A judge approved a proposal for a cadre of secured lenders to take over the Young Broadcasting stations in bankruptcy court in lower Manhattan this afternoon, clearing a significant hurdle toward completing the deal. The plan sees the lenders, including Wachovia, Oppenheimer, Eaton Vance and Credit Suisse, to acquire the 10 stations for $220 million. It also would have Gray Television manage seven of the 10 for an annual fee of $2.2 million and incentive fees.
According to court documents, Young’s KRON San Francisco, WATE Knoxville and WLNS Lansing are not part of the Gray management deal.
The proposal would keep Vincent Young in place as chairman and CEO and decrease the Young board from eight people to five: two existing members, two appointed by the lenders (to be approved by the current board) and Young himself. “We look forward to Vincent Young’s continued role,” said Sonnenschein Nath & Rosenthal attorney Peter Wolfson, who is representing Young Broadcasting.
Judge Arthur J. Gonzalez signed off on the bid at 1:30 today, 90 minutes after the hearing commenced. Next up is an official order from the court, which takes around 90 days, and the approval of the FCC.
Throughout the proceedings, Vincent Young, in a blue pinstriped suit, sat in the gallery with his hands folded on his lap and a calm expression on his face.
Wolfson said that negotiations were still going on late last night and even this morning, as the unsecured creditors pushed for alternative agreements to the one involving the secured creditors. “We’ve been negotiating literally up to the 11th hour on plan alternatives with the unsecured credit holders’ committee,” he told the judge.
The unsecured creditors, represented by Andrew Rosenberg of the law firm Paul, Weiss, Rifkind, Wharton and Garrison, filed an objection to the sale’s approval this morning. “The debtors have failed to meet their burden that there is a ‘good business justification’ for an immediate sale of all the Company’s assets outside of a plan of reorganization,” the objection read.
Much of the hearing centered on Young Broadcasting’s finances and the need to get the deal done quickly. The company has $348 million in senior secured debt and $18.6 million in the bank. If the acquisition takes a long time to wrap up, there was concern that Young would not have enough cash to cover the administrative costs connected to the closing. While the broadcaster has enough capital to run its business into next year, the attorneys stressed, it might be in jeopardy of being able to cover the deal’s closing costs by the end of October.
Wolfson seemed pleased with the day’s progress. “Now we can start to proceed forward on closing,” he said moments after the verdict.
Additional reporting by Brent Felgner.