Regent Communications has asked Federal Bankruptcy Judge Kevin Gross to deny a motion by Resilient Capital Management for appointment of a special committee to represent the interests of current shareholders. Resilient is pressing for a revised reorganization plan which would pay shareholders more than the 12.8 cents per share they would receive under the current plan.
“The Debtors are insolvent. Appointing an official committee of equity security holders will not change that fact,” Regent said in its objection to the Resilient motion. It said nothing will stop Resilient from having its day in court – literally – and that Regent is prepared to defend the Chapter 11 reorganization plan at its Confirmation Hearing, where Resilient is free to make its case that the valuation of the radio company prepared by Oppenheimer & Co. is wrong.
“Ironically, Resilient’s own actions may jeopardize the gift to equity that management and the Board of Directors fought to obtain,” Regent warned, should Resilient succeed in delaying the current fast-track bankruptcy proceeding. The $5.5 million payout to current Regent shareholders, which is about 12.8 cents per share, is stated to be a “gift” from the senior creditors, since the value of Regent’s assets under the Oppenheimer analysis is less than its $211 million of debt.
In its opposition, Regent defended the exclusion of Beasley, Emmis and Spanish Broadcasting System from Oppenheimer’s valuation. Beasley, it said, is family controlled and has a limited public float; Emmis obtains only 61% of its revenues from US radio and has balance sheet issues of its own; and Hispanic media companies such as SBS have historically traded at a premium to general market media companies. Resilient had argued that they should have been included because they are closest in size to Regent. The Oppenheimer valuation used Cumulus Media, Entercom, Radio One, Saga and Salem as “comparable” publicly traded companies. Regent also accused Resilient of using out-of-date or incorrect data for portions of its valuation analysis.
On the same date (April 2) that Regent filed its opposition to the Resilient motion to appoint a committee of shareholders, Resilient filed a 16-page objection to the pending Regent reorganization plan. However, the meat of the filing was in three pages of redacted material, plus several exhibits, which Resilient has asked the court for permission to file under seal. Resilient said the redacted material contained non-public financial information about Regent which Resilient representatives were permitted to see only after signing a confidentiality agreement.
In the public portion of its filing, however, Resilient again argued that the Oppenheimer valuation was flawed and that Regent’s assets are actually worth more than its debt load.