Alpha Media 375

Alpha Media may prove to be radio’s proverbial canary in the coalmine as broadcasters look for signs of an economic recovery boosting ad spending. Because of its chapter 11 reorganization process, the privately held company is filing monthly revenue updates with the bankruptcy court. The latest shows Alpha’s revenue jumped 17% between February and March, rising from $11.3 million to $13.2 million. March is typically the top billing month of the first quarter for most radio groups, nevertheless Alpha’s 207 stations across 44 markets offers a glimpse of a marketplace that appears to be strengthening.

Despite its improved revenue for March, in a filing in federal court Alpha said it closed the month in the red. But its $3 million loss was less than half the $8 million loss of February. And nearly all of March’s losses were tied to expenses related to its ongoing bankruptcy reorganization process.

Alpha Media filed its bankruptcy reorganization in January, and it says so far it has spent more than $3.5 million on professional fees associated with the process.

Under the prepackaged bankruptcy plan Alpha filed Jan. 24, Intermedia Capital Group, holder of $103.9 million of the company’s unsecured debt, will provide $37.5 million of new money through a second lien secured note in a debt for equity swap. At the same time holders of claims under the Second Lien Notes Agreement will see their outstanding debt converted to equity in the reorganized company. The lenders, who will be owed less post-restructuring, will, together with Alpha’s management team, collectively own 100% of the equity of the re-organized company, pending Federal Communications Commission approval.

Alpha Secures PPP Funds

Meanwhile, Alpha Media disclosed that on Friday it had secured $10 million in Paycheck Protection Program funding from U.S. Bank. The funding had been in doubt just a few weeks earlier after the Small Business Administration rejected Alpha’s PPP application since the program’s rules disqualify companies in bankruptcy. But Richmond-based U.S. Bankruptcy Judge Kevin Huennekens ordered the SBA to allow the radio group to take part. Huennekens called it “in the best interest” of Alpha.

Under terms of the CARES Act, PPP borrowers can apply for forgiveness for all or some of the loan amount. To qualify for forgiveness, borrowers have to show that the funds were used for payroll costs and other qualifying expenses, such as group health care benefits and some rent, utility and mortgage interest expenses.

The question of Alpha’s chapter 11 status may soon be moot based on the rapid pace which it is moving through the bankruptcy reorganization process. Three months after going to court, the company last month secured confirmation of its post-bankruptcy plan in federal court. The voting class earlier unanimously cast their ballots in favor of the plan, and even though a group of creditors rejected the plan it still won court approval. Huennekens rejected their argument that Alpha’s plan unfairly discriminates against them.

One hurdle in that timetable could be at the FCC where former Alpha CEO Larry Wilson and Southern Stone Communications CEO Paul Stone, who is an investor in Alpha, have asked the FCC to withhold its approval of Alpha’s proposed chapter 11 reorganization plan. Wilson filed a petition to deny accusing Alpha’s board of directors of “blatant, unlawful self-dealing,” and making false certifications to the FCC.

But in a 23-page response, Alpha says the FCC should not be used for “private financial gain, to settle personal claims or as an emotional outlet.”

Alpha Media has said it hopes to wrap up the restructuring process by the end of June.