Chapter 11, that is. The Wall Street Journal reports that TV/newspaper owner Freedom Communications is set to file for bankruptcy reorganization this week. The company’s flagship Orange County Register acknowledges the WSJ story and says talks are ongoing with Freedom’s lenders.
RBR/TVBR got much the same response from a Freedom spokesperson: “Freedom continues to work with our lenders on the capital structure of the company.”
Before the credit crunch hit – and then the nationwide recession – the Hoiles family members who’d restructured Freedom in 2003 to buy out their cousins rather than see the company sold were on the verge of borrowing big to buy out their private equity backers, Blackstone Group and Providence Equity Partners. Not only was that nixed by the credit crunch, but now the company is apparently struggling with the debt load from that 2003 refinancing. So, Blackstone and Providence Equity are in the same boat with the Hoiles family members – a boat that may be on the verge of sinking.
According to the WSJ, Freedom has about $770 million of debt. EBITDA has reportedly fallen by 75% over the past five years to about $50 million. You don’t need to consult a calculator to conclude that the company is in a significantly overleveraged situation. If the company is forced into bankruptcy, the WSJ says the major lenders, including JP Morgan Chase, SunTrust Banks and Union Bank of California, are expected to end up owning Freedom Communications.
Freedom Communications owns eight major network affiliate television stations and a large number of daily and non-daily newspapers stretching from coast to coast.