Spanish Broadcasting System hired Juan Garcia as an executive vice president to develop and execute re-finance strategies.
He comes after Moody’s Investor Services downgraded several SBS ratings and NASDAQ warned of a potential delisting.
Moody’s lowered its liquidity rating for SBS in January (from SGL-4 to SGL-3) and also downgraded the company’s $275 million in senior secured notes given the “heightened potential for payment default given the near term maturity” of those notes which are due next April. It changed its outlook for SBS from stable to negative.
The company is under restrictions limiting its ability to incur debt, make certain payments or undertake mergers.
SBS has filed applications with the FCC to take part in the spectrum incentive auction in Miami, Houston and Puerto Rico to potentially raise cash, however Moody’s doesn’t “count” this because of the uncertainty surrounding the auction.
“Operating performance through September 30, 2015 reflects continued revenue declines in radio and television due to a decrease in scheduled events, paid programming, and local sales. Free cash flow generation remains nominal which reduces the company’s ability to accumulate cash or pay down debt,” said Moody’s.
The NASDAQ delisting warning came in January as well because the value of the SBS common stock fell below the $15 million minimum for 30 consecutive days; the company has until July 26 to regain compliance and faces potential delisting.
SBS granted Garcia non-qualified stock options to purchase 75,000 shares of Class A common stock. Options for 25,000 shares will vest on the first, second and third anniversaries of the effective date of his employment agreement. The exercise price for the 10-year options is $2.99. They automatically vest is he’s terminated without cause or resigns after a change in control.