Granite reorganization complete


Granite Broadcasting has consummated the reorganization plan filed with a federal bankruptcy court in New York, reducing its total debt by more than 300 million bucks. Silver Point Capital is now the majority shareholder of Granite. Granite CEO Don Cornwell says the company now has a much stronger balance sheet and is ready to grow its business.

Under the plan, general unsecured creditors receive a full recovery on their pre-petition or agreed-upon claims. Holders of Granite's Secured Term Loans and 9.75% Senior Secured Notes due in 2010, representing an aggregate of more than 500 million in total secured claims, have converted their debt (on a pro-rata basis) into (i) a new 200 million senior secured term loan and (ii) shares of the company's new common equity, representing, in the aggregate, 97% of the new common equity of the company distributed pursuant to the plan. As for the remaining 3%, former holders of Granite's common stock get about 1%, but also rights to buy an additional 5% stake at a premium to the initial price of 25.90 for the new shares. Preferred shareholders get 2% and rights to buy an additional 10%. All of the pre-existing 12.75% Cumulative Exchangeable Preferred Stock and Class A and Class B Common Stock have been canceled.

TVBR observation: The new common equity will not be listed for public trading, but we expect to see it trade on the pink sheets. In fact, the old shares were still being traded on the pink sheets yesterday. At some point, that trading should switch from the old shares, trading at 12 or 13 cents each, to the new shares valued at 25.90 – but there won't be nearly as many of them to trade.