NEW YORK — On Monday (5/15), Spanish Broadcasting System notified the Securities and Exchange Commission that it needs more time to complete its Q1 2017 quarterly report, which was due by the close of the day.
Today, company executives won’t be crunching the numbers. Instead, they’ll be showing off their programming and on-air talent with clients and advertisers at an Upfront presentation featuring an appearance from the biggest Latin recording artist on the planet: Luis Fonsi.
The Upfront, a rarity for the radio industry, comes following a glowing presentation this morning from Univision Communications that focused squarely on its TV networks, with a brief mention of Univision Radio’s regional Mexican stations. It also follows NBCUniversal network Telemundo‘s Monday Upfront presentation, capped with a private concert from Enrique Iglesias.
Fonsi, responsible for perhaps the biggest global Spanish-language hit in history, “Despacito,” will take the stage at The Copacabana in Times Square after presentations from SBS’s two New York radio stations, Tropical WSKQ-FM “Mega 97.9” and Spanish Contemporary Pop WPAT-FM “93.1 Amor”; the LaMusica App; and SBS’s syndication arm, Aire Radio Networks.
SBS did not share details of what it will bring to clients and marketers at its Upfront.
One thing is certain: Advertisers will likely be unfazed as to the financial situation at Miami-based SBS.
It’s been a rocky ride for SBS, which saw its stock delisted from Nasdaq in January. Now on the OTC Markets as “SBSAA,” it immediately tumbled from $2.40 a share and bottomed out at 40 cents per share on April 26.
Two days earlier, on April 24, Moody’s Investors Service downgraded SBS’s probability of default rating (PDR) to D-PD from Caa3-PD—following the company’s announcement that is there was an event of default under the company’s note indenture following note maturity on April 15.
The company’s Corporate Family Rating (CFR) was downgraded to Ca from Caa2, the senior secured notes rating was downgraded to Ca from Caa2, and the preferred stock rating was downgraded from Ca to C.
The outlook remains negative.
Moody’s explains, “SBS’s Ca corporate family rating reflects an elevated expected loss rate following the recently announced default under the company’s 12.5% senior secured notes due April 2017. The company announced the default in its 10K filing on April 20, noting that it has engaged financial and legal advisors in evaluating its recapitalization options. In addition, the company has initiated conversations with representatives of the noteholders and holders of its preferred stock regarding the recapitalization.”
Moody’s views these actions “as increasing the likelihood of a bankruptcy filing, with reduced expected recovery of proceeds to the noteholders.”
As of Noon Eastern, SBS shares are at 74 cents.
With the inability to file its Form 10-Q prior to yesterday’s SEC filing deadline “without unreasonable effort or expense” due to its needing more time to analyze and complete the disclosures relating to the consequences of its failure to repay its senior secured notes facility, SBS expects to file the Form 10-Q no later than the fifth calendar day following the required filing date, as permitted by SEC Rule 12b-25.
As Luis Fonsi belts out “Despacito,” which is Spanish for “slowly,” the song’s title may prove to be a somewhat fitting title for the time it will take for the company’s full financial rebound.