Equity Media’s fate on ice


Literally. Yesterday’s Federal Bankruptcy Court hearing on whether to let Equity Media reorganize or be liquidated was postponed due to an ice storm that hit the Little Rock, AR area. The hearing will likely be rescheduled in a few days. Meanwhile, two filings with the bankruptcy court oppose the liquidation idea – one from Equity Media itself and the other from Univision.

Univision noted that it holds preferred stock in Equity Media and is also the holder of a $15 million note owed by the company. Univision said it has not had time to determine whether the statements in the emergency motion by Silver Point Finance are correct, so it urged the judge to hold off on any decision to liquidate Equity Media.

Noting that Silver Point also has financial interests in three other TV companies – Granite Broadcasting, Young Broadcasting and Communications Corp. of America – Univision suggested that if the court were to dismiss the federal bankruptcy court and let Silver Point proceed with its receivership case in Arkansas state court, “it would put Silver Point in a position to rapidly foreclose and acquire Debtor’s stations at a sale of sales under state law which has far fewer protections to assure fair value is received.” Univision said it and other creditors would be better served by a “fair and orderly” administration under the federal bankruptcy code.

An affidavit by Univision CFO Andrew Hobson stated that the value of Equity Media as a going concern would be “significantly greater” than a piecemeal sell-off of the stations.

Equity Media made much the same point in its own response opposing the Silver Point motion. “The value of the Debtor’s assets is believed to greatly exceed the value of its debt to Silver Point (and to other secured creditors as well),” it stated. And the company insisted that it does have a plan to maximize value for creditors and stakeholders. Equity Media told the court that just a few weeks ago Silver Point had been urging it to file Chapter 11.

“What has changed since then? Nothing, other than the fact that the Debtor refused to consent to Silver Point’s outrageous demand that the Debtor seek, on an expedited basis, the liquidation of all of its assets within 60 days,” Equity Media said. At best, it said, that would result in its assets being sold at a deep discount to their true value.