Spanish Broadcasting System (SBS ) Readies A Chapter 11 Bankruptcy Filing

By Adam Jacobson

Spanish Broadcasting System — the company founded in 1983 by Raúl Alarcón Jr. — has moved forward with a restructuring support agreement that sees it intend “to commence voluntary Chapter 11 cases” under U.S. bankruptcy code in a Delaware court.

According to documents posted to the SBS corporate website late Wednesday (4/8), the voluntary Chapter 11 filing will not impact operations, as Miami-headquartered SBS intends to continue employee wages and benefits while making “critical vendor payments.”

Importantly, SBS says it has received commitments from its “supporting investors” to provide debtor-in-possession financing that includes back-stop commitments and provide the company with liquidity during a forthcoming restructuring process.

The news came alongside the announcement that SBS on Friday (4/3) entered into a Restructuring Support Agreement with “certain funds and accounts” managed by Brigade Capital Management L.P., subsidiaries of Man Group plc and Bayside Capital LLC holding more than 72% of the outstanding principal amount of SBS’s 9.75% Senior Secured Notes due 2026, which is debt Spanish Broadcasting System was unable to timely repay.

That was shared on March 6, when SBS said it entered into a Forbearance Agreement with its supporting investors. This gave SBS time to discuss the maturity of the notes and how to best proceed with its only funded debt. Riveron RTS LLC is SBS’s restructuring capital advisor; GLC Advisors & Co. LLC is the restructuring investment banker.

Legal counsel for SBS is Fried, Frank, Harris, Shriver & Jacobson LLP and Morris, Nichols, Arsht & Tunnell LLP.

The supporting investors are represented by Milbank LLP, as legal counsel, and M3 Partners LP as financial advisor.

LARA RISES TO COO ROLE

With the news of the forthcoming Chapter 11 bankruptcy filing, SBS confirmed that Alarcón will remain CEO but could end up relinquishing his position as Chairman of the Board of Directors once the restructuring is complete. That’s because SBS anticipates that its new board of directors, post-bankruptcy, will be elected by company stockholders “in the manner set forth in” the restructuring support agreement.

The big takeaway is that Richard Lara, EVP/General Counsel and the key in-house legal figure at SBS, has been promoted to Chief Operating Officer. He’ll continue as CG of SBS, continuing to oversee legal affairs.

Courtesy of Radio TV Business Report