The Chapter 11 filing by Peak Broadcasting is all about the senior debt. Other creditors are being paid under the reorganization plan and the senior lenders, mainly Oaktree Capital and Rabobank, will become the new owners, once the plan is approved by the US Bankruptcy Court and the FCC gives its blessing to the license transfers.
Nearly all of the equity at Peak is currently held by various Duff Ackerman & Goodrich (DAG) investment funds, with CEO Todd Lawley and other execs having only small personal stakes. Under the reorg plan, Peak’s assets will go to a new company, with the senior creditors as the 100% owners.
One of the major equity owners will be a name quite familiar to RBR-TVBR readers: Oaktree Capital Management. Various Oaktree funds own portions of the senior debt from the original loan syndicate led by GE Capital. The other major holder is Rabobank International (the full name of the bank based in the Netherlands is Coöperatieve Centrale Raiffeisen-Boerenleenbank B.A.) and various affiliates. As is common with such broadcasting reorganizations, both stock and warrants are being issued and blanks remain to be filled in on exactly how the various new owners will hold their equity stakes to comply with FCC attribution rules.
According to the Chapter 11 plan filed with the US Bankruptcy Court in Delaware, the 1st lien holders are owed $87.5 million. In addition to owning 100% of the new Peak they’ll also be issuing a new $37 million loan.
There’s also a 2nd lien of $18 million held by Bernard National Loan Investors as successor to D.B. Zwirn Special Opportunities Fund. It will be paid $1,025,000 under the proposed Chapter 11 exit plan.
DAG won’t go away completely empty-handed. It is to be paid $3.3 million for a senior second lien.
Unsecured claims by creditors such as Arbitron ($38K), Premiere Radio Network ($18K), Katz Radio ($17K) and ASCAP ($16K) are unimpaired and are to be paid in full.
Peak filed the usual “first day” motions so it can continue to meet payroll, pay routine bills and keep operating its stations normally.
RBR-TVBR observation: Timing matters. Todd Lawley launched Peak in 2006 and bought stations in Fresno, CA (from CBS for $90 million) and Boise, ID (from Clear Channel for $25 million) just before the “Great Recession” began in 2008. A couple of the Fresno stations were spun off to other buyers, but the remaining 11 stations in the two markets obviously wouldn’t bring prices like that today.