As a possible prelude to a Chapter 11 bankruptcy filing, Ion Media Networks said today it has begun talks with "a growing group of lenders" about reducing its indebtedness through an exchange of debt for ownership stakes in the company.
The company hopes to swap an estimated $2.7 billion in long-term debut for equity stakes in the West Palm Beach, Fla.-based television network and station owner.
"Our board, management and advisors are focused on the benefits of reducing the company's legacy debt structure and funding its long-term growth potential," said Brandon Burgess, chairman and CEO of Ion. "We are encouraged by the receptivity and support from key stakeholders to the idea of restoring our balance sheet to maximize the potential of our unique nationwide TV network and spectrum assets."
Ion said that it has hired Kirkland & Ellis, a law firm known for its bankruptcy practice, and financial advisor Moelis & Co., which specializes in helping clients restructure debt.
Ion said that the lenders it is talking to so far have "expressed support" for the company's proposals to reduced its debt load, "and for management's vision and operational direction, including continuation of the company's programming, digital and mobile strategies."
Ion was launched in 1998 by broadcaster Bud Paxson as the Pax Network. Paxson, a born-again Christian, believed he could carve out a niche as a network with "family-friendly" programming. It rebranded in 2005 as I: Independent Television and again in 2007 as Ion TV.
If it does file for Chapter 11 protection, Ion would the latest media company to do so. The Tribune Co. filed in December and Yellow Pages company Idearc filed last month, both with plans to reemerge with healthier balance sheets.