Granite says restructuring plan is likely before end of the year

By Jennifer Lanning Drey

Eugene, Ore., Aug. 2 - Granite Broadcasting Corp. expects to announce a restructuring plan before the end of the year, according to Larry Wills, chief financial officer for the company.

The company is currently looking at strategic options including new financing or balance sheet restructuring, said W. Don Cornwell, chairman and chief executive officer of Granite, during a company conference call held Wednesday.

Granite has $504 million in outstanding debt, according to Wills.

The company's debt includes a $70 million bridge financing agreement Granite entered earlier this month, in part to purchase WBNG, Channel 12, the CBS-affiliated television station serving Binghamton and Elmira, N.Y., he said.

As previously reported, the facility includes a $40 million tranche A term loan and a $30 million convertible tranche B term loan, and both term loans mature on Dec. 1.

"At the end of the day, we're going to have to restructure the balance sheet," Wills said.

Granite also reported second quarter results Wednesday that exceeded its previous guidance, with net revenue increasing by 0.8% to $26.9 million during the quarter, according to a company news release.

The growth is primarily attributable to local initiatives taken by the company and incremental political advertising, said Cornwell.

A decrease in domestic automotive spending and reductions in network compensation offset other increases in revenues during the quarter, but the company expects to continue to see growth in the coming quarters, he said.

"While we continue to face the challenge of softness in domestic automotive spending and the impact of reduced network compensation, we expect healthy growth in advertising revenue, broadcast cash flow and margins for the third quarter and full year," Cornwell said.

Granite also expects to see a third quarter boost from its acquisition of WBNG, Channel 12, he said.

"The Binghamton acquisition was completed last week, and we continue to work with our financial and legal advisors to evaluate our strategic options including financing and balance sheet restructuring alternatives," said Cornwell.

Granite reported that it has decided not to sell its station in Detroit because the station has demonstrated a significant turnaround and positive operating results.

The company will continue to seek opportunities to sell its station in San Francisco.

The company expects third quarter net revenue to increase by 10% to 12%," Wills said.

Granite's corporate restructuring costs for the second quarter were $965,000.

Granite is a New York-based owner and operator of network-affiliated television stations.

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