ION Media files reorganization plan; lenders to receive new stock

By Caroline Salls

Pittsburgh, Aug. 19 - ION Media Networks, Inc. filed a joint plan of reorganization and disclosure statement Wednesday with the U.S. Bankruptcy Court for the Southern District of New York, according to a company news release.

Under the plan, which is supported by holders of more than 70% of ION's first-lien secured debt, which are also the debtor-in-possession financing lenders, the company would extinguish more than $2.7 billion in legacy debt and preferred stock claims.

"The filing of our plan is a significant step toward emerging from Chapter 11 as a stronger, more competitive company," ION chairman and chief executive officer Brandon Burgess said in the release.

"We have made substantial progress in addressing our operational and financial challenges and we are confident that the company will be well-positioned to create value for all of its stakeholders upon emergence."

Under the proposed plan:

• Holders of other secured claims will be paid in full in cash;

• The company's $150 million debtor-in-possession financing facility will be converted into 62.5% of the new common stock of reorganized ION;

• The holders of ION's first-lien secured debt claims will receive their share of 37.5% of the new common stock of reorganized ION;

• The holders of ION's second-priority notes claims will receive warrants to purchase 5% of the new common stock at an equity value of $1 billion;

• The holders of general unsecured claims will receive warrants to purchase 5% of the new common stock at an equity value of $1.5 billion;

• The rights to intercompany interests will remain unaltered; and

• All outstanding ION equity interests, including common stock, preferred stock and any options, warrants or rights to acquire any equity interests, will be cancelled and extinguished and holders will not receive a distribution.

The disclosure statement hearing is scheduled for Sept. 30.

ION is a West Palm Beach, Fla.-based television broadcaster. The company filed for bankruptcy on May 19 in the U.S. Bankruptcy Court for the Southern District of New York. Its Chapter 11 case number is 09-13125.

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