S&P downgrades Granite Broadcasting

Standard & Poor's said it lowered Granite Broadcasting Corp.'s long-term corporate credit and senior secured bank loan ratings to CCC- from CCC. The outlook is negative.

S&P said the rating action recognizes that Granite's cash balances have eroded to $8.5 million at March and that, absent asset sales or changes to its capital structure, the company will not have enough cash to make its upcoming interest payment on June 1. The WB Network's decision to cease operations in September has made the pending sales of Granite's two WB-affiliated TV stations much less certain. Asset sale proceeds were expected to be used to help fund the company's operating needs.

The rating on Granite reflects very high financial risk from its marginal liquidity, onerous and expensive capital structure and discretionary cash flow deficits, the agency said. These factors are minimally offset by Granite's ownership of profitable major-network-affiliated TV stations.

Granite recently hired a financial advisor to help it explore strategic alternatives, including potential financing options and capital restructuring alternatives. S&P said it remains concerned that because Granite's portfolio of assets generated about $15 million of EBITDA in 2005 and its debt burden is more than $400 million, a potential asset sale or cash infusion will only be a temporary liquidity remedy.

Total debt to EBITDA is extremely high, approaching 30x at Dec. 31.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.