Alpha Media has submitted its opposition to Larry Wilson and Paul Stone’s petitions to deny against the company’s bankruptcy restructuring.

Alpha goes after each of Wilson’s allegations and the legal precedence to defend them. An early paragraph summarizes their defense, “In short, when one peels away the bombast of Wilson’s Petition, it is clear that Wilson is inappropriately using the agency as a platform for rehashing his differences with certain members of the Company’s Board of Directors and management, and vainly attempting to shoehorn assessment of his personal grievances into the Commission’s processes under the guise of spurious claims that Alpha is unfit to hold its broadcast licenses. Moreover, his assertions are false. For Stone’s part, he simply criticizes the FCC’s well-established policy of promoting companies’ ability to promptly emerge from bankruptcy where further regulatory review of foreign ownership interests is required, a policy that is grounded in public interest considerations and comity with the bankruptcy laws.”

Alpha alleges that neither Wilson nor Stone have standing as a party of interest in the bankruptcy case as they as minority shareholders should have presented their case to the bankruptcy court and that Wilson as a lawyer should have known that the FCC does not get involved in private contractual matters. Alpha also comments that Wilson’s petition presented no evidence that raises legitimate concerns that Alpha was untruthful or misrepresented themselves to the agency.

Alpha writes, “it strains credulity to suggest that a longstanding Commission licensee with a record of compliance would abruptly depart from that path, that its directors would shun their fiduciary duties, and that Alpha would deliberately place itself in legal jeopardy. Wilson’s claims in this regard are not only not credible, but also reckless and misleading. Alpha’s emphasis on doing the right thing when it comes to abiding by FCC rules and regulations did not simply evaporate when Wilson left the Company.”

Alpha emphasizes that denying their applications for the restructuring or designating them for hearing would “serve to only prolong” their Chapter 11 proceedings.

The full response can be read here.

Original Report 4/15: Alpha Media founder and former Chairman/CEO Larry Wilson has filed a Petition To Deny with the FCC against the company’s Chapter 11 bankruptcy restructuring.

In the filing, Wilson accuses Alpha Media’s Board of Directors of multiple violations including making false certifications on multiple FCC applications, transferring control of the company’s operations without Board approval to a “Special Independent Committee” without seeking FCC approval for transfer of control, and “pursuing a foreign ownership structure set out in the above-captioned applications with the purpose and intent to freeze the current Alpha domestic shareholders out of the company and for the sole benefit of Alpha management, private equity investors, and foreign entities”.

Wilson “stepped down” as Chairman of Alpha Media in July 2018 after forming the company’s predecessor Alpha Broadcasting in 2009 with the purchase of CBS Radio’s and Rose City Radio’s stations in Portland. In the filing Wilson details what he believes led to his exit from the company in particular his clashes with Stephens Capital Partner’s Noel Strauss, a member of the company’s Board of Directors.

Wilson alleges that at the behest of Strauss and fellow director Breakwater Investment Management’s Saif Mansour, the company failed to hold a Board of Directors meeting from mid-2018 to early 2019 as required by the company’s governing documents, “purported to fire” Wilson as Chairman despite never holding the necessary board vote to do so, entered into a loan agreement with Intermediate Capital Group that required the company to divest $110 million worth of assets without the necessary board approval. Wilson claims that he had an alternate proposal in which former Digity CEO Dean Goodman and Southern Stone Communications CEO and Alpha board member Paul Stone would have invested $30 to $40 million themselves into Alpha in exchange for equity in the company. That proposal was claimed to have been rejected without being proposed to the board to not “dilute the equity interests of the two entities they represented”.

Wilson alleges that the divestitures including the $80 million sale of their West Palm Beach cluster to Hubbard all were done without necessary corporate authorization. Wilson and another former board member notified that the violations included false representations made to the FCC and belatedly called a meeting in January 2019 to ratify the divestitures and authorize the FCC filings although Wilson wrote to the company’s CFO, “To vote in favor now is an admission that the agreement was not properly approved and clear evidence that the FCC has been misled by Alpha.” Following the meeting Wilson resigned from the Alpha Media Board of Directors.

Wilson then claims that the company adopted a Fifth Amended and Restated Limited Liability Company Agreement over the dissent of all minority shareholders which eliminated the core fiduciary duties of each board member and created a “Special Independent Committee” comprised of Strauss and Mansour with full power and authority to make significant decisions “regarding any proposed transactions to restructure, reorganize, or recapitalize the Company.” He states that the committee accepted Intermediate Capital Group’s prepackaged bankruptcy plan without the knowledge or approval of any of the minority shareholders and that the two directors and Alpha President/CEO Bob Proffitt “may well have effectively transferred control of Alpha to ICG” ahead of the filing as “the current lack of corporate transparency has foreclosed the acquisition of facts regarding Petitioner’s belief that Alpha is continuing to operate outside the dictates of its governing documents.”

Wilson and a separate petition to deny filed by Paul Stone also claim that the restructuring attempts to circumvent the FCC’s 25% limit on foreign investment before requesting a petition for declaratory ruling. Stone writes, “Alpha is asking the Media Bureau to essentially undercut the balance and sanctity of this new process by granting it a temporary waiver of the requirement to demonstrate that its proposed foreign ownership is in the public interest.” Stone is concerned that if the FCC were to later determine Alpha’s foreign ownership is not in the public interest coming into compliance later would be complicated as the Bankruptcy Court has already approved the restructuring which is not contingent on a grant of a declaratory ruling in surpassing the 25% foreign ownership limit.

Wilson’s full petition can be read here.

Update 4/16: Alpha Media has responded with a brief statement.

“While we believe the petition is based on inaccurate information and baseless claims, Alpha Media remains squarely focused on serving our communities and operating our radio stations across the United States. Our core business continues to perform well despite current market challenges, and we are proud of what all our teams have accomplished in delivering dynamic, diverse and exciting content to our communities. We continue to achieve significant progress in our financial restructuring process, which has been confirmed by the Court and best positions Alpha Media with strong financial partners to navigate current market conditions and pursue growth opportunities.”