Ion Ponders Two Restructuring Proposals - Broadcasting & Cable

Ion Ponders Two Restructuring Proposals

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Ion Media Networks (formerly Paxson) has received another restructuring proposal, which it says it will consider along with another standing restructuring.

Last month, Citadel and NBC U proposed a restructuring of the company in which Citadel would take over Paxson's former interest in the company and become NBC's new partner in the network/station group.

NBC was required by FCC rules to deal Paxson's share to a third party.

Now, Ion has filed with the Securities and Exchange Commission (SEC), informing it that a group of preferred stockholders has proposed an alternative restructuring, possibly including chapter 11, a possibility Ion says is not in the cards.

In a release Tuesday that it also sent to the SEC, Ion said that it "does not face any liquidity issues that would compel it to resort to a Chapter 11 filing given that its debt obligations are being fully serviced and do not mature until 2012." It also pointed out that it can defer interest payments on a third of its debt, has a $650 million line of credit still available, and that the preferred stockholders aren't creditors and could not compel chapter 11.

Ion says Citadel, the largest single holder of preferred stock, does not appear to be part of the ad hoc group, which is led by venture capital firm AIG.

In an internal memo obtained by B&C, ION CEO Brandon Burgess told staffers not to sweat it.

"We are entering into an active phase of reducing our balance sheet obligations," he explained, "including identifying funding for growth initiatives. This process will take several months, if not more. We can expect to see public reports and campaigns around differing financing approaches, reflecting how various investor groups would like to see a refinancing implemented.

"For example, you may have seen recent reports on a second preferred stockholder group that has submitted an alternative proposal to the one we received from Citadel Investment Group. Both proposals involve a recapitalization, providing the company with greater financial flexibility and access to resources.

There is no need to be concerned about the process or the publicity, which in many cases will simply reflect investor groups negotiating with each other. Our board and its legal and financial advisers will take the various alternatives into consideration and determine the appropriate course of action."

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