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Granite Plans to Make Interest Payment

May 31, 2006  •  Post A Comment

Granite Broadcasting told Wall Street that it intends to make an interest payment on its debt securities within an allotted 30-day grace period, removing a dark cloud that has loomed over the debt-addled broadcaster for months.

In a statement issued Wednesday, New York-based Granite said it will make a $19.7 million interest payment immediately following the completion of its sale of two television stations. The station sales, generating an estimated $150 million, are expected to be completed by June 30. The interest payment is due June 1 and is tied to debt securities that mature in 2010.

Granite for years has struggled under a mountain of debt that has left the company hamstrung at a time when many TV station owners have had to reinvent themselves due to fierce competition from cable and the Internet. The June 1 interest payment-and Granite’s ability to pay it on time-has been a question mark hanging over the company for some time, given the company hasn’t had enough cash on hand to make the payment. As of the end of the first quarter, Granite’s cash stood at $11.2 million.

The company was counting on its sale of WB affiliates WDWB-TV in Detroit and KBWB-TV in San Francisco to help ensure the cash-strapped company didn’t default on the June 1 interest payment. However, earlier this year things were thrown into chaos after a buyer backed out following the announcement of the shutdown of The WB.

Granite, which paid more than $350 million for the stations, found a new buyer in April.