Young Broadcasting lender opposes creditors' disclosure statement

By Alice Popovici

New York, Oct. 30 - Young Broadcasting, Inc. administrative agent, Wachovia Bank, NA objected to the disclosure statement submitted by the committee of unsecured creditors as part of its proposed Chapter 11 plan, according to a Thursday filing with the U.S. Bankruptcy Court for the Southern District of New York.

The bank said the committee plan is "not feasible and is unconfirmable," according to the objection. "The committee, controlled by distressed debt funds holding $484 million of subordinated unsecured notes, proposes to reinstate the lenders' $338 million senior secured claim, pay general unsecured creditors 5 cents on the dollar and keep all the equity in the reorganized [company] for the noteholders, except a 10% carveout of equity for current management," the motion continues.

"The hard reality is that the [company has] no way of repaying the $338 million in two and a half years, as they would be required to under the committee plan, and therefore the committee plan is not feasible."

As previously reported, holders of pre-bankruptcy lender claims will receive a distribution of $75 million face amount of five-year senior secured holding company notes, which will accrue interest at a rate of Libor plus 500 basis points.

Young Broadcasting said the lenders' $200 million credit bid has been selected as the prevailing bid for substantially all of the company's assets.

Holders of noteholder claims will receive warrants to purchase up to 2.5% of the equity interests of the reorganized company.

The warrants will mature in 2½ years, will have a $125 million spot price and will have a $225 million strike price.

The disclosure statement approval hearing is scheduled for Nov. 5, and the plan confirmation hearing will be held on Dec. 21.

New York-based Young Broadcasting owns 10 television stations and the national representation firm Adam Young Inc. The company filed for bankruptcy on Feb. 13, 2009. Its Chapter 11 case number is 09-10645.

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