Spanish Broadcasting System said on April 8 that it intends to commence voluntary Chapter 11 cases in a Delaware court, a move that puts one of Miami’s best-known Spanish-language broadcasters into court protection while it works through a restructuring. The company said the filing will not affect operations.
The company also said it will keep paying employee wages and benefits and make critical vendor payments as the case proceeds, while it relies on debtor-in-possession financing from its supporting investors to provide back-stop commitments and liquidity during the restructuring process. For a broadcaster that has been operating since 1983, the message was clear: the station group plans to keep the lights on while it tries to repair its balance sheet.
The filing comes after SBS was unable to timely repay its 9.75% Senior Secured Notes due 2026, the only funded debt on its books. On April 3, the company 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. Those investors hold more than 72% of the outstanding principal amount of the notes, giving the agreement enough weight to shape the bankruptcy process before it begins.
SBS said it had already reached a forbearance agreement with its supporting investors on March 6, signaling that negotiations over the debt were under way before the bankruptcy plan was made public. The company’s advisers on the restructuring include Riveron RTS LLC as capital adviser and GLC Advisors & Co. LLC as restructuring investment banker. Fried, Frank, Harris, Shriver & Jacobson LLP and Morris, Nichols, Arsht & Tunnell LLP are serving as legal counsel for SBS, while Milbank LLP represents the supporting investors and M3 Partners LP is their financial adviser.
The company confirmed that Raúl Alarcón will remain chief executive officer, but said he could give up the chairman’s role once the restructuring is complete. SBS also said it expects its new board, after bankruptcy, to be elected by stockholders in the manner set out in the restructuring support agreement. Richard Lara, who serves as EVP and general counsel, has been promoted to chief operating officer and will continue to oversee legal affairs.
The arrangement suggests SBS is trying to move quickly from default pressure to a court-supervised reset with investor backing already lined up. The question now is less whether the company can stay on air than how much control its existing leadership and owners will keep once the restructuring is finished.
