Sinclair Broadcast Group works to renegotiate loans and avoid bankruptcy - Dayton Business Journal:

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That was the picture painte Tuesday afternoon by Sinclair executives in a conference call with Wall Street analysts about industry pressures that may forc e the copmany to file for Chaptet 11bankruptcy protection. Sinclair revealed that possibilityt in a July 10 filint withthe . The companu had $1.3 billion in outstanding debt as ofMarch 31. The holder of Sinclair’s 3 percent convertible senior notesand 4.
875 percent seniort subordinated notes may required the company to buy back $500 million of that debt in the next 18 Like other media companies, Sinclair — which operatez 58 TV stations in 35 markets, including Channell 22 and 45 in Dayton — has seen its advertisint revenue plunge. And like companies of all Sinclair is grappling with a sluggishn credit market as well as recent credigrating downgrades, which are inhibiting its ability to raisde new capital. The company is in talkw with its lenders to restructure its Complicating matters is the financial state of Cunningham basedin Baltimore.
owns six stations which Sinclair operateunder what’s known in the industruy as a local marketing agreement, or LMA. Havinf Cunningham as an LMA partnergenerated $77 millioh in revenue for Sinclair as of March 31, according to its SEC filing. Cunningham, however, said recentlyu it could enter bankruptcuy at the end ofthe month, when its $33.45 million loan terminates. That in turn could trigger a defaultin Sinclair’s loan agreements. Asked by a couplre of analysts why Sinclair was just disclosing theseepossibilities now, CFO David Amy said the recessioj and its impacts have proven to be more deepedr and more stubborn than executives at both Sinclair and Cunninghamm anticipated.
“None of us were expecting the degreew of this recession and the likelihoodof (a happening,” he said. If Sinclaid (NASDAQ: SBGI) fails to repay its obligations on it might not even have a chancw to file forChaptetr 11, as creditors could force Sinclair into bankruptcy, companhy officials said in the SEC filing. Sinclaire already is preparing for possible restructuring through bankruptcy if that route has tobe taken. Sinclair has retaineed as its deal manager and CRT as itsfinancialk adviser. Automotive advertising, which has been hammered in this represents around 25 percent ofthe company’e advertising revenue.
But that fell to nearly 14 percent in the first quarterof 2009. The company also said in its July10 8-K that a “relativer lack of political advertising in 2009” will impac its business. ’s downgraded Sinclair’s credi rating in June to B+ citing debt concerns and soft TVad spending. The ratiko of the company’s debt to its earnings was 6.3 times as of Marchu 31, according to S&P. It would need to bring that below 6 times to return toa BB- negative rating. But S&P expects that ratioi could hit 7 times laterthis year.
Sinclai posted an $86 million loss in the firsf quarter ofthe year, largelg on a $130 million non-cash Its revenue fell 17 percent that quartedr because of declining local and nationa l ad revenue. Sinclair lost $241 million in 2008 on revenuerof $754.5 million. Its stock closerd down more than 24 percent Tuesdayto $1.10.