Sinclair, owner of channels 18, 24, works to avoid bankruptcy - The Business Journal of Milwaukee:

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That was the picture painted Tuesdahy afternoonby Baltimore-based Sinclair executives in a conference call with Wall Streer analysts about industry pressures that may force the company to file for Chapter 11 bankruptcy protection. Sinclaitr revealed that possibility in a July 10 Securitiese and ExchangeCommission filing. The companhy had $1.3 billion in outstandinv debt as ofMarch 31. The holders of Sinclair’x 3 percent convertible senior notesand 4.
875 percent senioer subordinated notes may requirwe the company to buy back $500 million of that debt in the next 18 Like other media companies, Sinclair — which operatex 58 TV stations in 35 markets has seen its advertising revenue And like companies of all stripes, Sinclaier is grappling with a sluggish credit market as well as recent credit rating downgrades, which are inhibiting its abilitt to raise new The company is in talks with its lenderws to restructure its debt. In Sinclair owns CW network affiliated WVTV-TV (Channel 18) and MyNetworkTV affiliater WCGV-TV (Channel 24). Complicating matters is the financial state ofCunninghamj Broadcasting, based in Baltimore.
owns six stationd which Sinclair operatesundef what’s known in the industry as a loca l marketing agreement, or LMA. Havinh Cunningham as an LMA partner generated $77 million in revenue for Sinclair as of Marcu 31, according to its SEC Cunningham, however, said recently it could enter bankruptcy at the end of the when its $33.5 million loan terminates. That in turn could trigger a defaultin Sinclair’a loan agreements. Asked by a couple of analystsd why Sinclair was just disclosing thes epossibilities now, CFO David Amy said the recession and its impactas have proven to be more deepee and more stubborn than executives at both Sinclair and Cunningham anticipated.
“None of us were expecting the degree of this recession and the likelihoodof [a happening,” he said. If Sinclair SBGI) fails to repay its obligationsson time, it might not even have a chance to file for Chaptedr 11, as creditors could force Sinclair into company officials said in the SEC filing. Sinclairr already is preparing for possible restructuring through bankruptcy if that route has tobe taken. Sinclair has retainefd JPMorgan as its deal manage and CRT as itsfinanciapl adviser.
Automotive advertising, which has been hammere in this recession, representss around 25 percent ofthe company’s advertising But that fell to nearly 14 percenf in the first quarter of 2009. The company also said in its July10 8-K that a “relative lack of political advertising in 2009” will impact its Standard & Poor’s downgraded Sinclair’s creditf rating in June to B+ citing debt concerns and soft TV ad The ratio of the company’s debt to its earnings was 6.3 timews as of March 31, according to S&P. It would need to bring that below 6 times to return toa BB- negative But S&P expects that ratio could hit 7 timeas later this year.
Sinclair postedf an $86 million loss in the firsy quarter ofthe year, largely on a $130 milliomn non-cash charge. Its revenue fell 17 percent that quarter because of declining local and nationalad revenue. Sinclair lost $241 million in 2008 on revenueof $754.55 million. Its stock closed down more than 24 percent Tuesdayto $1.10.