With the grace periods for payments skipped on two debt issues due to expire this week, Young Broadcasting late Friday filed for Chapter 11 reorganization. The filing in the US Bankruptcy Court in Manhattan will protect the company from its creditors as it works to reorganize its finances. Young has been operating under a crushing debt load since acquiring KRON-TV San Francisco for a record $820 million in 2000.
The company gave up its Nasdaq listing last month, with its stock trading for just a few pennies per share. It skipped a $6.125 million interest payment in January and early this month another for $4.513 million. The company said it was negotiating with its creditors on restructuring its finances. But those talks apparently didn’t get to the finish line. Young would have been in default when the grace periods for those missed payments expired this week, so it put its creditors on hold by filing Chapter 11.
“Our decision to restructure through a Chapter 11 filing will allow the Company to bring its debt in line with current economic realities so that we can emerge a stronger and more financially secure company. It is important to note that we are restructuring our debt, not our operations. We believe that the Company will emerge from Chapter 11 better equipped to thrive in this changing economic environment with less leverage. I strongly believe that our Chapter 11 filing is in the best interests of Young Broadcasting, its viewers, advertisers, employees, and other key constituents,” said Vincent Young, Chairman of Young Broadcasting.
Silver Point Capital is believed to have amassed a large holding in Young’s debt at discounted prices. Silver Point already owns Granite Broadcasting, following its Chapter 11 restructuring.
Young Broadcasting owns ten television stations and the national television representation firm, Adam Young Inc. Five stations are ABC affiliates: WKRN-TV – Nashville, TN, WTEN-TV – Albany, NY, WRIC-TV – Richmond, VA, WATE-TV – Knoxville, TN, and WBAY-TV – Green Bay, WI. Three are CBS affiliates: WLNS-TV – Lansing, MI, KLFY-TV – Lafayette, LA and KELO-TV – Sioux Falls, SD. KELO also has MyNetworkTV on a DTV multicast.) KWQC-TV Davenport, IA is Young’s only NBC affiliate. Its biggest station, KRON-TV San Francisco, is a MyNetworkTV affiliate.
RBR/TVBR observation: Not a surprise to anyone. Young’s stock has long been trading as nothing more than a lottery ticket. Pay a few pennies for a bet that the company will survive. Once the company gave up on finding a buyer for KRON, it was clear that the creditors were going to end up as owners. It’s doubtful that the shareholders will come out with anything, so if you bought a share on Friday, you’re out four cents.