Granite preferred stockholders elect directors, warn on capital structure

New York, Oct. 25 - Holders of Granite Broadcasting Corp.'s 12¾% cumulative exchangeable preferred stock have exercised their right to elect two directors to the board.

The holders, who include Harbert Distressed Investment Master Fund, Ltd., John Hancock High Yield Fund and funds managed by Somerset Capital Advisers, named Eugene I. Davis and Kirk W. Aubry.

The holders also warned about Granite's capital structure.

The holders have the right to elect two directors due to Granite's failure to pay required dividends on the preferred stock for more than three semi-annual dividend periods.

"We are very concerned about the direction of Granite. Selling assets to fund interest payments and continuing losses is not a viable business plan," said Philip A. Falcone, senior portfolio manager of Harbert, in a news release.

"Granite is highly leveraged and, with its current capital structure, we do not believe that it will be able to meet its ongoing and long-term obligations.

"In light of Granite's financial situation, we are extremely concerned about the anticipated uses of net proceeds expected to be received from the $180 million sale of the two WB-affiliated television stations recently announced by Granite.

"We believe that Gene Davis and Kirk Aubry, both of whom have significant experience in assisting companies in need of restructuring, will be able to assist the Granite board in exercising their fiduciary duties and making responsible decisions in managing the company's assets and operations."

Davis has been chairman and chief executive officer of Pirinate Consulting Group, LLC, a consulting firm that specializes in, among other things, crisis and turn-around management, mergers and acquisitions and strategic planning services, since 1999. He has also been chief executive officer, chief operating officer, president and director of a number of other companies in need of turn-around management services, Harbert said in the news release.

Aubry has also assisted companies in restructuring operations. He is currently the chief operating officer of Cadence Innovation LLC where he has worked since April 2005. From 2001 to 2003, Aubry was vice president of transformation for Textron, Inc.

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

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