Secured Claims; and General Unsecured Claims.

Previous Interep shareholders, including many current and former employees, will get nothing. The old stock is being wiped out completely, as had been anticipated, as the former bondholders take new stock to wipe out the old debt.

Just what is the value of the company they are getting? An analysis by Jefferies and Company filed with the bankruptcy court puts the enterprise value at $67-88.5 million, with a mid-point of $77.7 million. Pro-forma net debt of the reorganized company is projected to be $67.7 million – most of that new lending from Oaktree/Silver Point – so the new equity value is estimated at only $10 million.

Financial projections by Interep management see revenues of $62.2 million in 2009 – growing to $78.6 million in 2012, with operating income turning positive in 2010 and net income turning positive in 2011. EBITDA is projected to be $4.4 million in 2009 – growing to $16.6 million in 2012.