Granite Broadcasting files pre-packaged Chapter 11

By Caroline Salls

Pittsburgh, Dec. 11 - Granite Broadcasting Corp. filed for pre-packaged Chapter 11 bankruptcy on Monday in the U.S. Bankruptcy Court for the Southern District of New York.

According to a company news release, the pre-packaged plan of reorganization was negotiated with the company's secured debtholders.

"We operate competitive and profitable television stations, and despite our need to restructure our corporate balance sheet, we have continued to successfully grow the business," chairman and chief executive officer W. Don Cornwell said in the release.

"We have been candid about the company's need to restructure its corporate balance sheet. In that regard, we explored a wide range of alternatives, including the sale of stations formerly affiliated with The WB Network in San Francisco and Detroit.

"Our ability to sell those stations on an acceptable basis was directly impacted in January 2006 by The WB Network's announcement that it would cease operations. This unexpected and damaging decision forced us to seek other alternatives.

"Together with our financial advisor, Houlihan Lokey Howard & Zukin, we evaluated and exhausted a number of strategic options. However, we were unable to find an alternative long-term solution that would have permanently addressed our capital structure."

Cornwell also said in the release that the proposed plan of reorganization will reduce the company's corporate debt by more than $275 million to roughly $230 million.

Cornwell said the company expects to complete its restructuring by the first half of 2007 with additional resources to re-invest and grow its local television business.

Granite said it expects to emerge as a privately held company.

Under the plan, current secured debtholders will exchange their existing notes for a combination of new notes and new common stock.

Current common and preferred stockholders will exchange their existing stock for shares of the newly reorganized company.

The company lists $443.56 million in total assets and $641.1 million in total debt.

Granite's largest unsecured creditor is D.B. Zwirn Specialist Opportunities Fund, LP, New York, with a $30 million guaranty claim.

Granite's subsidiaries KBWB, Inc.; KBWB License, Inc.; WEEK-TV License, Inc.; WXON, Inc.; and WXON License, Inc. were also included in the filing.

Granite is a New York-based owner and operator of network-affiliated television stations. Its Chapter 11 case number is 06-12984.

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