After agreeing last month to a Restructuring Support Agreement with its creditors that was to include a pre-packaged bankruptcy, Spanish Broadcasting System filed for Chapter 11 bankruptcy protection today.
SBS says it has secured the support of holders of more than 90% of the outstanding principal amount of its secured notes, which is the Company’s only funded debt, and has solicited and expects to obtain approval of its plan of reorganization on an expedited basis. The plan provides f”or a comprehensive balance sheet restructuring that will significantly reduce the Company’s debt and position it for long-term success. Under the Plan, holders of the Notes will receive 100% of the common stock in the reorganized Company and up to $70 million in new secured notes”. Existing equity interests in the Company will be cancelled.
All other creditors are expected to be unimpaired and trade creditors will be paid in full in the ordinary course of business for goods and services provided post-filing.
SBS CEO Raúl Alarcón said, “This restructuring represents an important step forward in strengthening our balance sheet and positioning the Company for the future. We have strong alignment with our key stakeholders and a clear path to emerge with a significantly strengthened capital structure.”
As part of the previous agreement, Brigade Capital Management LP and subsidiaries of Man Group plc, and Bayside Capital LLC, currently hold in excess of 72% of the outstanding principal amount of its 9.750% Senior Secured Notes due 2026. They will receive 100% of the common stock in the reorganized company subject to issuances of equity to Company management pursuant to a new management incentive plan, and new secured notes issued by the reorganized company. Alarcón will continue his leadership of the Company in his role as Chief Executive Officer, and will continue to serve as Chairman of the board of directors through the consummation of the restructuring. General Counsel Richard Lara was promoted to Chief Operating Officer.
