Despite an attempt by one investor to block the deal, Granite Broadcasting has secured regulatory approval of the sale of two stations the company desperately needs to complete by next Friday to avoid Chapter 11.
The Federal Communications Commission Friday signed off on the transfer of its WB affiliates WDWB Detroit and KBWB San Francisco.
An investor group, including four private-equity firms, agreed to pay $150 million in cash after an earlier $190 million deal collapsed. Kevin O’Brien, former Cox and Meredith executive, is behind the deal.
Completing the deal is critical for Granite. The company lacked the cash to make a $19.7 million interest payment June 1. The loan agreement gives the company a grace period that expires Friday (June 30). If it doesn’t pay, Granite will be in default and investors owning $405 million in notes can demand immediate repayment.
One investor is trying to derail the sale.
Investor Harbinger Capital Partners has sued to block the sale in Chancery court, worried that the deal will leave Granite in a crippled financial position. Harbinger also tried – but failed -- to thwart Granite at the FCC, arguing that even if Granite's sale is approved, it will eventually file for bankruptcy anyway, making the sale a "fraudulent conveyance."
Granite countered that Harbinger is trying to drive it into bankruptcy.
The FCC said it would not hold up the transaction on the speculation that a bankrupcty court would move to block the sale, and that the parties are fully qualified and the sale in the public interest.--John Eggerton contributed to this report.