Sinclair Television wraps tender offer for 3%, 4.875% convertibles

By Jennifer Chiou

New York, Nov. 6 - Sinclair Broadcast Group, Inc. subsidiary Sinclair Television Group, Inc. announced the conclusion of the tender offers for the company's $294.3 million of 3% convertible senior notes due 2027 and its $143.5 million of 4.875% convertible senior notes due 2018.

The offers expired at midnight ET on Nov. 5. They began on Oct. 8.

In all, the company tallied tenders for $266.6 million, or 90.6%, of the 3% notes as well as $106.5 million, or 74.21%, of the 4.875% notes.

Holders of the remaining $27.7 million of 3% notes and the $37.0 million of 4.875% notes may require the company to repurchase their notes at par in May and January 2011, respectively.

The purchase price was $980 for each $1,000 principal amount of convertibles plus accrued interest up to but excluding the Nov. 9 settlement date.

In May, the company said it was exploring alternative solutions for the noteholders' upcoming put options.

In July, Sinclair disclosed that its cash would not be enough to repurchase the convertibles if they are put and that it was experiencing difficulty in raising new funds. It said it had begun planning for a potential restructuring, including a possible bankruptcy filing.

As already noted, the company met with members of an ad hoc committee of convertibles holders on Aug. 10 and reached a tentative agreement that included plans for the tender offer. The committee consisted of holders of about 50% of the outstanding principal amount of the convertibles.

The company previously noted that the terms of the tender offer are different than the terms negotiated with the ad hoc committee, but it said the committee supports the current terms.

Under the terms that were discussed, the purchase price was going to be $935 per $1,000 principal amount of 3% convertibles and $900 per $1,000 principal amount of 4.875% convertibles.

Sinclair funded the tender offers with the proceeds from a private placement of second-lien notes.

The offers were conditioned on, among other things, the receipt of enough proceeds to fund the offers and an amendment of Sinclair's credit facility to allow the issuance of the second-lien notes. They were not conditioned on the tender of a minimum principal amount of convertibles.

Previously, the company entered into a non-binding memorandum of understanding with Cunningham Broadcasting Corp., its local marketing agreement partner in six markets. In July, Sinclair had warned that Cunningham was facing a potential bankruptcy that would cause a default under Sinclair's bank credit agreement and might result in the rejection of Sinclair's local management agreements with the company.

Under the memorandum of understanding, Cunningham had already agreed to not seek to reject the local marketing agreements in a bankruptcy proceeding until the companies have had a reasonable amount of time to negotiate mutually agreeable amendments to the agreements.

J.P. Morgan Securities Inc. (800 245-8812 or 212 270-3394) was the dealer manager for the tender offers, and MacKenzie Partners, Inc. (212 929-5500) was the information agent.

Sinclair is a television broadcasting company based in Baltimore.

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