Heritage Inner City Broadcasting headed for auction block

Story by Inside Radio

Four months after a group of lenders dragged Inner City Broadcasting into bankruptcy court, it now appears as if some - if not all - of the company’s radio stations will be sold at auction. Efforts to reach a restructuring agreement or other strategic alternatives didn't get far because of an estimated $75-million dollar tax penalty. An auction was seen as the best alternative.

In a court filling, Rothschild senior managing director Neil Augustine writes, "A sale of all, or substantially all, of the debtors' assets...is critical to preserving and maximizing the value of these estates and the only vialble alternative to a chapter 7 liquidation." He works for debtholders Yucaipa, Fortress Capital and Drawbridge Capital.

If U.S. Bankruptcy Court Judge Shelley Chapman agrees, the lenders who are owed a combined $254-million dollars will create a limited liability company that will act as a "stalking horse" to buy the stations in New York NY; San Francisco CA; Jackson, MS and Columbia, SC.

Augustine tells the court using that method will "attract higher and better bids in order to maximize creditor recoveries." The value of the stalking horse company's credit bid and cash payment hasn't been settled, but they've told the court that a number will be submitted by January 6th.

To win Inner City Broadcasting, a bidder will have to beat that bid when the auction is held in mid-February.