Financial Troubles
In the company's annual report for 2007, released on April 2, 2008, Equity said that the company was in default on its credit lines, and that if it could not find additional financing it "will need to cease all or a portion of its operations, seek protection under U.S. bankruptcy laws and regulations, engage in a restructuring or undertake a combination of these and other actions." An earlier indication of Equity's troubles came one month previously when its board of directors appointed its chairman, Henry Luken, to replace Equity founder Larry Morton as president and CEO. Morton remained the chair, president and CEO of Retro Television Network.
Retro Television Network was sold to Luken's company, Luken Communications, on June 25, 2008. Luken Communications continued to operate RTN out of Little Rock, Arkansas as a client of Equity's C.A.S.H. system.
In June 2008, Equity instituted a companywide suspension of news programs.
In November 2008, Equity began attempts to sell all of its TV stations and cut most of the company's top management in a move which Chief Restructuring Officer Paul Brissette believed could allow the company a chance to avoid bankruptcy.
Equity filed for Chapter 11 bankruptcy on December 8, 2008 after the company defaulted on a loan worth $41.5 million. One of its creditors, Silver Point Finance, soon filed to change the bankruptcy from a voluntary Chapter 11 to an involuntary Chapter 7 in an attempt to foreclose on Equity assets, as they felt that there was no way Equity could reorganize under Chapter 11, nor did they have enough funds to cover payroll.
Silver Point ended its attempts to push the company directly into liquidation on December 23, in return for the appointment of Kim D. Kelly, a new Chief Restructuring Officer (CRO) who exerted near-total control to run the company and handle decisions on the sale of the individual stations.
Trading in Equity Media Holdings Corporation (EMDA.Q) common stock, units, and warrants were suspended on December 18, 2008; NASDAQ announced on January 15, 2009 that the Equity-related securities were de-listed permanently.
The sale of Equity's flagship Little Rock TV station KWBF (now Nexstar Broadcasting Group's KARZ-TV) closed at the end of January 2009; similarly named RTN radio station KWBF-FM had also been sold (to Flinn Broadcasting Corporation) and went silent on November 2008, later returning as KZTS under its new owner. Equity had also unexpectedly terminated a deal with the Southland Conference to carry Central Arkansas University basketball games on KKYK-DT, effective January 14, 2009.
Silver Point extended a $58 million "debtor in protection" loan on February 2, 2009 to keep Equity on-air under chief restructuring officer Kim D. Kelly, but at a hefty interest rate premium: 8% above the current London Interbank Offered Rate. The chief restructuring officer was not answerable in any way to Equity's board.
On April 10, 2009, Equity announced an auction of all its stations, held on April 16 in Dallas. About 60 stations (counting repeater transmitters) were sold (subject to FCC approval) at a total of $21.3 million.
Read more about this topic: Equity Media Holdings
Famous quotes containing the words financial and/or troubles:
“What people don’t realize is that intimacy has its conventions as well as ordinary social intercourse. There are three cardinal rules—don’t take somebody else’s boyfriend unless you’ve been specifically invited to do so, don’t take a drink without being asked, and keep a scrupulous accounting in financial matters.”
—W.H. (Wystan Hugh)
“Now when Job’s three friends heard of all these troubles that had come upon him, each of them set out from his home—Eliphaz the Temanite, Bildad the Shuhite, and Zophar the Naamathite. They met together to go and console and comfort him.”
—Bible: Hebrew, Job 2:11.