SBS Sees Strong Q4 As Recapitalization Plan Is Revealed


Just after 6pm Eastern on Wednesday (4/19), Spanish Broadcasting System (SBS) at long last revealed its Q4 and FY2016 financial results, ahead of a conference call with key company leaders set for 11am Eastern on Friday (4/21).

Along with the results came a recapitalization strategy.

In short, SBS is working with a team of financial and legal advisors in evaluating all options in executing a comprehensive recapitalization plan.

These options include, but are not limited to:

  • Selling certain non-core assets (whose net proceeds would be used to repay a portion of outstanding notes)
  • New financings (including debt, equity-linked securities and equity offerings)
  • An exchange offer with the holders of company notes, with or without exit consents to amend the terms of the indenture under which the notes were issued (the “Indenture”), use of cash on hand, and a combination of these options.


“We have been pursuing the sale of certain non-core assets, including certain of our television stations and real estate assets,” the company said, referring to its MegaTV operation.

In connection with SBS’s recapitalization plan, it has initiated conversations with representatives of its noteholders and holders of its 10¾% Series B Cumulative Exchangeable Redeemable Preferred Stock regarding these matters.

SBS did not repay the notes at their maturity, as a result of which there was an event of default under the Indenture on Monday (4/17), the payment date following the April 15 maturity date.

Additionally, SBS is in default with the security agreement covenant relating to deposit account control agreements and the related indenture covenant regarding compliance with the security agreement.

Furthermore, SBS is in default under the Future Guarantors covenant of the Indenture (though it has delivered documentation to the trustee to have the subsidiary become an additional guarantor of the notes).

The notes will continue to earn interest after the maturity date.

The recapitalization strategy comes as SBS saw its consolidated revenue improve 5% in Q4, to $42.1 million from $40.3 million. Radio revenue climbed 3%, to $37.5 million from $36.4 million. Local sales increased in SBS’s Chicago, Miami New York and Puerto Rico markets.

Adjusted OIBDA jumped by 88%, to $18.7 million from $9.9 million.

For the full-year of 2016, consolidated revenue slipped 2%, to $144.6 million, as radio revenue declined 3%, to $129.5 million. Television revenue was up 14%, to $15.1 million, in 2016.

Full-year OIBDA was up 21% on a consolidated basis, to $47.5 million, with Radio OIBDA climbing 14%, to $56.6 million.

“Our fourth quarter results marked the end of a highly successful year for SBS as we generated our strongest performance in over a decade,” said Raúl Alarcón Jr., SBS’s Chairman/CEO.