Despite an effort by the company’s founder to stop it, the Audio Division of the FCC’s Media Bureau has moved forward with the approval of Alpha Media‘s voluntary debtor-in-possession status.
As such, an emergence from Chapter 11 bankruptcy protection appears imminent.
And, it marks a defeat for former Alpha Media CEO and its founder, Larry Wilson, along with its legal counsel at Brooks Pierce.
Wilson had vociferously argued that several business actions had been made over several years without full board approval. Much of Wilson’s argument centers on the $88 million sale of a group of radio stations in West Palm Beach to Hubbard Broadcasting, which closed in early 2019.
Alpha argued that the petition filed at the FCC was based on inaccurate information and baseless claims.
Wilson’s accusations came alongside a second petition to deny filed by Southern Stone Communications founder Paul Stone, who is a minority investor in Alpha Media. He sought a denial of Alpha Media’s request to increase its foreign ownership concentration via a temporary waiver of the Commission’s rules.
In a 17-page ruling released late Tuesday (7/13), Audio Division Chief Al Shuldiner denied the petitions from Wilson and from Stone, granted the application request from Alpha.
Specifically, Shuldiner rejected Wilson’s allegations of misconduct by Alpha concerning its corporate governance, unauthorized transfer of control, and misrepresentation in divestiture applications as grounds to deny the assignment applications.
“We likewise find that Wilson has failed to demonstrate how Alpha Holdings’ application
for a PPP loan—which the Bankruptcy Court viewed favorably—should have any bearing on the waiver request,” he added.
Most importantly, Shuldiner says, “Wilson and Stone have failed to demonstrate that they have standing in this proceeding.”
On Jan. 25, 2021, Portland, Ore.-based Alpha Media took an important step toward reducing its $267 million debt burden by filing for Chapter 11 bankruptcy protection.
Emergence from debtor-in-possession in status was on target for the end of Q2 2021. Now, it appears all but certain that it will come very shortly.
That’s because the commission’s approval will allow Alpha to shift its radio stations from a debtor-in-possession licensee to a “new” Alpha Media.
In short, “New Alpha” will be the post-bankruptcy version of Alpha Media, with equity interests and warrants issued to some second lien noteholders. The warrants will hold no voting rights, solely the equity interests will.
No single party will hold a controlling interest in New Alpha. New Alpha will have only a
single class of stock and as a result, direct and indirect equity and voting interests in New Alpha will be identical.
What is New Alpha’s ownership composition?
- MetLife Private Equity Holdings will control 43.7% of the equity and voting interests
- Florida Growth Fund LLC and Hamilton Lane Strategic Opportunities 2016 Fund LP will control 49% of the equity and voting interests in New Alpha
- ICG North America Holdings Ltd. will control approximately 5.8% of the equity and voting interests
In total, the entities controlled by MetLife will be attributed with a 6.6% foreign ownership (voting and equity) interest in New Alpha. Additionally, 3.4% of the equity and 0.5% of the voting of HLI are attributed to foreign owners. FGF will be attributed with a 0.012% foreign equity interest in New Alpha.
Furthermore, ICG, a U.K. private limited company, will directly hold 0.4% of the stock of New Alpha at emergence, and will indirectly—through ICGNA, a Cayman Islands corporation—control an additional 5.4% of the stock of new Alpha at emergence. These entities will be attributed with a 5.8% foreign ownership (equity and voting) interest in New Alpha.
New Alpha will be managed by a five-member board of directors.
This board will consist of Alpha CEO Bob Proffitt; a director designated by Hamilton Lane Inc.; a director designated by Intermediate Capital Group PLC; a director designated by all of the equity holders (who will not be an employee or agent of a foreign equity holder), each of whom will vote in proportion to their equity holdings in New Alpha; and an independent director who will be designated by the other four directors.