White Knight Broadcasting must file reorganization papers

[PelicanGuy 117]

TV station parents told to file reorganization

 

By TED GRIGGS

(Baton Rouge) Advocate business writer

Published: Mar 8, 2007

 

The parent companies of Baton Rouge NBC affiliate WVLA-TV and Fox affiliate WGMB-TV must file a reorganization plan by Wednesday detailing the plans to remove the companies from the protection of U.S. Bankruptcy Court.

 

The companies have more than $400 million in debt, court records show.

 

Bankruptcy court records show Communications Corp. of America and White Knight Broadcasting hope to raise as much as $100 million by selling two or three of the companies’ 23 TV stations in Louisiana, Texas and Indiana.

 

“It’s more likely that the sale will generate $75 million to $80 million,” said William Patrick III, the attorney for Communications Corp.

 

Among its holdings, White Knight owns WVLA-TV Channel 33 and independent KZUP-TV Channel 19 in Baton Rouge.

 

Communications Corporation of America owns Fox affiliate WGMB-TV Channel 44 and WBRL-TV Channel 21 in Baton Rouge and Fox affiliate KADN-TV Channel 15 and KLAF-TV Channel 17 in Lafayette.

 

The companies say they operate independently but say the firms are connected through a variety of arrangements, including sharing service agreements. In addition, Communications Corporation provides accounting and billing services for White Knight.

 

By selling the stations, the companies will be able to reduce the $230 million owed senior lenders to a manageable level, Patrick said. The companies can then refinance the remaining debt or work with another lender to take on the secured debt.

 

For now, Communications Corporation and White Knight have the exclusive right to file a reorganization plan. It is unclear whether the companies will be able to get their creditors to sign off on the plan.

 

Mike Crawford, the attorney representing the unsecured creditors committee, said it is too early at this point to say whether the committee will support the Communications Corporation-White Knight plan.

 

Although the companies have made their plans known in general, the details remain to be seen, Crawford said.

 

GE Capital Corp. is acting as agent for the senior lenders. Attorneys for GE declined to comment on the case.

 

However, court records show that Janet E. Henderson, the lead attorney for GE, expressed doubts about the Communications Corporation-White Knight proposal.

 

“There is a very ‘Through the Looking Glass’ feel to this,” Henderson said, according to the transcript of a Feb. 2 hearing.

 

“Through the Looking Glass” is the sequel to “Alice’s Adventures in Wonderland.” In the second book, Alice encounters a world where everything is reversed.

 

The principals of Communications Corporation and White Knight want to emerge from reorganization still owning the companies, carrying more than $400 million in debt, and no way to service that debt, Henderson said in the hearing.

 

Communications Corporation and White Knight had asked the bankruptcy court to give the companies until April 30 to file a reorganization plan and disclosure statement and to sell the stations by the end of June.

 

However, Judge Steven V. Callaway issued an order Friday requiring the reorganization plan by Wednesday, likely accelerating the remainder of the reorganization.

 

Patrick said the companies would have liked more time but believe they can meet the earlier deadline.

 

Communications Corporation and White Knight are working with a broker and are making progress in selling the stations, Patrick said. The companies believe they can accomplish the reorganization.

 

Crawford said he is cautiously optimistic that White Knight and Communications Corporation will emerge from reorganization, and he expects the pace will pick up in the next few months.