AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION OCTOBER 8, 1997
REGISTRATION NO. 333-34753-01
================================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
AMENDMENT NO. 1
TO
FORM S-4
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
------------
SINCLAIR BROADCAST GROUP, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
------------
MARYLAND
(State or other jurisdiction of incorporation or organization)
------------
52-1494660
(I.R.S. Employer Identification No.)
------------
4833
(Primary Standard Industrial Classification Code Number)
----------------
2000 WEST 41ST STREET
BALTIMORE, MARYLAND 21211
(410) 467-5005
(Address, including ZIP Code, and telephone number, including area
code, of registrants' principal executive offices)
----------------
SEE TABLE OF ADDITIONAL REGISTRANTS.
----------------
DAVID D. SMITH
PRESIDENT AND CHIEF EXECUTIVE OFFICER
SINCLAIR BROADCAST GROUP, INC.
2000 WEST 41ST STREET
BALTIMORE, MARYLAND 21211
(410) 467-5005
(Name, address, including ZIP Code, and telephone number,
including area code, of agent for service)
----------------
Copies to:
<TABLE>
<S> <C>
George P. Stamas, Esq. Steven A. Thomas, Esq.
Wilmer, Cutler & Pickering Thomas & Libowitz, P.A.
2445 M Street, N.W. 100 Light Street - Suite 1100
Washington, D.C. 20037 Baltimore, MD 21202
(202) 663-6000 (410) 752-2468
</TABLE>
Approximate date of commencement of proposed sale of the securities to the
public:
As soon as practicable after the effective date of this Registration Statement.
If the securities being registered on this Form are being offered in
connection with the formation of a holding company and there is compliance with
General Instruction G, check the following box. [ ]
----------------
The Registrants hereby amend this Registration Statement on such date or
dates as may be necessary to delay its effective date until the Registrants
shall file a further amendment which specifically states that this Registration
Statement shall thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933, as amended, or until the Registration Statement
shall become effective on such date as the Commission, acting pursuant to said
Section 8(a), may determine.
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<PAGE>
TABLE OF ADDITIONAL REGISTRANTS
<TABLE>
<CAPTION>
ADDRESS, INCLUDING
ZIP CODE,
PRIMARY AND TELEPHONE NUMBER,
EXACT NAME OF STATE OR OTHER STANDARD I.R.S. INCLUDING AREA CODE,
REGISTRANT AS JURISDICTION OF INDUSTRIAL EMPLOYER OF REGISTRANT'S
SPECIFIED IN INCORPORATION OR CLASSIFICATION IDENTIFICATION PRINCIPAL EXECUTIVE
ITS CHARTER ORGANIZATION CODE NUMBER NUMBER OFFICES
- ------------------------- ------------------ ---------------- ---------------- --------------------------
<S> <C> <C> <C> <C>
Chesapeake Television, Maryland 4833 52-1590917 2000 West 41st Street
Inc. Baltimore, Maryland 21211
410/467-5005
Chesapeake Television Delaware 4833 51-0336990 2000 West 41st Street
Licensee, Inc. Baltimore, Maryland 21211
410/467-5005
FSF-TV, Inc. North Carolina 4833 56-1739096 2000 West 41st Street
Baltimore, Maryland 21211
410/467-5005
KABB Licensee, Inc. Delaware 4833 52-1974581 2000 West 41st Street
Baltimore, Maryland 21211
410/467-5005
KDNL Licensee, Inc. Delaware 4833 52-1974579 2000 West 41st Street
Baltimore, Maryland 21211
410/467-5005
KSMO, Inc. Maryland 4833 52-1836395 2000 West 41st Street
Baltimore, Maryland 21211
410/467-5005
KSMO Licensee, Inc. Delaware 4833 52-1966077 2000 West 41st Street
Baltimore, Maryland 21211
410/467-5005
KUPN Licensee, Inc. Maryland 4833 52-2016990 2000 West 41st Street
Baltimore, Maryland 21211
410/467-5005
SCI-Indiana Licensee, Delaware 4833 52-1974576 2000 West 41st Street
Inc. Baltimore, Maryland 21211
410/467-5005
SCI-Sacramento Delaware 4833 52-1974575 2000 West 41st Street
Licensee, Inc. Baltimore, Maryland 21211
410/467-5005
Sinclair Communica- Maryland 4833 52-1977539 2000 West 41st Street
tions, Inc. Baltimore, Maryland 21211
410/467-5005
Sinclair Radio of Albu- Maryland 4833 52-1976547 2000 West 41st Street
querque, Inc. Baltimore, Maryland 21211
410/467-5005
Sinclair Radio of Albu- Delaware 4833 52-1974593 2000 West 41st Street
querque Licensee, Baltimore, Maryland 21211
Inc. 410/467-5005
Sinclair Radio of Maryland 4833 52-1975701 2000 West 41st Street
Buffalo, Inc. Baltimore, Maryland 21211
410/467-5005
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
ADDRESS, INCLUDING
ZIP CODE,
PRIMARY AND TELEPHONE NUMBER,
EXACT NAME OF STATE OR OTHER STANDARD I.R.S. INCLUDING AREA CODE,
REGISTRANT AS JURISDICTION OF INDUSTRIAL EMPLOYER OF REGISTRANT'S
SPECIFIED IN INCORPORATION OR CLASSIFICATION IDENTIFICATION PRINCIPAL EXECUTIVE
ITS CHARTER ORGANIZATION CODE NUMBER NUMBER OFFICES
- ------------------------- ------------------ ---------------- ---------------- --------------------------
<S> <C> <C> <C> <C>
Sinclair Radio of Buf- Delaware 4833 52-1974582 2000 West 41st Street
falo Licensee, Inc. Baltimore, Maryland 21211
410/467-5005
Sinclair Radio of Maryland 4833 52-1975786 2000 West 41st Street
Greenville, Inc. Baltimore, Maryland 21211
410/467-5005
Sinclair Radio of Delaware 4833 52-1974584 2000 West 41st Street
Greenville Licensee, Baltimore, Maryland 21211
Inc. 410/467-5005
Sinclair Radio of Los Maryland 4833 52-1975780 2000 West 41st Street
Angeles, Inc. Baltimore, Maryland 21211
410/467-5005
Sinclair Radio of Los Delaware 4833 52-1974591 2000 West 41st Street
Angeles Licensee, Baltimore, Maryland 21211
Inc. 410/467-5005
Sinclair Radio of Maryland 4833 52-1975784 2000 West 41st Street
Memphis, Inc. Baltimore, Maryland 21211
410/467-5005
Sinclair Radio of Delaware 4833 52-1974586 2000 West 41st Street
Memphis Licensee, Baltimore, Maryland 21211
Inc. 410/467-5005
Sinclair Radio of Maryland 4833 52-1975785 2000 West 41st Street
Nashville, Inc. Baltimore, Maryland 21211
410/467-5005
Sinclair Radio of Nash- Delaware 4833 52-1974585 2000 West 41st Street
ville Licensee, Inc. Baltimore, Maryland 21211
410/467-5005
Sinclair Radio of New Maryland 4833 52-1975783 2000 West 41st Street
Orleans, Inc. Baltimore, Maryland 21211
410/467-5005
Sinclair Radio of New Delaware 4833 52-1974588 2000 West 41st Street
Orleans Licensee, Baltimore, Maryland 21211
Inc. 410/467-5005
Sinclair Radio of St. Maryland 4833 52-1975782 2000 West 41st Street
Louis, Inc. Baltimore, Maryland 21211
410/467-5005
Sinclair Radio of St. Delaware 4833 52-1974592 2000 West 41st Street
Louis Licensee, Inc. Baltimore, Maryland 21211
410/467-5005
Sinclair Radio of Maryland 4833 52-1975788 2000 West 41st Street
Wilkes-Barre, Inc. Baltimore, Maryland 21211
410/467-5005
Sinclair Radio Delaware 4833 52-1974583 2000 West 41st Street
of Wilkes-Barre Baltimore, Maryland 21211
Licensee, Inc. 410/467-5005
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
ADDRESS, INCLUDING
ZIP CODE,
PRIMARY AND TELEPHONE NUMBER,
EXACT NAME OF STATE OR OTHER STANDARD I.R.S. INCLUDING AREA CODE,
REGISTRANT AS JURISDICTION OF INDUSTRIAL EMPLOYER OF REGISTRANT'S
SPECIFIED IN INCORPORATION OR CLASSIFICATION IDENTIFICATION PRINCIPAL EXECUTIVE
ITS CHARTER ORGANIZATION CODE NUMBER NUMBER OFFICES
- ----------------------- ------------------ ---------------- ---------------- --------------------------
<S> <C> <C> <C> <C>
Superior Communica- Delaware 4833 61-1250982 2000 West 41st Street
tions of Kentucky, Baltimore, Maryland 21211
Inc. 410/467-5005
Superior Communica- Oklahoma 4833 73-1021304 2000 West 41st Street
tions of Oklahoma, Baltimore, Maryland 21211
Inc. 410/467-5005
Superior KY License Delaware 4833 61-1250983 2000 West 41st Street
Corp. Baltimore, Maryland 21211
410/467-5005
Superior OK License Delaware 4833 73-1438189 2000 West 41st Street
Corp. Baltimore, Maryland 21211
410/467-5005
Tuscaloosa Broadcast- Maryland 4833 52-1940000 2000 West 41st Street
ing, Inc. Baltimore, Maryland 21211
410/467-5005
WCGV, Inc. Maryland 4833 52-1836393 2000 West 41st Street
Baltimore, Maryland 21211
410/467-5005
WCGV Licensee, Inc. Delaware 4833 52-0349552 2000 West 41st Street
Baltimore, Maryland 21211
410/467-5005
WDBB, Inc. Maryland 4833 52-1947227 2000 West 41st Street
Baltimore, Maryland 21211
410/467-5005
WLFL, Inc. Maryland 4833 52-1911462 2000 West 41st Street
Baltimore, Maryland 21211
410/467-5005
WLFL Licensee, Inc. Delaware 4833 51-0364246 2000 West 41st Street
Baltimore, Maryland 21211
410/467-5005
WLOS Licensee, Inc. Delaware 4833 52-1974580 2000 West 41st Street
Baltimore, Maryland 21211
410/467-5005
WPGH, Inc. Maryland 4833 52-1742771 2000 West 41st Street
Baltimore, Maryland 21211
410/467-5005
WPGH Licensee, Inc. Maryland 4833 52-1742774 2000 West 41st Street
Baltimore, Maryland 21211
410/467-5005
WSMH, Inc. Maryland 4833 52-1952880 2000 West 41st Street
Baltimore, Maryland 21211
410/467-5005
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
ADDRESS, INCLUDING
ZIP CODE,
PRIMARY AND TELEPHONE NUMBER,
EXACT NAME OF STATE OR OTHER STANDARD I.R.S. INCLUDING AREA CODE,
REGISTRANT AS JURISDICTION OF INDUSTRIAL EMPLOYER OF REGISTRANT'S
SPECIFIED IN INCORPORATION OR CLASSIFICATION IDENTIFICATION PRINCIPAL EXECUTIVE
ITS CHARTER ORGANIZATION CODE NUMBER NUMBER OFFICES
- ------------------------ ------------------ ---------------- ---------------- --------------------------
<S> <C> <C> <C> <C>
WSMH Licensee, Inc. Delaware 4833 52-1939265 2000 West 41st Street
Baltimore, Maryland 21211
410/467-5005
WSTR, Inc. Maryland 4833 52-1836394 2000 West 41st Street
Baltimore, Maryland 21211
410/467-5005
WSTR Licensee, Inc. Maryland 4833 52-1958895 2000 West 41st Street
Baltimore, Maryland 21211
410/467-5005
WSYX, Inc. Maryland 4833 52-2050323 2000 West 41st Street
Baltimore, Maryland 21211
410/467-5005
WTTE, Channel 28, Inc. Maryland 4833 52-1313500 2000 West 41st Street
Baltimore, Maryland 21211
410/467-5005
WTTE, Channel 28 Maryland 4833 52-1742776 2000 West 41st Street
Licensee, Inc. Baltimore, Maryland 21211
410/467-5005
WTTO , Inc. Maryland 4833 52-1836391 2000 West 41st Street
Baltimore, Maryland 21211
410/467-5005
WTTO Licensee, Inc. Delaware 4833 51-0349553 2000 West 41st Street
Baltimore, Maryland 21211
410/467-5005
WTVZ, Inc. Maryland 4833 52-1903498 2000 West 41st Street
Baltimore, Maryland 21211
410/467-5005
WTVZ Licensee, Inc. Maryland 4833 52-1908393 2000 West 41st Street
Baltimore, Maryland 21211
410/467-5005
WYZZ, Inc. Maryland 4833 52-1959155 2000 West 41st Street
Baltimore, Maryland 21211
410/467-5005
WYZZ Licensee, Inc. Delaware 4833 52-1959631 2000 West 41st Street
Baltimore, Maryland 21211
410/467-5005
</TABLE>
<PAGE>
PROSPECTUS
OFFER FOR ALL OUTSTANDING
9% SENIOR SUBORDINATED NOTES DUE 2007
IN EXCHANGE FOR
9% SENIOR SUBORDINATED NOTES DUE 2007
THAT HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933
OF
[GRAPHIC OMITTED]
The Exchange Offer and Withdrawal Rights will
expire at 5:00 p.m., New York City time,
on November 7, 1997, unless extended.
----------------
Sinclair Broadcast Group, Inc. (the "Company" or "Sinclair") hereby offers
to exchange up to $200,000,000 aggregate principal amount of the Company's 9%
Senior Subordinated Notes due 2007, (the "New Notes") for a like aggregate
principal amount of the Company's outstanding 9% Senior Subordinated Notes due
2007 (the "Old Notes" and, with the New Notes, the "Notes"), of which
$200,000,000 is outstanding. The New Notes have terms that are substantially
identical to the terms of the Old Notes, except that the New Notes have been
registered under the Securities Act of 1933, as amended (the "Securities Act"),
pursuant to a Registration Statement (as defined herein), of which this
Prospectus constitutes a part, do not contain terms with respect to transfer
restrictions, and do not provide for additional interest for certain periods.
The offer is made upon the terms and subject to the conditions set forth in this
Prospectus (such Prospectus, as it may be amended or supplemented from time to
time, the "Prospectus") and in the accompanying Letter of Transmittal (which
together constitute the "Exchange Offer").
The Old Notes are guaranteed, jointly and severally, on a senior
subordinated basis (the "Old Guarantees") by substantially all of the Company's
subsidiaries (the "Guarantors"). The New Notes also will be guaranteed, jointly
and severally, on a senior subordinated basis (the "New Guarantees") by the
Guarantors. A subsidiary may be released from its New Guarantee under certain
circumstances. See "Description of the New Notes - New Guarantees."
Interest on the New Notes will be payable semiannually on January 15 and
July 15 of each year, commencing January 15, 1998. The New Notes will be
redeemable at the option of the Company, in whole or in part, at any time on or
after July 15, 2002, at the redemption prices set forth herein, together with
accrued and unpaid interest, if any, to the date of redemption. Currently, under
the Company's Bank Credit Agreement (as defined) the Company could not exercise
these options. On or prior to July 15, 2000, the Company may redeem up to 25% of
the original principal amount of New Notes with the proceeds of a Public Equity
Offering (as defined) of the Company at 109% of the aggregate principal amount,
together with accrued and unpaid interest, if any, to the date of redemption.
Upon the occurrence of a Change of Control (as defined), each holder of the New
Notes may require the Company to repurchase all or a portion of such holder's
New Notes at 101% of the principal amount thereof, together with accrued and
unpaid interest, if any, to the date of repurchase.
See "Description of the New Notes."
(Continued on next page)
----------------
SEE "RISK FACTORS" BEGINNING ON PAGE 12 FOR CERTAIN INFORMATION THAT SHOULD
BE CONSIDERED BY HOLDERS WHO TENDER OLD NOTES IN THE EXCHANGE OFFER.
----------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURI-
TIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED
UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTA-
TION TO THE CONTRARY IS A CRIMINAL OFFENSE.
THE DATE OF THIS PROSPECTUS IS OCTOBER 10, 1997.
<PAGE>
(Continued From Cover Page)
The New Notes will be unsecured obligations of the Company and will be
subordinated to all existing and future Senior Indebtedness (as defined) of the
Company. The New Guarantees will be unsecured obligations of the Guarantors and
will be subordinated to all existing and future Guarantor Senior Indebtedness
(as defined). As of October 1, 1997, the aggregate amount of Senior Indebtedness
that ranked senior in right of payment to the Notes was $332.3 million and the
aggregate amount of Guarantor Senior Indebtedness that ranked senior in right of
payment to the Guarantees was $332.3 million (including $325.6 million of
outstanding indebtedness representing guarantees of Senior Indebtedness). Under
the terms of the indenture with respect to the New Notes (the "Indenture"), the
Company and the Guarantors are permitted to incur additional Senior Indebtedness
and Guarantor Senior Indebtedness, including certain indebtedness relating to
acquisitions.
There is no public market for the New Notes, and the Company does not
intend to apply for listing of the New Notes on any national securities exchange
or for a quotation through the Nasdaq Stock Market ("Nasdaq"). The Company has
been advised by the Initial Purchasers (as defined) of the Old Notes that they
intend to make a market in the New Notes; however, they are under no obligation
to do so and may discontinue any market-making activities at any time without
notice.
The terms of the New Notes will be identical in all material respects to
the respective terms of the Old Notes, except that (i) the New Notes will have
been registered under the Securities Act of 1933 (the "Securities Act") and
therefore will not be subject to certain restrictions on transfer applicable to
the Old Notes and (ii) the New Notes will not be subject to an increase in
interest payments thereon as a consequence of a failure to take certain actions
in connection with their registration under the Securities Act.
The New Notes are being offered for exchange in order to satisfy certain
obligations of the Company under the Registration Rights Agreement dated July 2,
1997 (the "Registration Rights Agreement") among the Company, the Guarantors and
the Initial Purchasers (as defined herein). In the event the Exchange Offer is
consummated, any Old Notes which remain outstanding after consummation of the
Exchange Offer and the New Notes issued in the Exchange Offer will vote together
as a single class for purposes of determining whether holders of the requisite
percentage of outstanding principal amount thereof have taken certain actions or
exercised certain rights under the indenture governing the Notes.
The Company is making the Exchange Offer with respect to the New Notes in
reliance on the position of the staff of the Division of Corporation Finance of
the Securities and Exchange Commission (the "Staff") as set forth in certain
interpretive letters addressed to third parties in other transactions. However,
the Company has not sought its own interpretive letter and there can be no
assurance that the Staff would make a similar determination with respect to the
Exchange Offer as it has in such interpretive letters to third parties. Based on
these interpretations by the Staff, and subject to the two immediately following
sentences, the Company believes that New Notes issued pursuant to this Exchange
Offer in exchange for Old Notes may be offered for resale, resold and otherwise
transferred by a holder of such New Notes (other than a holder who is a
broker-dealer) without further compliance with the registration and prospectus
delivery requirements of the Securities Act, provided that such New Notes are
acquired in the ordinary course of such holder's business and that such holder
is not participating, and has no arrangement or understanding with any person to
participate, in a distribution (within the meaning of the Securities Act) of
such New Notes. However, any holder of Old Notes who is an "affiliate" of the
Company or who intends to participate in the Exchange Offer for the purpose of
distributing New Notes or any broker-dealer who purchased Old Notes from the
Company to resell pursuant to Rule 144A under the Securities Act ("Rule 144A")
or any other available exemption under the Securities Act, (a) will not be able
to rely on the interpretations of the Staff set forth in the above-mentioned
interpretive letters, (b) will not be permitted or entitled to tender such Old
Notes in the Exchange Offer and (c) must comply with the registration and
prospectus delivery requirements of the Securities Act in connection with any
sale or other transfer of such Old Notes unless such sale is made pursuant to an
exemption from such requirements. In addition, as described below, if any
broker-dealer holds Old Notes acquired for its own account as a result of
market-making or other trading activities and
-ii-
<PAGE>
exchanges such Old Notes for New Notes, then such broker-dealer must deliver a
prospectus meeting the requirements of the Securities Act in connection with any
resales of such New Notes or any other New Notes received in respect thereof.
Each holder of Old Notes who wishes to exchange Old Notes for New Notes in
the Exchange Offer will be required to represent that (i) it is not an
"affiliate" of the Company, (ii) any New Notes to be received by it are being
acquired in the ordinary course of its business, (iii) it has no arrangement or
understanding with any person to participate in a distribution (within the
meaning of the Securities Act) of such New Notes and (iv) if such holder is not
a broker-dealer, such holder is not engaged in, and does not intend to engage
in, a distribution (within the meaning of the Securities Act) of such New Notes.
In addition, the Company may require such holder, as a condition to such
holder's eligibility to participate in the Exchange Offer, to furnish to the
Company (or an agent thereof), in writing, information as to the number of
"beneficial owners" (within the meaning of Rule 13d-3 under the Securities
Exchange Act of 1934, as amended (the "Exchange Act")) on behalf of whom such
holder holds the Old Notes to be exchanged in the Exchange Offer. Each
broker-dealer that receives New Notes for its own account pursuant to the
Exchange Offer must acknowledge that it acquired the Old Notes for its own
account as the result of market-making activities or other trading activities
and must agree that it will deliver a prospectus meeting the requirements of the
Securities Act in connection with any resale of such New Notes. The Letter of
Transmittal states that by so acknowledging and by delivering a prospectus, a
broker-dealer will not be deemed to admit that it is an "underwriter" within the
meaning of the Securities Act.
Based on the positions taken by the Staff in the interpretive letters
referred to above, the Company believes that broker-dealers who acquired Old
Notes for their own accounts, as a result of market-making activities or other
trading activities ("Participating Broker-Dealers") may fulfill their prospectus
delivery requirements with respect to the New Notes received upon exchange of
such Old Notes (other than Old Notes which represent an unsold allotment from
the original sale of the Old Notes ) with a prospectus meeting the requirements
of the Securities Act, which may be the prospectus prepared for an exchange
offer so long as it contains a description of the plan of distribution with
respect to the resale of such New Notes. Accordingly, this Prospectus, as it may
be amended or supplemented from time to time, may be used by a Participating
Broker-Dealer during the period referred to below in connection with resales of
New Notes received in exchange for Old Notes where such Old Notes were acquired
by such Participating Broker-Dealer for its own account as a result of
market-making or other trading activities. Subject to certain provisions set
forth in the Registration Rights Agreement, the Company has agreed that this
Prospectus, as it may be amended or supplemented from time to time, may be used
by a Participating Broker-Dealer in connection with resales of such New Notes
for a period ending 180 days after the Registration Statement of which this
Prospectus constitutes a part is declared effective. See "Plan of Distribution."
Any Participating Broker-Dealer who is an "affiliate" of the Company may not
rely on such interpretive letters and must comply with the registration and
prospectus delivery requirements of the Securities Act in connection with any
resale transaction. See "The Exchange Offer - Resales of New Notes."
In that regard, each Participating Broker-Dealer who surrenders Old Notes
pursuant to the Exchange Offer will be deemed to have agreed, by execution of
the Letter of Transmittal, that, upon receipt of notice from the Company of the
occurrence of any event or the discovery of any fact which makes any statement
contained or incorporated by reference in this Prospectus untrue in any material
respect or which causes this Prospectus to omit to state a material fact
necessary in order to make the statements contained or incorporated by reference
herein, in light of the circumstances under which they were made, not misleading
or of the occurrence of certain other events specified in the Registration
Rights Agreement, such Participating Broker-Dealer will suspend the sale of New
Notes pursuant to this Prospectus until the Company has amended or supplemented
this Prospectus to correct such misstatement or omission and has furnished
copies of the amended or supplemented Prospectus to such Participating
Broker-Dealer or the Company has given notice that the sale of the New Notes may
be resumed, as the case may be.
Any Old Notes not tendered and accepted in the Exchange Offer will remain
outstanding and will be entitled to all the same rights and will be subject to
the same limitations applicable thereto under the
-iii-
<PAGE>
Indenture (except for those rights that terminate upon consummation of the
Exchange Offer). Following consummation of the Exchange Offer, the holders of
Old Notes will continue to be subject to all of the existing restrictions upon
transfer thereof and the Company will not have any further obligation to such
holders (other than under certain limited circumstances) to provide for
registration under the Securities Act of the Old Notes held by them. To the
extent that Old Notes are tendered and accepted in the Exchange Offer, a
holder's ability to sell untendered Old Notes could be adversely affected. See
"Risk Factors - Consequences of a Failure to Exchange Old Notes."
THIS PROSPECTUS AND THE RELATED LETTER OF TRANSMITTAL CONTAIN IMPORTANT
INFORMATION. HOLDERS OF OLD NOTES ARE URGED TO READ THIS PROSPECTUS AND THE
RELATED LETTER OF TRANSMITTAL CAREFULLY BEFORE DECIDING WHETHER TO TENDER THEIR
OLD NOTES PURSUANT TO THE EXCHANGE OFFER.
Old Notes may be tendered for exchange on or prior to 5:00 p.m., New York
City time, on November 7, 1997 (such time on such date being hereinafter called
the "Expiration Date"), unless the Exchange Offer is extended by the Company (in
which case the term "Expiration Date" shall mean the latest date and time to
which the Exchange Offer is extended). Tenders of Old Notes may be withdrawn at
any time on or prior to the Expiration Date. The Exchange Offer is not
conditioned upon any minimum principal amount of Old Notes being tendered for
exchange. However, the Exchange Offer is subject to certain events and
conditions which may be waived by the Company and to the terms and provisions of
the Registration Rights Agreement. The Company has agreed to pay all expenses of
the Exchange Offer. See "The Exchange Offer - Fees and Expenses." This
Prospectus, together with the Letter of Transmittal and Notice of Guaranteed
Delivery, is being sent to all registered holders of Old Notes as of October 10,
1997.
The Company will not receive any cash proceeds from the issuance of the
New Notes offered hereby. No dealer-manager is being used in connection with
this Exchange Offer. See "Use of Proceeds" and "Plan of Distribution."
----------------
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATION NOT CONTAINED IN THIS PROSPECTUS AND, IF GIVEN OR
MADE, SUCH INFORMATION OR REPRESENTATION MUST NOT BE RELIED UPON
AS HAVING BEEN AUTHORIZED BY THE COMPANY. THIS PROSPECTUS
DOES NOT CONSTITUTE AN OFFER OF ANY SECURITIES OTHER THAN
THE SECURITIES TO WHICH IT RELATES OR AN OFFER TO ANY PER-
SON IN ANY JURISDICTION WHERE SUCH OFFER WOULD BE UN-
LAWFUL. NEITHER THE DELIVERY OF THIS PROSPECTUS NOR
ANY SALE MADE HEREUNDER SHALL, UNDER ANY CIR-
CUMSTANCES, CREATEANY IMPLICATION THAT
THERE HAS NOT BEEN ANY CHANGE IN THE AF-
FAIRS OF THE COMPANY SINCE THE DATE
HEREOF.
----------------
-iv-
<PAGE>
AVAILABLE INFORMATION
The Company is subject to the information requirements of the Exchange Act
and in accordance therewith files reports, proxy statements and other
information with the Securities and Exchange Commission (the "Commission"). Such
reports, proxy statements and other information filed by the Company with the
Commission can be inspected and copied at the public reference facilities
maintained by the Commission at Room 1024, Judiciary Plaza, 450 Fifth Street,
N.W., Washington, D.C. 20549, and at the following regional offices of the
Commission: 5 Park Place, Room 1228, New York, New York 10007 and 500 West
Madison Street, Suite 1400, Chicago, Illinois 60621. Copies of such material may
be obtained from the Public Reference Section of the Commission, 450 Fifth
Street, N.W., Washington, D.C. at prescribed rates. Such reports and other
information can also be reviewed through the Commission's Electronic Data
Gathering, Analysis, and Retrieval System ("EDGAR") which is publicly available
though the Commission's World Wide Web site (http://www.sec.gov). In addition,
the Company's Class A Common Stock, par value $.01 per share (the "Class A
Common Stock") is listed on the Nasdaq Stock Market's National Market System,
and material filed by the Company can be inspected at the offices of the
National Association of Securities Dealers, Inc., 1735 K Street, N.W.,
Washington, D.C. 20006.
This Prospectus constitutes a part of a registration statement on Form S-4
(the "Registration Statement") filed by the Company with the Commission under
the Securities Act. As permitted by the rules and regulations of the Commission,
this Prospectus does not contain all the information set forth in the
Registration Statement, certain parts of which are omitted in accordance with
the rules and regulations of the Commission, and reference is hereby made to the
Registration Statement and to the exhibits relating thereto for further
information with respect to the Company and the New Notes. Any statements
contained herein concerning the provisions of any document are not necessarily
complete, and, in each instance, reference is made to the copy of such document
filed as an exhibit to the Registration Statement or otherwise filed with the
Commission. Each such statement is qualified in its entirety by such reference.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents filed with the Commission by the Company are
incorporated by reference in this Prospectus:
(a) The Company's Annual Report on Form 10-K for the year ended December 31,
1996 (as amended), together with the report of Arthur Andersen LLP,
independent certified public accountants;
(b) The Company's Quarterly Report on Form 10-Q for the quarters ended March
31, 1997 and June 30, 1997;
(c) The historical financial statements contained in the Company's Current
Reports on Form 8-K and Form 8-K/A filed May 10, 1996, May 13, 1996, May
17, 1996, May 29, 1996, August 30, 1996, September 5, 1996 and February
25, 1997 together with the reports of the independent accountants related
thereto; and
(d) The Company's Current Reports on Form 8-K and Form 8-K/A filed May 10,
1996, May 13, 1996, May 17, 1996, May 29, 1996, August 30, 1996,
September 5, 1996, February 25, 1997, June 27, 1997, July 2, 1997, July
14, 1997, July 17, 1997, July 29, 1997, August 13, 1997, August 26, 1997,
August 29, 1997, September 3, 1997, September 22, 1997 and October 8,
1997.
All documents filed by the Company pursuant to Sections 13(a) and (c), 14,
or 15(d) of the Exchange Act after the date hereof and prior to the termination
of the offering of the securities offered hereby shall be deemed to be
incorporated by reference herein and to be a part hereof from the date of filing
of such documents. Any statement contained in a document incorporated or deemed
to be incorporated by reference herein shall be deemed to be modified or
superseded for purposes of this Prospectus to the extent that a statement
contained herein or in any other subsequently filed document which
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also is or is deemed to be incorporated by reference herein modifies or
supersedes such statement. Any statement so modified or superseded shall not be
deemed, except as so modified or superseded, to constitute a part of this
Prospectus.
As used herein, the terms "Prospectus" and "herein" mean this Prospectus,
including the documents or portions thereof incorporated or deemed to be
incorporated herein by reference, as the same may be amended, supplemented or
otherwise modified from time to time. Statements contained in this Prospectus as
to the contents of any contract or other document referred to herein do not
purport to be complete, and where reference is made to the particular provisions
of such contract or other document, such provisions are qualified in all
respects by reference to all of the provisions of such contract or other
document.
The Company will provide without charge to each person to whom this
Prospectus is delivered, upon request, a copy of any or all of the foregoing
documents described above which have been or may be incorporated by reference in
this Prospectus other than exhibits to such documents (unless such exhibits are
specifically incorporated by reference into such documents). Such request should
be directed to:
Patrick J. Talamantes
Sinclair Broadcast Group, Inc.
2000 W. 41st Street
Baltimore, MD 21211
The New Notes will be represented by a global certificate registered in the
name of The Depository Trust Company ("DTC") or its nominee and, if holders that
are not qualified institutional buyers participate in the Exchange Offer, by
individual certificates issued in the names of such holders or their nominees.
See "Description of the New Notes - Book-Entry Securities; The Depository Trust
Company; Delivery and Form."
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SUMMARY
The following summary should be read in conjunction with the more detailed
information, financial statements and notes thereto in this Prospectus or
incorporated herein by reference. Unless the context otherwise indicates or
unless specifically defined otherwise, as used herein, the "Company" or
"Sinclair" means Sinclair Broadcast Group, Inc. and its direct and indirect
wholly-owned subsidiaries (collectively, the "Subsidiaries").
SINCLAIR
The Company is a diversified broadcasting company that owns or provides
programming services to more television stations than any other commercial
broadcasting group in the United States. The Company currently owns or provides
programming services pursuant to Local Marketing Agreements ("LMAs") to 29
television stations, has pending acquisitions of four additional television
stations, and has pending acquisitions of the rights to provide programming to
two additional television stations. The Company believes it is also one of the
top 20 radio groups in the United States, when measured by the total number of
radio stations owned. The Company owns 27 radio stations, has pending
acquisitions of 24 radio stations and has options to acquire an additional seven
radio stations. The Company has entered into an agreement to sell or exchange
three of the radio stations it currently owns.
The 29 television stations the Company owns or programs pursuant to LMAs
are located in 21 geographically diverse markets, with 23 of the stations in the
top 51 television DMAs in the United States. The Company's television station
group is diverse in network affiliation with ten stations affiliated with Fox
Broadcasting Company ("Fox"), 12 with United Paramount Television Network
Partnership ("UPN"), three with The WB Television Network ("WB"), two with ABC
and one with CBS. One station operates as an independent. The Company has
recently entered into an agreement with WB pursuant to which eight of its
stations would switch affiliations to, and one independent station has become
affiliated with, WB. In addition, the Company has notified UPN of its
non-renewal of affiliation with respect to three additional stations, which will
either operate as independents or enter into new affiliation agreements with UPN
or another network.
The Company's radio station group is also geographically diverse with a
variety of programming formats including country, urban, news/talk/sports,
progressive rock and adult contemporary. Of the 27 stations owned by the
Company, 12 broadcast on the AM band and 15 on the FM band. The Company owns
between two and eight stations in all but one of the seven radio markets it
serves.
The Company has undergone rapid and significant growth over the course of
the last six years. Since 1991, the Company has increased the number of stations
it owns or provides services to from three television stations to 29 television
stations and 27 radio stations. From 1991 to 1996, net broadcast revenues and
Adjusted EBITDA (as defined herein) increased from $39.7 million to $346.5
million, and from $15.5 million to $180.3 million, respectively. Pro forma for
the acquisitions completed in 1996 and the Heritage Acquisition described below,
1996 net broadcast revenues and Adjusted EBITDA would have been $532.4 million
and $246.3 million, respectively.
The Company is a Maryland corporation formed in 1986. The Company's
principal offices are located at 2000 West 41st Street, Baltimore, Maryland
21211, and its telephone number is (410) 467-5005.
RECENT DEVELOPMENTS
AGREEMENT WITH THE WB NETWORK
On July 4, 1997, the Company entered into an agreement with WB (the "WB
Agreement"), pursuant to which the Company agreed that certain stations
currently affiliated with UPN would terminate their affiliations with UPN at the
end of the current affiliation term in January 1998, and would
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enter into affiliation agreements with WB effective as of that date. The Company
has advised UPN that the following stations owned or provided programming
services by the Company will not renew their affiliation agreements with UPN
when the current agreements expire on January 15, 1998 (January 1999 with
respect to WTTV-TV/WTTK-TV): WPTT-TV, Pittsburgh, Pennsylvania, WNUV-TV,
Baltimore, Maryland, WSTR-TV, Cincinnati, Ohio, KRRT-TV, San Antonio, Texas,
KOCB-TV, Oklahoma City, Oklahoma, KSMO-TV, Kansas City, Missouri, KUPN-TV, Las
Vegas, Nevada, WCGV-TV, Milwaukee, Wisconsin, WABM-TV, Birmingham, Alabama, and
WTTV-TV/WTTK-TV, Indianapolis, Indiana. These stations (other than WCGV-TV,
KSMO-TV and WABM-TV, which will either operate as independents or enter into new
affiliation agreements with UPN or another network) will enter into ten-year
affiliation agreements with WB beginning on January 16, 1998 (other than
WTTV-TV/WTTK-TV, with respect to which the affiliation agreement will begin
January 11, 1999 and end January 15, 2008). Pursuant to the WB Agreement, the WB
affiliation agreements of WVTV-TV, Milwaukee, Wisconsin, and WTTO-TV,
Birmingham, Alabama (whose programming is simulcasted on WDBB-TV, Tuscaloosa,
Alabama), have been extended to January 16, 2008. In addition, WFBC-TV in
Greenville, South Carolina will become affiliated with WB on November 1, 1999,
when WB's current affiliation with another station in that market expires.
WTVZ-TV, Norfolk, Virginia and WLFL-TV, Raleigh, North Carolina, will become
affiliated with WB when their affiliations with Fox expire. These Fox
affiliations are scheduled to expire on August 31, 1998. Under the terms of the
WB Agreement, WB has agreed to pay the Company $64 million aggregate amount in
monthly installments during the eight years commencing on January 16, 1998 in
consideration for entering into affiliation agreements with WB. In addition, WB
will be obligated to pay an additional $10 million aggregate amount in monthly
installments in each of the following two years provided that WB is in the
business of supplying programming as a television network during each of those
years.
In August 1997, UPN filed an action in Los Angeles Superior Court against
the Company, seeking declaratory relief and specific performance or, in the
alternative, unspecified damages and alleging that neither the Company nor its
affiliates provided proper notice of their intention not to extend the current
UPN affiliations beyond January 15, 1998. Certain subsidiaries of the Company
have filed an action in the Circuit Court for Baltimore City seeking declaratory
relief that their notice was effective to terminate the affiliations on January
15, 1998. See "Risk Factors - Certain Network Affiliation Agreements" and
"Business of Sinclair - Legal Proceedings" in the Company's Current Report on
Form 8-K filed on October 8, 1997, which is incorporated herein by reference.
HERITAGE ACQUISITION
On July 16, 1997, the Company entered into agreements (the "Heritage
Acquisition Agreements") with The News Corporation Limited, Heritage Media
Group, Inc. and certain subsidiaries of Heritage Media Corporation
(collectively, "Heritage"), pursuant to which the Company agreed to acquire
certain television and radio assets of such subsidiaries. Under the Heritage
Acquisition Agreements, the Company will acquire the assets of, or the right to
program pursuant to LMAs, six television stations in three markets and the
assets of 24 radio stations in seven markets (the "Heritage Acquisition"). The
television stations serve the following markets: Charleston/Huntington, West
Virginia; Mobile, Alabama/Pensacola, Florida; and Burlington,
Vermont/Plattsburgh, New York. The radio stations serve the following markets:
St. Louis, Missouri; Portland, Oregon; Kansas City, Missouri; Milwaukee,
Wisconsin; Norfolk, Virginia; New Orleans, Louisiana; and Rochester, New York.
The aggregate purchase price for the assets is $630 million payable in cash at
closing, less a deposit of $63 million paid at the time of signing the Heritage
Acquisition Agreements. The Heritage Acquisition Agreements also provide for the
acquisition of the assets of a television station in Oklahoma City, Oklahoma;
the Company is required by the agreements to dispose of its interest in that
station, and the Company has entered into a letter of intent to sell that
station for $60 million in cash. The Company intends to finance the purchase
price from some combination of the proceeds of the Common Stock Offering (as
defined), the proceeds of the Preferred Stock Offering (as defined), funds
available under the Company's Bank
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Credit Agreement (as defined), and the anticipated $60 million in proceeds from
the sale of the Company's interest in the Oklahoma City station. Closing of the
Heritage Acquisition is conditioned on, among other things, FCC approval and the
expiration of the applicable waiting period under the Hart-Scott-Rodino
Antitrust Improvements Act of 1976, as amended.
PREFERRED STOCK AND COMMON STOCK OFFERINGS
On September 23, 1997, the Company completed a public offering of $172.5
million aggregate liquidation value (including shares sold on September 30, 1997
pursuant to the exercise of an overallotment option) of its Series D Convertible
Exchangeable Preferred Stock par value $.01 per share (the "Series D Preferred
Stock") (the offering of the Series D Preferred Stock, the "Preferred Stock
Offering") pursuant to a $1 billion shelf registration statement filed with the
Commission on September 16, 1997 (the "Shelf Registration Statement") and a
prospectus supplement filed with the Commission on September 17, 1997. The
Series D Preferred Stock has a liquidation preference of $50 per share and a
stated annual dividend of $3.00 per share payable quarterly out of legally
available funds. The Series D Preferred Stock is convertible into shares of
Class A Common Stock at the option of the holders thereof at a conversion price
of $45.625 per share. The Series D Preferred Stock is exchangeable beginning
December 15, 2000, at the option of the Company for Convertible Subordinated
Debentures of the Company, due 2012 and is redeemable at the option of the
Company beginning three years after issuance at specified prices plus accrued
dividends. Except under certain limited circumstances, shares of Series D
Preferred Stock will not have the right to vote on matters on which shares of
Common Stock have a vote, prior to their conversion into Class A Common Stock.
Concurrently with the Preferred Stock Offering and pursuant to the Shelf
Registration Statement and a prospectus supplement filed with the Commission on
September 23, 1997, the Company and certain stockholders of the Company (the
"Selling Stockholders") completed a public offering of 4,345,000 shares and
1,750,000 shares (each including shares sold September 30, 1997 pursuant to the
exercise of an overallotment option) of Class A Common Stock, respectively (the
"Common Stock Offering").
The Company received net proceeds from the Preferred Stock Offering and the
Common Stock Offering of approximately $167.0 million and $151.1 million,
respectively. The Company used the majority of these funds to repay existing
borrowings under the Bank Credit Agreement (as defined herein).
Contemporaneously with the Preferred Stock Offering and the Common Stock
Offering, the Company and the lenders under the Bank Credit Agreement entered
into an amendment to the Bank Credit Agreement, the effect of which was to
recharacterize $275 million of indebtedness from the Tranche A term loan under
the Bank Credit Agreement to amounts owing under the revolving credit facility
under the Bank Credit Agreement. The Company used $285.7 million of the net
proceeds from the Common Stock Offering and the Preferred Stock Offering to
repay outstanding borrowings under the revolving credit facility, $8.9 million
to repay outstanding amounts under the Tranche A term loan and the remaining net
proceeds of approximately $25.1 million for general corporate purposes.
Borrowings under the Tranche A term loan were used to finance acquisitions, and
the weighted average interest rate of the borrowings thereunder was 6.73% on the
date as of which the $275 million was recharacterized. Borrowings under the
revolving credit facility (other than the recharacterized $275 million) were
used for general corporate purposes. As of September 30, 1997, there were no
amounts outstanding under the revolving credit facility. The Company may
reborrow amounts under the revolving credit facility until December 31, 2004. In
addition, the Bank Credit Agreement provides for a Tranche C term loan in the
amount of up to $400 million which can be ulitized upon approval by the agent
bank and the raising of sufficent commitments from banks to fund the additional
loans.
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<PAGE>
THE EXCHANGE OFFER
GENERAL.................. The Old Notes were issued by the Company on July 2,
1997 to Smith Barney Inc., Chase Securities Inc.,
Salomon Brothers Inc and Furman Selz (the "Initial
Purchasers"). The Initial Purchasers subsequently
resold the Old Notes to qualified institutional
buyers in reliance upon Rule 144A under the
Securities Act. Up to $200,000,000 aggregate
principal amount of New Notes are being offered in
exchange for a like aggregate principal amount of
Old Notes (the "Exchange Offer"). The Company will
issue, promptly after the Expiration Date, $1,000
principal amount of New Notes in exchange for each
$1,000 principal amount of outstanding Old Notes
tendered and accepted in connection with the
Exchange Offer. The Company is making the Exchange
Offer in order to satisfy obligations under the
Registration Rights Agreement (the "Registration
Rights Agreement") relating to the Old Notes. For a
description of the procedures for tendering Old
Notes, see "The Exchange Offer - Procedures for
Tendering Old Notes." The Old Notes were guaranteed
by the Guarantors (the "Old Guarantees"), and in
connection with the Exchange Offer, the Guarantors
are exchanging the Old Guarantees for the New
Guarantees.
EXPIRATION DATE ......... 5:00 p.m., New York City time, on November 7, 1997
(such time on such date being hereinafter called the
"Expiration Date") unless the Exchange Offer is
extended by the Company (in which case the term
"Expiration Date" shall mean the latest date and
time to which the Exchange Offer is extended). See
"The Exchange Offer - Expiration Date; Extensions;
Amendments."
CONDITIONS TO THE EXCHANGE
OFFER .................. The Exchange Offer is subject to certain conditions,
which may be waived by the Company in its sole
discretion. The Exchange Offer is not conditioned
upon any minimum principal amount of the Old Notes
being tendered. See "The Exchange Offer - Conditions
to the Exchange Offer." The Company reserves the
right in its sole and absolute discretion, subject
to applicable law, at any time and from time to
time, (i) to delay the acceptance of the Old Notes
for exchange, (ii) to terminate the Exchange Offer
if certain specified conditions have not been
satisfied, (iii) to extend the Expiration Date of
the Exchange Offer and retain all Old Notes tendered
pursuant to the Exchange Offer, subject, however, to
the right of holders of Old Notes to withdraw their
tendered Old Notes, or (iv) to waive any condition
or otherwise amend the terms of the Exchange Offer
in any respect. See "The Exchange Offer - Expiration
Date; Extensions; Amendments."
WITHDRAWAL RIGHTS ...... Tenders of Old Notes may be withdrawn at any time on
or prior to the Expiration Date by delivering a
written notice of such withdrawal to First Union
National Bank (the "Exchange Agent") in conformity
with certain procedures set forth below under "The
Exchange Offer - Withdrawal Rights."
PROCEDURES FOR TENDERING
OLD NOTES ............. Tendering holders of Old Notes must complete and
sign a Letter of Transmittal in accordance with the
instructions contained therein and forward the same
by mail, facsimile or hand delivery, together with
any other required documents, to the Exchange Agent,
together with the Old Notes to be tendered or
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<PAGE>
in compliance with the specified procedures for
guaranteed delivery of Old Notes. Certain brokers,
dealers, commercial banks, trust companies and other
nominees may also effect tenders by book-entry
transfer. Holders of Old Notes registered in the
name of a broker, dealer, commercial bank, trust
company or other nominee are urged to contact such
person promptly if they wish to tender Old Notes
pursuant to the Exchange Offer. See "The Exchange
Offer - Procedures for Tendering Old Notes." Letters
of Transmittal and certificates representing Old
Notes should not be sent to the Company. Such
documents should only be sent to the Exchange Agent.
Questions regarding how to tender and requests for
information should be directed to the Exchange
Agent. See "The Exchange Offer Exchange Agent."
RESALES OF NEW NOTES ... The Company is making the Exchange Offer in reliance
on the position of the staff (the "Staff") of the
Division of Corporation Finance of the Securities
and Exchange Commission (the "Commission") as set
forth in certain interpretive letters addressed to
third parties in other transactions. However, the
Company has not sought its own interpretive letter
and there can be no assurance that the Staff would
make a similar determination with respect to the
Exchange Offer as it has in such interpretive
letters to third parties. Based on these
interpretations by the Staff, and subject to the two
immediately following sentences, the Company
believes that New Notes issued pursuant to this
Exchange Offer in exchange for Old Notes may be
offered for resale, resold and otherwise transferred
by a holder thereof (other than a holder who is a
broker-dealer) without further compliance with the
registration and prospectus delivery requirements of
the Securities Act, provided that such New Notes are
acquired in the ordinary course of such holder's
business and that such holder is not participating,
and has no arrangement or understanding with any
person to participate, in a distribution (within the
meaning of the Securities Act) of such New Notes.
However, any holder of Old Notes who is an
"affiliate" of the Company or who intends to
participate in the Exchange Offer for the purpose of
distributing the New Notes, or any broker-dealer who
purchased the Old Notes from the Company to resell
pursuant to Rule 144A or any other available
exemption under the Securities Act, (a) will not be
able to rely on the interpretations of the Staff set
forth in the above-mentioned interpretive letters,
(b) will not be permitted or entitled to tender such
Old Notes in the Exchange Offer and (c) must comply
with the registration and prospectus delivery
requirements of the Securities Act in connection
with any sale or other transfer of such Old Notes
unless such sale is made pursuant to an exemption
from such requirements. In addition, as described
below, if any broker-dealer holds Old Notes acquired
for its own account as a result of market-making or
other trading activities and exchanges such Old
Notes for New Notes, then such broker-dealer must
deliver a prospectus meeting the requirements of the
Securities Act in connection with any resales of
such New Notes.
Each holder of Old Notes who wishes to exchange Old
Notes for New Notes in the Exchange Offer will be
required to represent that (i) it is not an
"affiliate" of the Company, (ii) any New Notes to be
received by it are being acquired in the ordinary
course of its business, (iii) it has no arrangement
or understanding with any person to participate in a
distribution (within the meaning of the Securities
Act) of such New Notes, and (iv) if such holder is
not a
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<PAGE>
broker-dealer, such holder is not engaged in, and
does not intend to engage in, a distribution (within
the meaning of the Securities Act) of such New
Notes.
Each broker-dealer that receives New Notes for its
own account pursuant to the Exchange Offer must
acknowledge that it acquired the New Notes for its
own account as the result of market-making
activities or other trading activities and must
agree that it will deliver a prospectus meeting the
requirements of the Securities Act in connection
with any resale of such New Notes. The Letter of
Transmittal states that by so acknowledging and by
delivering a prospectus, a broker-dealer will not be
deemed to admit that it is an "underwriter" within
the meaning of the Securities Act. Based on the
position taken by the Staff in the interpretive
letters referred to above, the Company believes that
broker-dealers who acquired Old Notes for their own
accounts as a result of market-making activities or
other trading activities ("Participating
Broker-Dealers") may fulfill their prospectus
delivery requirements with respect to the New Notes
received upon exchange of such Old Notes (other than
Old Notes which represent an unsold allotment from
the original sale of the Old Notes) with a
prospectus meeting the requirements of the
Securities Act, which may be the prospectus prepared
for an exchange offer so long as it contains a
description of the plan of distribution with respect
to the resale of such New Notes. Accordingly, this
Prospectus, as it may be amended or supplemented
from time to time, may be used by a Participating
Broker-Dealer in connection with resales of New
Notes received in exchange for Old Notes where such
Old Notes were acquired by such Participating
Broker-Dealer for its own account as a result of
market-making or other trading activities. Subject
to certain provisions set forth in the Registration
Rights Agreement and to the limitations described
below under "The Exchange Offer - Resale of New
Notes," the Company has agreed that this Prospectus,
as it may be amended or supplemented from time to
time, may be used by a Participating Broker-Dealer
in connection with resales of such New Notes for a
period ending 180 days after the Registration
Statement of which this Prospectus constitutes a
part is declared effective. See "Plan of
Distribution." Any Participating Broker-Dealer who
is an "affiliate" of the Company may not rely on
such interpretive letters and must comply with the
registration and prospectus delivery requirements of
the Securities Act in connection with any resale
transaction. See "The Exchange Offer - Resales of
New Notes."
EXCHANGE AGENT ......... The exchange agent with respect to the Exchange
Offer is First Union National Bank. The addresses,
and telephone and facsimile numbers of the Exchange
Agent are set forth in "The Exchange Offer -
Exchange Agent" and in the Letter of Transmittal.
Use of Proceeds ......... The Company will not receive any cash proceeds from
the issuance of the New Notes offered hereby. See
"Use of Proceeds."
CERTAIN UNITED STATES
FEDERAL INCOME TAX
CONSEQUENCES ......... Holders of Old Notes should review the information
set forth under "Certain United States Federal
Income Tax Consequences" prior to tendering Old
Notes in the Exchange Offer.
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<PAGE>
THE NEW NOTES
NOTES OFFERED............ The terms of the New Notes will be identical in all
material respects to the Old Notes, except that the
New Notes will not contain terms with respect to
transfer restrictions and will not provide for
penalty amounts for certain future periods.
MATURITY DATE............ July 15, 2007.
INTEREST PAYMENT DATES... January 15 and July 15 of each year, commencing
January 15, 1998.
OPTIONAL REDEMPTION...... The New Notes will be redeemable at the option of
the Company, in whole or in part, at any time on or
after July 15, 2002, at the redemption prices set
forth herein, together with accrued and unpaid
interest, if any, to the date of redemption. On or
prior to July 15, 2000, the Company may redeem up to
25% of the original principal amount of the New
Notes with the proceeds of a Public Equity Offering
at 109% of the aggregate principal amount, together
with accrued and unpaid interest, if any, to the
date of redemption. See "Description of the New
Notes - Optional Redemption."
CHANGE OF CONTROL ...... Upon the occurrence of a Change of Control, each
holder of the New Notes may require the Company to
repurchase all or a portion of such holder's New
Notes at a purchase price in cash equal to 101% of
the principal amount thereof, together with accrued
and unpaid interest, if any, to the date of
repurchase. Certain highly leveraged transactions
and certain transactions with the Company's
management and its affiliates that may adversely
affect holders of the New Notes do not constitute a
Change of Control. A Change of Control will result
in an event of default under the Company's Bank
Credit Agreement (defined herein) which consists of
a $675 million reducing revolving credit facility
(the "Revolving Credit Facility") and a $325 million
Term Loan (the "Term Loan") and could result in the
acceleration of all indebtedness under the Bank
Credit Agreement (which constitutes Senior
Indebtedness and Guarantor Senior Indebtedness). See
"Description of the New Notes - Certain Covenants -
Purchase of New Notes Upon a Change of Control."
RANKING.................. The New Notes will be unsecured subordinated
obligations of the Company and, as such, will be
subordinated to all existing and future Senior
Indebtedness of the Company. The New Notes will rank
pari passu with all senior subordinated indebtedness
of the Company. As of August 31, 1997, and after
giving effect to the sale of the Old Notes and the
use of the net proceeds therefrom, the aggregate
amount of Senior Indebtedness that ranked senior in
right of payment to the Notes was $332.3 million,
and the aggregate amount of indebtedness that would
have been pari passu in right of payment with the
Notes was $400 million. See "Description of the New
Notes - Subordination."
GUARANTEES............... The New Notes will be guaranteed, jointly and
severally, on a senior subordinated basis by each of
the Guarantors, which consist of all of the
Company's existing Subsidiaries other than Cresap
Enterprises, Inc., KDSM, Inc., KDSM Licensee, Inc.
and Sinclair Capital, an indirect subsidiary trust
of the Company (the "Trust"). As of October 1, 1997,
and after giving effect to the sale of the Old
Notes, the aggregate amount of
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<PAGE>
Guarantor Senior Indebtedness that ranked senior in
right of payment to the Guarantees would have been
$332.3 million (including $325.6 million of
outstanding indebtedness representing guarantees of
Senior Indebtedness). See "Description of the New
Notes - New Guarantees."
Under the terms of the Indenture, the Company has
the right to form or acquire Subsidiaries in the
future that will not be required to be guarantors of
the New Notes. Under the terms of the Indenture, a
Subsidiary is not permitted to guarantee Senior
Indebtedness, including indebtedness under the Bank
Credit Agreement, or assume or become liable with
respect to Indebtedness of the Company unless such
Subsidiary becomes a Guarantor and any Guarantor
which no longer guarantees any other indebtedness of
the Company may be released from its Guarantee. See
"Description of the New Notes - Certain Covenants -
Limitation on Restricted Payments; Limitation on
Unrestricted Subsidiaries; and Limitation on
Issuance of Guarantees of and Pledges for
Indebtedness."
CERTAIN COVENANTS ...... The Indenture contains certain covenants, including,
but not limited to, covenants with respect to the
following matters: (i) limitation on indebtedness;
(ii) limitation on restricted payments; (iii)
limitation on transactions with affiliates; (iv)
limitation on senior subordinated indebtedness; (v)
limitation on liens; (vi) limitation on sale of
assets; (vii) limitation on issuances of guarantees
of and pledges for indebtedness; (viii) restriction
on transfer of assets; (ix) limitation on subsidiary
equity interests; (x) limitation on dividends and
other payment restrictions affecting subsidiaries;
(xi) limitation on unrestricted subsidiaries; and
(xii) restrictions on mergers, consolidations and
the transfer of all or substantially all of the
assets of the Company to another person. See
"Description of the New Notes - Certain Covenants."
ABSENCE OF PUBLIC TRADING
MARKET FOR THE NEW NOTES There is no public market for the New Notes and the
Company does not intend to apply for listing of the
New Notes on any national securities exchange or for
quotation of the New Notes through Nasdaq. The
Company has been advised by Smith Barney Inc., Chase
Securities Inc., Salomon Brothers Inc and Furman
Selz (together, the "Initial Purchasers") that the
Initial Purchasers presently intend to make a market
in the New Notes; however, they are under no
obligation to do so and may discontinue any
market-making activities at any time without notice.
No assurance can be given as to the liquidity of the
trading market for the New Notes or that an active
public market will develop. If an active public
market does not develop or is not maintained, the
market price and liquidity of the New Notes may be
adversely affected. See "Risk Factors - Absence of
Public Trading Market for the New Notes."
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SUMMARY HISTORICAL CONSOLIDATED FINANCIAL DATA
SINCLAIR BROADCAST GROUP, INC.
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
The summary historical consolidated financial data for the years ended
December 31, 1992, 1993, 1994, 1995 and 1996 have been derived from the
Company's audited Consolidated Financial Statements (the "Consolidated Financial
Statements"). The Consolidated Financial Statements for the years ended December
31, 1994, 1995 and 1996 are incorporated herein by reference. The summary
historical consolidated financial data for the six months ended June 30, 1996
and 1997 and as of June 30, 1996 and 1997 are unaudited, but in the opinion of
management, such data have been prepared on the same basis as the Consolidated
Financial Statements incorporated herein by reference and include all
adjustments, consisting only of normal recurring adjustments, necessary for a
fair presentation of the financial position and results of operations for those
periods. Results for the six months ended June 30, 1996 and 1997 are not
necessarily indicative of the results for a full year. Separate financial
information for the Trust is not provided since the Company believes it would
not be material to investors. The information below should be read in
conjunction with "Management's Discussion and Analysis of Financial Condition
and Results of Operations of Sinclair" and Sinclair's Consolidated Financial
Statements in Sinclair's Annual Report on Form 10-K (as amended) for the period
ended December 31, 1996 and Sinclair's Quarterly Report on Form 10-Q for the
quarter ended June 30, 1997, all of which are incorporated by reference herein.
Pro forma data showing the effect of acquisitions completed by the Company in
1996 (the "1996 Acquisitions"), issuance of the Preferred Securities, the
issuance of the Old Notes, the Heritage Acquisition and the Preferred Stock
Offering and the Common Stock Offering is set forth in the Company's Report on
Form 8-K filed October 8, 1997, which is incorporated by reference herein.
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
------------------------------------------------------------
1992 1993 1994(A) 1995(A) 1996(A)
------------ ------------ ----------- ----------- ----------
<S> <C> <C> <C> <C> <C>
STATEMENT OF
OPERATIONS DATA:
Net Broadcast Revenues(B) ..................... $ 61,081 $ 69,532 $118,611 $187,934 $346,459
Barter revenues .............................. 8,805 6,892 10,743 18,200 32,029
-------- -------- -------- -------- ---------
Total revenues .............................. 69,886 76,424 129,354 206,134 378,488
-------- -------- -------- -------- ---------
Operating expenses, excluding depreciation and
amortization, deferred compensation and special
bonuses paid to executive officers ........... 32,993 32,295 50,545 80,446 167,765
Depreciation and amortization(c) ............ 30,943 22,486 55,587 80,410 121,081
Amortization of deferred compensation ......... - - - - 739
Special bonuses paid to executive officers ... - 10,000 3,638 - -
-------- -------- -------- -------- ---------
Broadcast operating income .................. 5,950 11,643 19,584 45,278 88,903
-------- -------- -------- -------- ---------
Interest and amortization of debt discount
expense .................................... 12,997 12,852 25,418 39,253 84,314
Interest and other income ..................... 1,207 2,131 2,447 4,163 3,478
Subsidiary trust minority interest expense(d) - - - - -
-------- -------- -------- -------- ---------
Income (loss) before (provision) benefit for
income taxes and extraordinary item ......... $ (5,840) $ 922 $ (3,387) $ 10,188 $ 8,067
======== ======== ======== ======== =========
Net income (loss) available to common
shareholders ................................. $ (4,651) $ (7,945) $ (2,740) $ 76 $ 1,131
======== ======== ======== ======== =========
Earnings (loss) per common share:
Net income (loss) before extraordinary
item ....................................... $ (0.16) $ - $ (0.09) $ 0.15 $ 0.03
Extraordinary item ........................... - (0.27) - (0.15) -
-------- -------- -------- -------- ---------
Net income (loss) per common share ......... $ (0.16) $ (0.27) $ (0.09) $ - $ 0.03
======== ======== ======== ======== =========
Weighted average shares out-
standing (in thousands) ..................... 29,000 29,000 29,000 32,205 37,381
======== ======== ======== ======== =========
OTHER DATA:
Broadcast cash flow(e) ........................ $ 28,019 $ 37,498 $ 67,519 $111,124 $189,216
Broadcast cash flow margin(f) ............... 45.9% 53.9% 56.9% 59.1% 54.6 %
Adjusted EBITDA(g) ........................... $ 26,466 $ 35,406 $ 64,547 $105,750 $180,272
Adjusted EBITDA margin(f) ..................... 43.3% 50.9% 54.4% 56.3% 52.0 %
After tax cash flow(h) ........................ $ 9,398 $ 17,950 $ 24,948 $ 51,288 $ 76,745
After tax cash flow margin(f) ............... 15.4% 25.8% 21.0% 27.3% 22.3 %
Program contract payments ..................... $ 10,427 $ 8,723 $ 14,262 $ 19,938 $ 30,451
Capital expenditures ........................ 426 528 2,352 1,702 12,609
Corporate overhead expense .................. 1,553 2,092 2,972 5,374 8,944
<CAPTION>
SIX MONTHS ENDED
JUNE 30,
-----------------------
1996 1997
---------- ------------
(UNAUDITED)
<S> <C> <C>
STATEMENT OF
OPERATIONS DATA:
NET BROADCAST REVENUES(B) ..................... $117,339 $219,701
Barter revenues .............................. 9,571 19,870
--------- --------
Total revenues .............................. 126,910 239,571
--------- --------
Operating expenses, excluding depreciation and
amortization, deferred compensation and special
bonuses paid to executive officers 52,826 114,697
Depreciation and amortization(c) ............ 45,993 76,650
Amortization of deferred compensation ......... 506 233
Special bonuses paid to executive officers ... - -
--------- --------
Broadcast operating income .................. 28,085 47,991
--------- --------
Interest and amortization of debt discount
expense .................................... 27,646 51,993
Interest and other income ..................... 3,172 1,087
Subsidiary trust minority interest expense(d) - 7,007
--------- --------
Income (loss) before (provision) benefit for
income taxes and extraordinary item ......... $ 3,611 $ (9,922)
========= ========
Net income (loss) available to common
shareholders ................................. $ 1,511 $ (5,822)
========= ========
Earnings (loss) per common share:
Net income (loss) before extraordinary
item ....................................... $ 0.04 $ (0.17)
Extraordinary item ........................... - -
--------- --------
Net income (loss) per common share ......... $ 0.04 $ (0.17)
========= ========
Weighted average shares out-
standing (in thousands) ..................... 34,750 34,746
========= ========
OTHER DATA:
Broadcast cash flow(e) ........................ $ 65,079 $105,600
Broadcast cash flow margin(f) ............... 55.5% 48.1%
Adjusted EBITDA(g) ........................... $ 62,013 $ 98,615
Adjusted EBITDA margin(f) ..................... 52.8% 44.9%
After tax cash flow(h) ........................ $ 30,441 $ 32,737
After tax cash flow margin(f) ............... 26.0% 15.0%
Program contract payments ..................... $ 12,071 $ 26,259
Capital expenditures ........................ 2,114 8,286
Corporate overhead expense .................. 3,066 6,985
</TABLE>
(Continued on following page)
9
<PAGE>
<TABLE>
<CAPTION>
AS OF DECEMBER 31,
-------------------------------------------------------------------
1992 1993 1994(A) 1995(A) 1996(A)
----------- ----------- ------------- ------------- ---------------
<S> <C> <C> <C> <C> <C>
Adjusted EBITDA to interest expense ............ 2.0 x 2.8 x 2.5 x 2.7 x 2.1 x
Adjusted EBITDA to interest expense plus
subsidiary trust minority interest expense . 2.0 x 2.8 x 2.5 x 2.7 x 2.1 x
Adjusted EBITDA less capital expenditures
to interest expense plus subsidiary trust mi-
nority interest expense 2.0 x 2.7 x 2.4 x 2.7 x 2.0 x
Net debt to Adjusted EBITDA(i) .................. 4.1 x 5.8 x 5.3 x 2.9 x 7.1 x
Net debt plus Company Obligated Mandato-
rily Redeemable Security of Subsidiary
Trust Holding Solely KDSM Senior Deben-
tures (as defined) to Adjusted EBITDA 4.1 x 5.8 x 5.3 x 2.9 x 7.1 x
Cash flows from operating activities(j) ......... $ 5,235 $11,230 $ 20,781 $ 55,909 $ 68,970
Cash flows from investing activities(j) ......... (1,051) 1,521 (249,781) (119,243) (1,011,897)
Cash flows from financing activities(j) ......... (3,741) 3,462 213,410 173,338 832,818
Ratio of:
Earnings to fixed charges(k) .................. - 1.1 x - 1.3 x 1.1 x
<CAPTION>
SIX MONTHS ENDED
JUNE 30,
---------------------------
1996 1997
------------- -------------
(UNAUDITED)
<S> <C> <C>
Adjusted EBITDA to interest expense ............ 2.2 x 1.9 x
Adjusted EBITDA to interest expense plus
subsidiary trust minority interest expense . 2.2 x 1.7 x
Adjusted EBITDA less capital expenditures
to interest expense plus subsidiary trust mi-
nority interest expense 2.2 x 1.5 x
Net debt to Adjusted EBITDA(i) .................. 10.4 x 5.4 x
Net debt plus Company Obligated Mandato-
rily Redeemable Security of Subsidiary
Trust Holding Solely KDSM Senior Deben-
tures (as defined) to Adjusted EBITDA 10.4 x 6.3 x
Cash flows from operating activities(j) ......... $ 26,447 $ 42,483
Cash flows from investing activities(j) ......... (942,126) (112,429)
Cash flows from financing activities(j) ......... 807,425 70,345
Ratio of:
Earnings to fixed charges(k) .................. 1.1 x -
</TABLE>
<TABLE>
<CAPTION>
AS OF DECEMBER 31,
------------------------------------------------------------ AS OF JUNE 30,
1992 1993 1994(A) 1995(A) 1996(A) 1997
---------- ------------ ------------ ---------- ------------ ---------------
(UNAUDITED)
<S> <C> <C> <C> <C> <C> <C>
BALANCE SHEET DATA:
Cash and cash equivalents .................. $ 1,823 $ 18,036 $ 2,446 $112,450 $ 2,341 $ 2,740
Total assets .............................. 140,366 242,917 399,328 605,272 1,707,297 1,762,505
Total debt(l) .............................. 110,659 224,646 346,270 418,171 1,288,147 1,175,783
Company Obligated Mandatorily Re-
deemable Security of Subsidiary Trust
Holding Solely KDSM Senior Deben-
tures(m) - - - - - 200,000
Total stockholders' equity (deficit) ...... (3,127) (11,024) (13,723) 96,374 237,253 232,638
</TABLE>
NOTES TO SUMMARY HISTORICAL CONSOLIDATED FINANCIAL DATA
(a) The Company made acquisitions in 1994, 1995 and 1996 as described in
the footnotes to the Consolidated Financial Statements incorporated
herein by reference. The statement of operations and other data
presented for periods preceding the dates of acquisitions do not
include amounts for these acquisitions and therefore are not comparable
to subsequent periods. Additionally, the years in which the specific
acquisitions occurred may not be comparable to subsequent periods
depending on when during the year the acquisition occurred.
(b) Net broadcast revenues are defined as broadcast revenues net of agency
commissions.
(c) Depreciation and amortization includes amortization of program contract
costs and net realizable value adjustments, depreciation and
amortization of property and equipment, and amortization of acquired
intangible broadcasting assets and other assets including amortization
of deferred financing costs and costs related to excess syndicated
programming.
(d) Subsidiary trust minority interest expense represent the distributions
on $200 million aggregate Liquidation Value of Preferred Securities (as
defined) at a distribution rate of 11.625%.
(e) "Broadcast cash flow" is defined as broadcast operating income plus
corporate overhead expense, special bonuses paid to executive officers,
depreciation and amortization, (including film amortization and
amortization of deferred compensation and excess syndicated
programming) less cash payments for program contract rights. Cash
program payments represent cash payments made for current program
payables and do not necessarily correspond to program usage. Special
bonuses paid to executive officers are considered non-recurring
expenses. The Company has presented broadcast cash flow data, which the
Company believes are comparable to the data provided by other companies
in the industry, because such data are commonly used as a measure of
performance for broadcast companies. However, broadcast cash flow does
not purport to represent cash provided by operating activities as
reflected in the Company's consolidated statements of cash flows, is
not a measure of financial performance under generally accepted
accounting principles and should not be considered in isolation or as a
substitute for measures of performance prepared in accordance with
generally accepted accounting principles.
(notes continued on following page)
10
<PAGE>
(f) "Broadcast cash flow margin" is defined as broadcast cash flow divided
by net broadcast revenues. "Adjusted EBITDA margin" is defined as
Adjusted EBITDA divided by net broadcast revenues. "After tax cash flow
margin" is defined as after tax cash flow divided by net broadcast
revenues.
(g) "Adjusted EBITDA" is defined as broadcast cash flow less corporate
overhead expense and is a commonly used measure of performance for
broadcast companies. Adjusted EBITDA does not purport to represent cash
provided by operating activities as reflected in the Company's
consolidated statements of cash flows, is not a measure of financial
performance under generally accepted accounting principles and should
not be considered in isolation or as a substitute for measures of
performance prepared in accordance with generally accepted accounting
principles.
(h) "After tax cash flow" is defined as net income (loss) before
extraordinary items plus depreciation and amortization of intangibles
(excluding film amortization), amortization of deferred compensation,
amortization of excess syndicated programming, special bonuses paid to
executive officers, and the deferred tax provision (or minus the
deferred tax benefit). After tax cash flow is presented here not as a
measure of operating results and does not purport to represent cash
provided by operating activities. After tax cash flow should not be
considered in isolation or as a substitute for measures of performance
prepared in accordance with generally accepted accounting principles.
(i) Net debt is defined as total debt less cash and cash equivalents.
(j) These items are financial statement disclosures in accordance with
Generally Accepted Accounting Principles and are also presented in the
Company's consolidated financial statements incorporated by reference
herein.
(k) Earnings were inadequate to cover fixed charges for the years ended
December 31, 1992 and 1994, and for the six months ended June 30, 1997.
Additional earnings of $5,840, $3,387, and $9,922 would have been
required to cover fixed charges in 1992, 1994 and the six months ended
June 30, 1997, respectively.
(l) "Total debt" is defined as long-term debt, net of unamortized discount,
and capital lease obligations, including current portion thereof. In
1992 total debt included warrants outstanding which were redeemable
outside the control of the Company. The warrants were purchased by the
Company for $10.4 million in 1993. Total debt as of December 31, 1993
included $100 million in principal amount of the 1993 Notes (as defined
herein), the proceeds of which were held in escrow to provide a source
of financing for acquisitions that were subsequently consummated in
1994 utilizing borrowings under the Bank Credit Agreement. $100 million
of the 1993 Notes was redeemed from the escrow in the first quarter of
1994. Total debt does not include the Preferred Securities.
(m) Company Obligated Mandatorily Redeemable Security of Subsidiary Trust
Holding Solely KDSM Senior Debentures represents $200 million aggregate
Liquidation Value of Preferred Securities which carry a mandatory
redemption feature after twelve years.
11
<PAGE>
RISK FACTORS
In addition to the other information contained or incorporated by reference
in this Prospectus, holders of Old Notes should review carefully the following
risks concerning the New Notes, the Company and the broadcast industry before
tendering Old Notes for exchange.
SUBSTANTIAL LEVERAGE AND PREFERRED STOCK OUTSTANDING
The Company has consolidated indebtedness that is substantial in relation
to its total stockholders' equity. As of October 1, 1997, the Company had
outstanding long-term indebtedness (including current installments) of
approximately $932.3 million (including the Old Notes). In addition, Sinclair
Capital, a subsidiary trust of the Company (the "Trust"), had issued and
outstanding $200 million aggregate liquidation amount of 11 5/8% High Yield
Trust Offered Preferred Securities (the "Preferred Securities"), which are
ultimately backed by $206.2 million liquidation amount of Series C Preferred
Stock, par value $.01, of the Company (the "Series C Preferred Stock") each of
which must be redeemed in 2009. The Company may borrow additional amounts under
a bank credit facility governed by an Amended and Restated Credit Agreement
dated as of May 20, 1997 with The Chase Manhattan Bank, as agent (as amended by
the First Amendment thereto and as otherwise amended from time to time, the
"Bank Credit Agreement"), of which $316.1 million was outstanding as of October
1, 1997, and expects to do so to finance the Heritage Acquisition. The Company
also had outstanding 1,085,983 shares of the Company's Series B Convertible
Preferred Stock, par value $.01 per share (the "Series B Convertible Preferred
Stock") with an aggregate liquidation preference of $108.6 million as of October
1, 1997. Pursuant to the Preferred Stock Offering, the Company issued 3,450,000
shares of its Series D Convertible Exchangeable Preferred Stock with an
aggregate liquidation preference of approximately $172.5 million, which is
exchangeable at the option of the Company in certain circumstances for
subordinated debentures of the Company with an aggregate principal amount of
$172.5 million. The Company also has significant program contracts payable and
commitments for future programming. Moreover, subject to the restrictions
contained in its debt instruments and preferred stock, the Company may incur
additional debt and issue additional preferred stock in the future.
The Company and its subsidiaries have and will continue to have significant
payment obligations relating to the Bank Credit Agreement, the Company's 10%
Senior Subordinated Notes due 2003 (the "1993 Notes"), the Company's 10% Senior
Subordinated Notes due 2005 (the "1995 Notes"), the New Notes (the 1993 Notes,
the 1995 Notes and the New Notes, the "Existing Notes"), and the Preferred
Securities, and a significant amount of the Company's cash flow will be required
to service these obligations. In addition, the Company will be required to pay
dividends on the Series D Preferred Stock and may be required to pay dividends
on the Series B Convertible Preferred Stock in certain circumstances. The
Company, on a consolidated basis, reported interest expense of $84.3 million for
the year ended December 31, 1996. After giving pro forma effect to acquisitions
completed by the Company in 1996, the issuance of the Preferred Securities, the
issuance of the New Notes, the Heritage Acquisition and the Common Stock
Offering and Preferred Stock Offering as though each occurred on January 1,
1996, and the use of the net proceeds therefrom, the interest expense and
Subsidiary Trust Minority Interest Expense would have been $164.7 million. The
weighted average interest rates on the Company's indebtedness under the Bank
Credit Agreement during the year ended December 31, 1996 was 8.08%.
The $675 million revolving credit facility available to the Company under
the Bank Credit Agreement will be subject to reductions beginning September 30,
1997, and will mature on the last business day of December 2004. Payment of
portions of the $325 million term loan under the Bank Credit Agreement began on
September 30, 1997 and the term loan must be fully repaid by December 31, 2004.
The 1993 Notes mature in 2003, the 1995 Notes mature in 2005 and the New Notes
mature in 2007. The Series C Preferred Stock must be redeemed in 2009. Required
repayment of indebtedness of the Company totaling approximately $932.3 million
will occur at various dates through May 31, 2007.
The Company's current and future debt service obligations and obligations
to make distributions on and to redeem preferred stock could have adverse
consequences to holders of the New Notes, including the following: (i) the
Company's ability to obtain financing for future working capital needs or
additional acquisitions or other purposes may be limited; (ii) a substantial
portion of the Company's cash flow from
12
<PAGE>
operations will be dedicated to the payment of principal and interest on its
indebtedness and payments related to the Preferred Securities, thereby reducing
funds available for operations; (iii) the Company may be vulnerable to changes
in interest rates under its credit facilities; and (iv) the Company may be more
vulnerable to adverse economic conditions than less leveraged competitors and,
thus, may be limited in its ability to withstand competitive pressures. If the
Company is unable to service or refinance its indebtedness or preferred stock,
it may be required to sell one or more of its stations to reduce debt service
obligations.
The Company expects to be able to satisfy its future debt service and
dividend and other payment obligations and other commitments with cash flow from
operations. However, there can be no assurance that the future cash flow of the
Company will be sufficient to meet such obligations and commitments. If the
Company is unable to generate sufficient cash flow from operations in the future
to service its indebtedness and to meet its other commitments, it may be
required to refinance all or a portion of its existing indebtedness or to obtain
additional financing. There can be no assurance that any such refinancing or
additional financing could be obtained on acceptable terms. If the Company is
unable to service or refinance its indebtedness, it may be required to sell one
or more of its stations to reduce debt service obligations.
RESTRICTIONS IMPOSED BY TERMS OF INDEBTEDNESS
The indentures relating to the Existing Notes (the "Existing Indentures")
and the Articles Supplementary relating to the Series C Preferred Stock
restrict, among other things, the Company's and its Subsidiaries' (as defined in
the Existing Indentures) ability to (i) incur additional indebtedness, (ii) pay
dividends, make certain other restricted payments or consummate certain asset
sales, (iii) enter into certain transactions with affiliates, (iv) incur
indebtedness that is subordinate in priority and in right of payment to any
Senior Indebtedness and senior in right of payment to the Existing Notes, (v)
merge or consolidate with any other person, or (vi) sell, assign, transfer,
lease, convey, or otherwise dispose of all or substantially all of the assets of
the Company. The indenture relating to the convertible subordinated debentures
of the Company that would be issued if the Series D Preferred Stock were
exchanged contains similar restrictions. In addition, the Bank Credit Agreement
contains certain other and more restrictive covenants, including restrictions on
redemption of capital stock, a limitation on the aggregate size of future
acquisitions undertaken without lender consent, a requirement that certain
conditions be satisfied prior to consummation of future acquisitions, and a
limitation on the amount of capital expenditures permitted by the Company in
future years without lender consent. The Bank Credit Agreement also requires the
Company to maintain specific financial ratios and to satisfy certain financial
condition tests. In addition, the Company may issue additional debt securities
in the future ("Debt Securities"), pursuant to the Shelf Registration Statement
or otherwise, with other and more restrictive covenants. The Company's ability
to meet these financial ratios and financial condition tests can be affected by
events beyond its control, and there can be no assurance that the Company will
meet those tests. The breach of any of these covenants could result in a default
under the Bank Credit Agreement and/or the Existing Indentures and/or Debt
Securities. In the event of a default under the Bank Credit Agreement, the
Existing Indentures or any Debt Securities, the lenders and the noteholders
could seek to declare all amounts outstanding under the Bank Credit Agreement,
the Existing Notes or any Debt Securities, together with accrued and unpaid
interest, to be immediately due and payable. If the Company were unable to repay
those amounts, the lenders under the Bank Credit Agreement could proceed against
the collateral granted to them to secure that indebtedness. If the indebtedness
under the Bank Credit Agreement, the Existing Notes or any Debt Securities were
to be accelerated, there can be no assurance that the assets of the Company
would be sufficient to repay in full that indebtedness and the other
indebtedness of the Company, much of which ranks senior in right of payment to
the New Notes. Substantially all of the assets of the Company and its
Subsidiaries (other than the assets of KDSM, Inc. which ultimately back up the
Preferred Securities) are pledged as security under the Bank Credit Agreement.
The Subsidiaries (with the exception of Cresap Enterprises, Inc., KDSM, Inc. (as
defined), KDSM Licensee, Inc. and the Trust) also guarantee the indebtedness
under the Bank Credit Agreement and the Existing Indentures.
In addition to a pledge of substantially all of the assets of the Company
and its Subsidiaries, the Company's obligations under the Bank Credit Agreement
are secured by mortgages on certain real property assets of certain non-Company
entities (the "Stockholder Affiliates") owned and controlled by
13
<PAGE>
the Company's current majority stockholders (David D. Smith, Frederick G.
Smith, J. Duncan Smith and Robert E. Smith, collectively, the "Controlling
Stockholders"), including Cunningham Communications, Inc. ("CCI"), Gerstell
Development Corporation ("Gerstell"), Gerstell Development Limited Partnership
("Gerstell LP") and Keyser Investment Group, Inc. ("KIG"). If the Company were
to seek to replace the Bank Credit Agreement, there can be no assurance that
the assets of these Stockholder Affiliates would be available to provide
additional security under a new credit agreement, or that a new credit
agreement could be arranged on terms as favorable as the terms of the Bank
Credit Agreement without a pledge of such Stockholder Affiliates' assets.
SUBORDINATION OF THE NEW NOTES AND THE NEW GUARANTEES; ASSET ENCUMBRANCES
The payment of principal of, premium, if any, and interest on the New Notes
will be subordinated to the prior payment in full of existing and future Senior
Indebtedness of the Company, which includes all indebtedness under the Bank
Credit Agreement including obligations under interest rate agreements related
thereto (the "Bank Interest Rate Agreements") and certain other indebtedness
(the "Founders' Notes"). Therefore, in the event of the liquidation,
dissolution, reorganization, or any similar proceeding regarding the Company,
the assets of the Company will be available to pay obligations on the New Notes
only after Senior Indebtedness has been paid in full in cash or cash equivalents
or in any other form acceptable to the holders of Senior Indebtedness, and there
may not be sufficient assets to pay amounts due on all or any of the New Notes.
In addition, the Company may not pay principal of, premium, if any, interest on
or any other amounts owing in respect of the New Notes, make any deposit
pursuant to defeasance provisions or purchase, redeem or otherwise retire the
New Notes, if any Designated Senior Indebtedness (as defined in the Indenture)
is not paid when due or any other default on Designated Senior Indebtedness
occurs and the maturity of such indebtedness is accelerated in accordance with
its terms unless, in either case, such default has been cured or waived, any
such acceleration has been rescinded or such indebtedness has been repaid in
full. Moreover, under certain circumstances, if any non-payment default exists
with respect to Designated Senior Indebtedness, the Company may not make any
payments on the New Notes for a specified time, unless such default is cured or
waived, any acceleration of such indebtedness has been rescinded or such
indebtedness has been repaid in full. See "Description of the New Notes -
Subordination." As of October 1, 1997, the aggregate amount of Senior
Indebtedness that ranked senior in right of payment to the Notes would have been
$332.3 million, and the aggregate amount of indebtedness that was pari passu in
right of payment to the New Notes would have been $400 million. The Company's
and the Subsidiaries' ability to incur additional indebtedness is restricted
under the Subordinated Note Indentures. Any indebtedness which can be incurred
may constitute additional Senior Indebtedness or Guarantor Senior Indebtedness
and may be secured. See "Description of the New Notes - Certain Covenants -
Limitation on Indebtedness."
The New Guarantees by the Guarantors will be subordinated in right of
payment to the guarantees by the Guarantors of the Company's obligations under
the Bank Credit Agreement including but not limited to the obligations under any
Bank Interest Rate Agreement related thereto and the Founders' Notes and will be
subordinated in the future to all future guarantees by the Guarantors of Senior
Indebtedness of the Company and any other Guarantor Senior Indebtedness. As of
October 1, 1997, the aggregate amount of Guarantor Senior Indebtedness that
ranked senior in right of payment to the Guarantees would have been $332.3
million (including $325.6 million of outstanding indebtedness representing
guarantees of Senior Indebtedness).
The New Notes will not be secured by any of the Company's assets. The
obligations of the Company under the Bank Credit Agreement including but not
limited to any Bank Interest Rate Agreement, however, are secured, to the extent
permitted by law, by a first priority security interest in substantially all of
the Company's assets, including the assets of the Guarantors. Moreover, the
Company's obligations under the Founders' Notes are secured on a second priority
basis by substantially all of the Company's assets, including the assets of the
Guarantors. If the Company becomes insolvent or is liquidated, or if payment
under the Bank Credit Agreement, any Bank Interest Rate Agreement or the
Founders' Notes is accelerated, the lenders under the Bank Credit Agreement, any
Bank Interest Rate Agreement or the holders of the Founders' Notes would be
entitled to exercise the remedies available to a secured lender under applicable
law and pursuant to instruments governing such indebtedness. Accordingly,
14
<PAGE>
such lenders will have a prior claim on the Company's assets. In any such event,
because the New Notes will not be secured by any of the Company's assets, it is
possible that there would be no assets remaining from which claims of the
holders of the New Notes could be satisfied or, if any such assets remained,
such assets might be insufficient to satisfy such claims fully. See "Description
of the New Notes" and "Management's Discussion and Analysis of Financial
Condition and Results of Operations - Liquidity and Capital Resources," and
Notes to the Consolidated Financial Statements in the filings incorporated by
reference herein. In addition, KDSM, Inc.'s 11 5/8% Senior Debentures due 2009
(the "KDSM Senior Debentures"), $206.2 million principal amount of which is
outstanding, are secured by a first priority security interest in the Series C
Preferred Stock.
DEPENDENCE UPON OPERATIONS OF SUBSIDIARIES; POSSIBLE INVALIDITY OF NEW
GUARANTEES
The New Notes are the obligations of the Company. As of September 30, 1997,
approximately 97.9% of the consolidated tangible assets of the Company were held
by the Guarantors. For the year ended December 31, 1996, 98.3% of the Company's
pro forma broadcast cash flow and 85.3% of the Company's income before provision
or benefit for income taxes were derived from operations of the Guarantors.
Therefore, the Company's ability to make interest and principal payments when
due to holders of the New Notes is dependent, in part, upon the receipt of
sufficient funds from its Subsidiaries.
The Company's obligations under the New Notes will be guaranteed, jointly
and severally, on a senior subordinated basis by each of the Guarantors, which
consist of all of the Company's existing Subsidiaries other than Cresap
Enterprises, Inc., KDSM, Inc. (together with its subsidiaries, "KDSM, Inc."),
KDSM Licensee, Inc. and the Trust. To the extent that a court were to find that:
(i) a New Guarantee was incurred by a Guarantor with intent to hinder, delay or
defraud any present or future creditor or the Guarantor contemplated insolvency
with a design to prefer one or more creditors to the exclusion in whole or in
part of others; or (ii) such Guarantor did not receive fair consideration or
reasonably equivalent value for issuing its New Guarantee and such Guarantor (a)
was insolvent; (b) was rendered insolvent by reason of the issuance of such New
Guarantee; (c) was engaged or about to engage in a business or transaction for
which the remaining assets of such Guarantor constituted unreasonably small
capital to carry on its business; or (d) intended to incur, or believed that it
would incur, debts beyond its ability to pay such debts as they matured, the
court could avoid or subordinate such New Guarantee in favor of the Guarantor's
other creditors. Among other things, a legal challenge of a New Guarantee on
fraudulent conveyance grounds may focus on the benefits, if any, realized by the
Guarantor as a result of the issuance by the Company of the New Notes. To the
extent any New Guarantee were to be avoided as a fraudulent conveyance or held
unenforceable for any other reason, holders of the New Notes would cease to have
any claim in respect of such Guarantor and would be creditors solely of the
Company and any Guarantor whose New Guarantee was not avoided or held
unenforceable. In such event, the claims of the holders of the New Notes against
the issuer of an invalid New Guarantee would be subject to the prior payment of
all liabilities of such Guarantor. There can be no assurance that, after
providing for all prior claims, there would be sufficient assets to satisfy the
claims of the holders of the New Notes relating to any voided New Guarantee.
Based upon financial and other information currently available to it, the
Company believes that the New Notes and the New Guarantees are being incurred
for proper purposes and in good faith and that the Company and each Guarantor
are solvent and will continue to be solvent after issuing the New Notes or its
New Guarantee, as the case may be, will have sufficient capital for carrying on
its business after such issuance and will be able to pay its debts as they
mature. See "Description of the New Notes" herein and "Management's Discussion
and Analysis of Financial Condition and Results of Operations - Liquidity and
Capital Resources" in the filings incorporated by reference herein.
POTENTIAL RELEASE OF NEW GUARANTEES
Any New Guarantee of a Guarantor may be released at any time upon any sale,
exchange or transfer by the Company of the stock of such Guarantor or
substantially all the assets of such Guarantor to a non-affiliate. Under the
Indenture, the net cash proceeds of any Asset Sale (as defined) are required to
be applied to the repayment of any Senior Indebtedness or to the purchase of
properties and assets
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for use in the Company's businesses existing on the date of the Indenture or
reasonably related thereto. If such proceeds are not so utilized within 12
months of the Asset Sale and all such proceeds not so utilized exceed $5.0
million, the Company is required to offer to apply such proceeds to the
repayment of the New Notes and any indebtedness pari passu in right of payment
to the New Notes. The New Guarantee of any of the Guarantors may also be
released at such time as such Guarantor no longer guarantees any other debt of
the Company. See "Description of the New Notes - Certain Covenants - Limitation
on Sale of Assets" and "- Certain Definitions - Asset Sale."
CONFLICTS OF INTEREST
In addition to their respective interests in the Company, the Controlling
Stockholders have interests in various non-Company entities which are involved
in businesses related to the business of the Company, including, among others,
the operation of a television station in St. Petersburg, Florida since 1991 and
a television station in Bloomington, Indiana since 1990. In addition, the
Company leases certain real property and tower space from and engages in other
transactions with the Stockholder Affiliates, which are controlled by the
Controlling Stockholders. Although the Controlling Stockholders have agreed to
divest interests in the Bloomington station that are attributable to them under
applicable Federal Communications Commission ("FCC") regulations, the
Controlling Stockholders and the Stockholder Affiliates may continue to engage
in the operation of the St. Petersburg, Florida station and other already
existing businesses. However, under Maryland law, generally a corporate insider
is precluded from acting on a business opportunity in his or her individual
capacity if that opportunity is one which the corporation is financially able to
undertake, is in the line of the corporation's business and of practical
advantage to the corporation, and is one in which the corporation has an
interest or reasonable expectancy. Accordingly, the Controlling Stockholders
generally are required to engage in new business opportunities of the Company
only through the Company unless a majority of the Company's disinterested
directors decide under the standards discussed above, that it is not in the best
interests of the Company to pursue such opportunities. Non-Company activities of
the Controlling Stockholders such as those described above could, however,
present conflicts of interest with the Company in the allocation of management
time and resources of the Controlling Stockholders, a substantial majority of
which is currently devoted to the business of the Company.
In addition, there have been and will be transactions between the Company
and Glencairn Ltd. (with its subsidiaries, "Glencairn"), a corporation in which
relatives of the Controlling Stockholders beneficially own a majority of the
equity interests. Glencairn is the owner-operator and licensee of television
stations WRDC in Raleigh/Durham, WVTV in Milwaukee, WNUV in Baltimore, WABM in
Birmingham, KRRT in San Antonio, and WFBC in Asheville, North
Carolina/Greenville/Spartanburg, South Carolina. The Company currently provides
programming services to each of these stations pursuant to an LMA. The Company
has also agreed to sell the License Assets (as defined) relating to WTTE in
Columbus, Ohio to Glencairn and to enter into an LMA with Glencairn pursuant to
which the Company will provide programming services for this station after the
acquisition of the License Assets by Glencairn. See "Business of Sinclair
Broadcasting Acquisitions Strategy" in the Company's Form 8-K dated October 8,
1997, which is incorporated by reference herein. The FCC has approved this
transaction. However, the Company does not expect this transfer to occur unless
the Company acquires the assets of WSYX in Columbus, Ohio.
Two persons who are expected to become directors of the Company, Barry
Baker (who is also expected to become an executive officer of the Company) and
Roy F. Coppedge, III, have direct and indirect interests in River City
Broadcasting, L.P. ("River City"), from which the Company purchased certain
assets in 1996 (the "River City Acquisition"). In addition, in connection with
the River City Acquisition, the Company has entered into various ongoing
agreements with River City, including options to acquire assets that were not
acquired at the time of the initial closing of the River City Acquisition, and
LMAs relating to stations for which River City continues to own License Assets.
See "Business - Broadcasting Acquisition Strategy" in the Company's Form 8-K
dated October 8, 1997, which is incorporated by reference herein. Messrs. Baker
and Coppedge were not officers or directors of the Company at the time these
agreements were entered into, but, upon their expected election to the
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board of directors of the Company (the "Board of Directors") and upon Mr.
Baker's expected appointment as an executive officer of the Company, they may
have conflicts of interest with respect to issues that arise under any
continuing agreements and any other agreements with River City.
The Bank Credit Agreement, the Existing Indentures and the Articles
Supplementary relating to the Series C Preferred Stock provide (and any Debt
Securities may provide) that transactions between the Company and its affiliates
must be no less favorable to the Company than would be available in comparable
transactions in arm's-length dealings with an unrelated third party. Moreover,
the Existing Indentures provide (and any Debt Securities may provide) that any
such transactions involving aggregate payments in excess of $1.0 million must be
approved by a majority of the members of the Board of Directors of the Company
and the Company's independent directors (or, in the event there is only one
independent director, by such director), and, in the case of any such
transactions involving aggregate payments in excess of $5.0 million, the Company
is required to obtain an opinion as to the fairness of the transaction to the
Company from a financial point of view issued by an investment banking or
appraisal firm of national standing.
"License Assets" means the television and radio station assets essential
for broadcasting a television or radio signal in compliance with regulatory
guidelines, generally consisting of the FCC license, transmitter, transmission
lines, technical equipment, call letters and trademarks, and certain furniture,
fixtures and equipment. "Non-License Assets" means the assets relating to
operation of a television or radio station other than License Assets.
VOTING RIGHTS; CONTROL BY CONTROLLING STOCKHOLDERS;
POTENTIAL ANTI-TAKEOVER EFFECT OF DISPROPORTIONATE VOTING RIGHTS
The Company's Common Stock has been divided into two classes, each with
different voting rights. The Class A Common Stock entitles a holder to one vote
per share on all matters submitted to a vote of the stockholders, whereas the
Company's Class B Common Stock, par value $.01 per share (the "Class B Common
Stock"), 100% of which is beneficially owned by the Controlling Stockholders,
entitles a holder to ten votes per share, except for "going private" and certain
other transactions for which the holder is entitled to one vote per share. The
Class A Common Stock, the Class B Common Stock and the Series B Convertible
Preferred Stock vote together as a single class (except as otherwise may be
required by Maryland law) on all matters submitted to a vote of stockholders,
with each share of Series B Convertible Preferred Stock entitled to 3.64 votes
on all such matters. Holders of Class B Common Stock may at any time convert
their shares into the same number of shares of Class A Common Stock and holders
of Series B Convertible Preferred Stock may at any time convert each share of
Series B Convertible Preferred Stock into 3.64 Shares of Class A Common Stock.
The Controlling Stockholders own in the aggregate nearly 60% of the
outstanding voting capital stock (including the Series B Convertible Preferred
Stock) of the Company and control over 90% of all voting rights associated with
the Company's capital stock. As a result, any three of the Controlling
Stockholders will be able to elect a majority of the members of the Board of
Directors and, thus, will have the ability to maintain control over the
operations and business of the Company.
The Controlling Stockholders have entered into a stockholders' agreement
(the "Stockholders' Agreement") pursuant to which they have agreed, for a period
ending in 2005, to vote for each other as candidates for election to the Board
of Directors. In addition, in connection with the River City Acquisition, the
Controlling Stockholders and Barry Baker and Boston Ventures IV Limited
Partnership and Boston Ventures IVA Limited Partnership (collectively, "Boston
Ventures") have entered into a voting agreement (the "Voting Agreement")
pursuant to which the Controlling Stockholders have agreed to vote in favor of
certain specified matters including, but not limited to, the appointment of Mr.
Baker and Mr. Coppedge (or another designee of Boston Ventures) to the Company's
Board of Directors at such time as they are allowed to become directors pursuant
to FCC rules. Mr. Baker and Boston Ventures, in turn, have agreed to vote in
favor of the reappointment of each of the Controlling Stockholders to the Board
of Directors. The Voting Agreement will remain in effect with respect to Mr.
Baker for as long as he is a director of the Company and will remain in effect
with respect to Mr. Coppedge (or another designee of Boston Ventures) until the
first to occur of (a) the later of (i) May 31, 2001 and (ii) the
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expiration of the initial five-year term of Mr. Baker's employment agreement and
(b) such time as Boston Ventures no longer owns directly or indirectly through
its interest in River City at least 721,115 shares of Class A Common Stock
(including shares that may be obtained on conversion of Series B Convertible
Preferred Stock). See "Management - Employment Agreements" in Sinclair's Form
8-K dated October 8, 1997 incorporated herein by reference.
The disproportionate voting rights of the Class B Common Stock relative to
the Class A Common Stock and the Stockholders' Agreement and Voting Agreement
may make the Company a less attractive target for a takeover than it otherwise
might be or render more difficult or discourage a merger proposal, tender offer
or other transaction involving an actual or potential Change of Control of the
Company. In addition, the Company has the right to issue additional shares of
preferred stock the terms of which could make it more difficult for a third
party to acquire a majority of the outstanding voting stock of the Company and
accordingly may be used as an anti-takeover device.
DEPENDENCE UPON KEY PERSONNEL; EMPLOYMENT AGREEMENTS WITH KEY PERSONNEL
The Company believes that its success will continue to be dependent upon
its ability to attract and retain skilled managers and other personnel,
including its present officers, regional directors and general managers. The
loss of the services of any of the present officers, especially its President
and Chief Executive Officer, David D. Smith, or Barry Baker, who is currently a
consultant to the Company and is expected to become President and Chief
Executive Officer of Sinclair Communications, Inc. (a wholly owned subsidiary of
the Company that holds all of the broadcast operations of the Company, "SCI")
and Executive Vice President and a director of the Company as soon as
permissible under FCC rules, may have a material adverse effect on the
operations of the Company. Each of the Controlling Stockholders has entered into
an employment agreement with the Company, each of which terminates June 12,
1998, unless renewed for an additional one year period according to its terms,
and Barry Baker has entered into an employment agreement that terminates in
2001. See "Management - Employment Agreements" in Sinclair's Form 8-K dated
October 8, 1997. The Company has key-man life insurance for Mr. Baker, but does
not currently maintain key personnel life insurance on any of its executive
officers.
Mr. Baker is Chief Executive Officer of River City and devotes a
substantial amount of his business time and energies to those services. Mr.
Baker cannot be appointed as an executive officer or director of the Company
until such time as (i) either the Controlling Stockholders dispose of their
attributable interests (as defined by applicable FCC rules) in a television
station in the Indianapolis DMA or Mr. Baker no longer has an attributable
interest in WTTV or WTTK in Indianapolis; and (ii) either the Company disposes
of its attributable interest in WTTE in Columbus or Mr. Baker no longer has an
attributable interest in WSYX in Columbus. The Company has not taken these
actions as of the date of this Prospectus and, accordingly, Mr. Baker is able to
terminate his employment agreement at any time. If Mr. Baker's employment
agreement is terminated under certain specified circumstances, Mr. Baker will
have the right to purchase from the Company at fair market value either (i) the
Company's broadcast operations in either the St. Louis market or the Asheville,
North Carolina/Greenville/Spartanburg, South Carolina market or (ii) all of the
Company's radio operations, either of which may also have a material adverse
effect on the operations of the Company.
RECENT RAPID GROWTH; ABILITY TO MANAGE GROWTH; FUTURE ACCESS TO CAPITAL
Since the beginning of 1992, the Company has experienced rapid and
substantial growth primarily through acquisitions and the development of LMA
arrangements. In 1996 and 1997, the Company completed the River City Acquisition
and other acquisitions, which increased the number of television stations owned
or provided programming services by the Company from 13 to 29 and increased the
number of radio stations owned from none to 27 radio stations. In addition, the
Company has entered into an agreement to acquire four television and 24 radio
stations and the right to provide programming services to two television
stations in connection with the Heritage Acquisition. The Company has options to
acquire an additional seven radio stations. There can be no assurance that the
Company will be able to continue to locate and complete acquisitions on the
scale of the River City Acquisition, the
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Heritage Acquisition or in general. In addition, acquisitions in the television
and radio industry have come under increased scrutiny from the Department of
Justice and the Federal Trade Commission. See "Business of Sinclair - Federal
Regulation of Television and Radio Broadcasting" in the Company's Form 8-K dated
October 8, 1997, which is incorporated by reference herein. Accordingly, there
is no assurance that the Company will be able to maintain its rate of growth or
that the Company will continue to be able to integrate and successfully manage
such expanded operations, including those to be acquired in the Heritage
Acquisition. Inherent in any acquisitions are certain risks such as increasing
leverage and debt service requirements and combining company cultures and
facilities which could have a material adverse effect on the Company's operating
results, particularly during the period immediately following such acquisitions.
Additional debt or capital may be required in order to complete future
acquisitions, and there can be no assurance the Company will be able to obtain
such financing or raise the required capital.
DEPENDENCE ON ADVERTISING REVENUES; EFFECT OF LOCAL, REGIONAL AND NATIONAL
ECONOMIC CONDITIONS
The Company's operating results are primarily dependent on advertising
revenues which, in turn, depend on national and local economic conditions, the
relative popularity of the Company's programming, the demographic
characteristics of the Company's markets, the activities of competitors and
other factors which are outside the Company's control. Both the television and
radio industries are cyclical in nature, and the Company's revenues could be
adversely affected by a future local, regional or national recessionary
environment.
RELIANCE ON TELEVISION PROGRAMMING
One of the Company's most significant operating cost components is
television programming. There can be no assurance that the Company will not be
exposed in the future to increased programming costs which may materially
adversely affect the Company's operating results. Acquisitions of program rights
are usually made two or three years in advance and may require multi-year
commitments, making it difficult to accurately predict how a program will
perform. In some instances, programs must be replaced before their costs have
been fully amortized, resulting in write-offs that increase station operating
costs.
CERTAIN NETWORK AFFILIATION AGREEMENTS
All but one of the television stations owned or provided programming
services by the Company are affiliated with a network. Under the affiliation
agreements, the networks possess, under certain circumstances, the right to
terminate the agreement on prior written notice generally ranging between 15 and
45 days, depending on the agreement. Ten of the stations currently owned or
programmed by the Company are affiliated with Fox and 39.0% of the Company's
revenue in 1996 on a pro forma basis without giving effect to the Heritage
Acquisition was from Fox affiliated stations. WVTV, a station to which the
Company provides programming services in Milwaukee, Wisconsin pursuant to an
LMA, WTTO, a station owned by the Company in Birmingham, Alabama, and WDBB, a
station to which the Company provides programming services in Tuscaloosa,
Alabama pursuant to an LMA, each of which was previously affiliated with Fox,
had their affiliation agreements with Fox terminated by Fox in December 1994,
September 1996 and September 1996, respectively. WVTV and WTTO are now WB
affiliates. In addition, the Company has been notified by Fox of Fox's intention
to terminate WLFL's affiliation with Fox in the Raleigh-Durham market and WTVZ's
affiliation with Fox in the Norfolk market, effective August 31, 1998, and the
Company has entered into an agreement with WB for those stations to become
affiliated with WB at that time. On August 20, 1996, the Company entered into an
agreement with Fox limiting Fox's rights to terminate the Company's affiliation
agreements with Fox in other markets, but there can be no assurance that the Fox
affiliation agreements will remain in place or that Fox will continue to provide
programming to affiliates on the same basis that currently exists. See "Business
of Sinclair - Television Broadcasting" in Sinclair's Form 8-K dated October 8,
1997, which is incorporated by reference herein. The Company's UPN affiliation
agreements expire in January 1998. The non-renewal or termination of
affiliations with Fox or any other network could have a material adverse effect
on the Company's operations.
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Each of the affiliation agreements relating to television stations involved
in the River City Acquisition (other than River City's ABC and Fox affiliates)
became terminable by the network upon transfer of the License Assets of the
stations. These stations are continuing to operate as network affiliates, but
there can be no assurance that the affiliation agreements will be continued, or
that they will be continued on terms favorable to the Company. If any
affiliation agreements are terminated, the affected station could lose market
share, may have difficulty obtaining alternative programming at an acceptable
cost, and may otherwise be adversely affected.
Twelve stations owned or programmed by the Company are affiliated with UPN,
a network that began broadcasting in January 1995. Two stations owned or
programmed by the Company are operated as affiliates with WB, a network that
began broadcasting in January 1995, and, pursuant to an agreement between the
Company and WB, certain of the Company's stations affiliated with UPN will
become affiliated with WB when their current affiliations expire in January
1998. There can be no assurance as to the future success of UPN or WB
programming or as to the continued operation of the UPN or WB networks. In
connection with the change of affiliation of certain of the Company's stations
from UPN to WB, UPN has filed an action in Los Angeles Superior Court against
the Company, seeking declaratory relief and specific performance or, in the
alternative, unspecified damages and alleging that neither the Company nor its
affiliates provided proper notice of their intention not to extend the current
UPN affiliations beyond January 15, 1998. Certain subsidiaries of the Company
have filed an action in the Circuit Court for Baltimore City seeking declaratory
relief that their notice was effective to terminate the affiliations on January
15, 1998. There can be no assurance that the Company and its subsidiaries will
prevail in these proceedings or that the outcome of these proceedings, if
adverse to the Company and its subsidiaries, will not have a material adverse
effect on the Company.
COMPETITION
The television and radio industries are highly competitive. Some of the
stations and other businesses with which the Company's stations compete are
subsidiaries of large, national or regional companies that may have greater
resources than the Company. Technological innovation and the resulting
proliferation of programming alternatives, such as cable television, wireless
cable, in home satellite-to-home distribution services, pay-per-view and home
video and entertainment systems have fractionalized television viewing audiences
and have subjected free over-the-air television broadcast stations to new types
of competition. The radio broadcasting industry is also subject to competition
from new media technologies that are being developed or introduced, such as the
delivery of audio programming by cable television systems and by digital audio
broadcasting ("DAB"). In April 1997, the FCC awarded two licenses for DAB. DAB
may provide a medium for the delivery by satellite or terrestrial means of
multiple new audio programming formats to local and national audiences.
The Company's stations face strong competition for market share and
advertising revenues in their respective markets from other local free
over-the-air radio and television broadcast stations, cable television and
over-the-air wireless cable television as well as newspapers, periodicals and
other entertainment media. Some competitors are part of larger companies with
greater resources than the Company. In addition, the FCC has adopted rules which
permit telephone companies to provide video services to homes on a
common-carrier basis without owning or controlling the product being
distributed, and proposed legislation could relax or repeal the telephone-cable
cross-ownership prohibition for all systems. See "Business of Sinclair
Competition" in Sinclair's Form 8-K dated October 8, 1997, which is incorporated
by reference herein.
In February 1996, the Telecommunications Act of 1996 (the "1996 Act") was
adopted by the Congress of the United States and signed into law by President
Clinton. The 1996 Act contains a number of sweeping reforms that are having an
impact on broadcasters, including the Company. While creating substantial
opportunities for the Company, the increased regulatory flexibility imposed by
the 1996 Act and the removal of previous station ownership limitations have
sharply increased the competition for and prices of stations. The 1996 Act also
frees telephone companies, cable companies and others from some of the
restrictions which have previously precluded them from involvement in the
provision of video services. The 1996 Act may also have other effects on the
competition the Company faces, either in individual markets or in making
acquisitions.
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IMPACT OF NEW TECHNOLOGIES
The FCC has taken a number of steps to implement digital television ("DTV")
broadcasting service in the United States. In December 1996, the FCC adopted a
DTV broadcast standard and, in April 1997, made decisions in several pending
rulemaking proceedings that establish service rules and a plan for implementing
DTV. The FCC adopted a DTV Table of Allotments that provides all authorized
television stations with a second channel on which to broadcast a DTV signal.
The FCC has attempted to provide DTV coverage areas that are comparable to
stations' existing service areas. The FCC has ruled that television broadcast
licensees may use their digital channels for a wide variety of services such as
high-definition television, multiple standard definition television programming,
audio, data, and other types of communications, subject to the requirement that
each broadcaster provide at least one free video channel equal in quality to the
current technical standard.
Initially, DTV channels will be located in the range of channels from
channel 2 through channel 51. The FCC is requiring that affiliates of ABC, CBS,
Fox and NBC in the top 10 television markets begin digital broadcasting by May
1, 1999 (the stations affiliated with these networks in the top 10 markets have
voluntarily committed to begin digital broadcasting within 18 months), and that
affiliates of these networks in markets 11 through 30 begin digital broadcasting
by November 1999. The FCC's plan calls for the DTV transition period to end in
the year 2006, at which time the FCC expects that (i) DTV channels will be
clustered either in the range of channels 2 through 46 or channels 7 through 51;
and (ii) television broadcasters will have ceased broadcasting on their
non-digital channels, allowing that spectrum to be recovered by the government
for other uses. Under the Balanced Budget Act recently signed into law by
President Clinton, however, the FCC is authorized to extend the December 31,
2006 deadline for reclamation of a television station's non-digital channel if,
in any given case: (a) one or more television stations affiliated with one of
the four major networks in a market are not broadcasting digitally and the FCC
determines that the station(s) has (have) "exercised due diligence" in
attempting to convert to digital broadcasting; (b) less than 85% of the
television households in the station's market subscribe to a multichannel video
service (cable, wireless cable or direct-to-home broadcast satellite television)
that carries at least one digital channel from each of the local stations in
that market; or (c) less than 85% of the television households in the station's
market can receive digital signals off the air using either a set-top converted
box for an analog television set or a new digital television set. The Balanced
Budget Act also directs the FCC to auction the non-digital channels by September
30, 2002 even though they are not to be reclaimed by the government until at
least December 31, 2006. The FCC has stated that it will open a separate
proceeding to consider the recovery of television channels 60 through 69 and how
those frequencies will be used after they are eventually recovered from
television broadcasters. Additionally, the FCC will open a separate proceeding
to consider to what extent the cable must-carry requirements will apply to DTV
signals.
Implementation of digital television will improve the technical quality of
television signals received by viewers. Under certain circumstances, however,
conversion to digital operation may reduce a station's geographic coverage area
or result in some increased interference. The FCC's DTV allotment plan may also
result in UHF stations having considerably less signal power within their
service areas than present VHF stations that move to DTV channels. The Company
has filed with the FCC a petition for reconsideration of the FCC's DTV allotment
plan because of its concerns with respect to the relative DTV signal powers of
VHF/UHF and UHF/UHF stations. Implementation of digital television will also
impose substantial additional costs on television stations because of the need
to replace equipment and because some stations will need to operate at higher
utility costs. The FCC is also considering imposing new public interest
requirements on television licensees in exchange for their receipt of DTV
channels. The Company is currently considering plans to provide high definition
television ("HDTV"), to provide multiple channels of television, including the
provision of additional broadcast programming and transmitted data on a
subscription basis, and to continue its current TV program channels without
subscription fees on its allocated portions of the broadcast spectrum. The 1996
Act allows the FCC to charge a spectrum fee to broadcasters who use the digital
spectrum to offer subscription-based services. The FCC is expected to open a
rulemaking in the fall of 1997 to consider the spectrum fees to be charged to
broadcasters for such use. Congress has held hearings on broadcasters' plans for
the use of their digital spectrum. The Company cannot predict what future
actions the FCC or Congress might take with
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respect to DTV, nor can it predict the effect of the FCC's present DTV
implementation plan or such future actions on the Company's business.
Further advances in technology may also increase competition for household
audiences and advertisers. The video compression techniques now under
development for use with current cable television channels or direct broadcast
satellites which do not carry local television signals (some of which commenced
operation in 1994) are expected to reduce the bandwidth which is required for
television signal transmission. These compression techniques, as well as other
technological developments, are applicable to all video delivery systems,
including over-the-air broadcasting, and have the potential to provide vastly
expanded programming to highly targeted audiences. Reduction in the cost of
creating additional channel capacity could lower entry barriers for new channels
and encourage the development of increasingly specialized "niche" programming.
This ability to reach a very defined audience may alter the competitive dynamics
for advertising expenditures. The Company is unable to predict the effect that
technological changes will have on the broadcast television industry or the
future results of the Company's operations. The radio broadcasting industry is
also subject to competition from new media technologies that are being developed
or introduced, such as delivery of audio programming by cable television systems
and by digital audio broadcasting ("DAB"). DAB may provide a medium for the
delivery by satellite or terrestrial means of multiple new audio programming
formats by local and national audiences. The FCC has issued licenses for two DAB
systems. See "Business of Sinclair - Competition" in Sinclair's Form 8-K dated
October 8, 1997, which is incorporated by reference herein.
GOVERNMENTAL REGULATIONS; NECESSITY OF MAINTAINING FCC LICENSES
The broadcasting industry is subject to regulation by the FCC pursuant to
the Communications Act. Approval by the FCC is required for the issuance,
renewal and assignment of station operating licenses and the transfer of control
of station licensees. In particular, the Company's business will be dependent
upon its continuing to hold broadcast licenses from the FCC. While in the vast
majority of cases such licenses are renewed by the FCC, there can be no
assurance that the Company's licenses or the licenses owned by the
owner-operators of the stations with which the Company has LMAs will be renewed
at their expiration dates. A number of federal rules governing broadcasting have
changed significantly in recent years and additional changes may occur,
particularly with respect to the rules governing digital television, multiple
ownership and attribution. The Company cannot predict the effect that these
regulatory changes may ultimately have on the Company's operations. Additional
information regarding governmental regulation is set forth under "Business of
Sinclair - Federal Regulation of Television and Radio Broadcasting" in
Sinclair's Form 8-K dated October 8, 1997, which is incorporated by reference
herein.
Multiple Ownership Rules and Effect on LMAs
On a national level, FCC rules and regulations generally prevent an entity
or individual from having an attributable interest in television stations that
reach in excess of 35% of all U.S. television households (for purposes of this
calculation, UHF stations are credited with only 50% of the television
households in their markets). The Company currently reaches approximately 9% of
U.S. television households using the FCC's method of calculation. On a local
level, the "duopoly" rules prohibit attributable interests in two or more
television stations with overlapping service areas. There are no national limits
on ownership of radio stations, but on a local level no entity or individual can
have an attributable interest in more than five to eight stations (depending on
the total number of stations in the market), with no more than three to five
stations (depending on the total allowed) broadcasting in the same band (AM or
FM). There are limitations on the extent to which radio programming can be
simulcast through LMA arrangements, and LMA arrangements in radio are counted in
determining the number of stations that a single entity may control. FCC rules
also impose limitations on the ownership of a television and radio station in
the same market, though such cross-ownership is permitted on a limited basis in
larger markets.
The FCC generally applies its ownership limits to "attributable" interests
held by an individual, corporation, partnership or other entity. In the case of
corporations holding broadcast licenses, the interests of officers, directors
and those who, directly or indirectly, have the right to vote 5% or more of
22
<PAGE>
the corporation's voting stock (or 10% or more of such stock in the case of
insurance companies, certain regulated investment companies and bank trust
departments that are passive investors) are generally deemed to be attributable,
as are positions as an officer or director of a corporate parent of a broadcast
licensee. The FCC has proposed changes to these attribution rules. See "Business
of Sinclair - Federal Regulation of Television and Radio Broadcasting" in
Sinclair's Form 8-K dated October 8, 1997, which is incorporated by reference
herein.
The FCC has initiated rulemaking proceedings to consider proposals to
modify its television ownership restrictions, including ones that may permit the
ownership, in some circumstances, of two television stations with overlapping
service areas. The FCC is also considering in these proceedings whether to adopt
restrictions on television LMAs or treat television LMAs as attributable
interests of the entity providing the programming. The "duopoly" rules currently
prevent the Company from acquiring the FCC licenses of television stations with
which it has LMAs in those markets where the Company owns a television station.
In addition, if the FCC were to decide that the provider of programming services
under an LMA should be treated as the owner of the television station and if it
did not relax the duopoly rules, or if the FCC were to adopt restrictions on
LMAs without grandfathering existing arrangements, the Company could be required
to modify or terminate certain of its LMAs. In such an event, the Company could
be required to pay termination penalties under certain of its LMAs. The 1996 Act
provides that nothing therein "shall be construed to prohibit the origination,
continuation, or renewal of any television local marketing agreement that is in
compliance with the regulations of the [FCC]." The legislative history of the
1996 Act reflects that this provision was intended to grandfather television
LMAs that were in existence upon enactment of the 1996 Act, and to allow
television LMAs consistent with the FCC's rules subsequent to enactment of the
1996 Act. In its pending rulemaking proceeding regarding the television duopoly
rule, the FCC has proposed to adopt a grandfathering policy providing that, in
the event that television LMAs become attributable interests, LMAs that are in
compliance with existing FCC rules and policies and were entered into before
November 5, 1996, would be permitted to continue in force until the original
term of the LMA expires. Under the FCC's proposal, television LMAs that are
entered into or renewed after November 5, 1996 would have to be terminated if
LMAs are made attributable interests and the LMA in question resulted in a
violation of the television multiple ownership rules. All of the Company's LMAs
were entered into prior to November 5, 1996, but one was entered into after
enactment of the 1996 Act. Furthermore, rights under certain of the Company's
LMAs were acquired by other parties either subsequent to enactment of the 1996
Act but prior to November 5, 1996, or subsequent to November 5, 1996. The
Company can not predict whether any or all of its LMAs will be grandfathered.
See "Business of Sinclair - Federal Regulation of Television and Radio
Broadcasting" in Sinclair's Form 8-K dated October 8, 1997, which is
incorporated by reference herein. The LMA entered into after enactment of the
1996 Act has a term expiring May 31, 2006. Further, if the FCC were to find that
the owners/licensees of the stations with which the Company has LMAs failed to
maintain control over their operations as required by FCC rules and policies,
the licensee of the LMA station and/or the Company could be fined or could be
set for hearing, the outcome of which could be a fine or, under certain
circumstances, loss of the applicable FCC license.
A petition has been filed to deny the application to assign WTTV and WTTK
in the Indianapolis DMA from River City to the Company. Although the petition to
deny does not challenge the assignments of WTTV and WTTK to the Company, it
alleges that station WIIB in the Indianapolis DMA should be deemed an
attributable interest of the Controlling Stockholders (resulting in a violation
of the FCC's local television ownership restrictions when coupled with the
Company's acquisition of WTTV and WTTK) even though the Controlling Stockholders
have agreed to transfer their voting stock in WIIB to a third party. The FCC, at
the Company's request, has withheld action on the applications for the Company
to acquire WTTV and WTTK, and for the Controlling Stockholders to transfer their
voting stock in WIIB, pending the outcome of the FCC's rulemaking proceeding
concerning the cross-interest policy. The petitioner has appealed the
withholding of action on these applications.
In addition, the FCC granted the assignment applications for the Company to
acquire the License Assets of WLOS-TV and KABB-TV in the Asheville, North
Carolina/Greenville/Spartanburg, South Carolina and San Antonio, Texas markets,
respectively, and for Glencairn to acquire the License Assets of KRRT-TV and
WFBC-TV in these two markets, respectively, subject to the outcome of the FCC's
23
<PAGE>
cross-interest policy rulemaking proceeding and certain other conditions
relating to certain trusts that have non-voting ownership interests in
Glencairn. The Company has acquired the License Assets of KABB-TV and WLOS-TV.
Glencairn has acquired the License Assets of KRRT-TV and WFBC-TV and the Company
provides programming services to FRRT-TV and WFBC-TV pursuant to LMAs.
Applications for review have been filed by third parties which appeal the FCC's
grants of: (i) the Company's application to acquire WLOS-TV in the Asheville,
North Carolina/Greenville/Spartanburg, South Carolina market and Glencairn's
application to acquire WFBC-TV in that market; and (ii) the Company's
application to acquire KABB-TV in the San Antonio market. The Company has filed
oppositions to both applications for review.
An objection has also been filed against the Company's application to
acquire WNNE-TV in the Burlington, Vermont/Plattsburgh, New York market pursuant
to the Heritage Acquisition. The objection alleges that the FCC erred in a
previous determination that the contour overlap between WNNE-TV and WPTZ-TV in
the same market (which the Company has also proposed to acquire) is of a de
minimis nature, and that the Company's acquisition of WNNE-TV and WPTZ-TV would
violate the television duopoly rule. The Company has opposed this objection.
Additionally, the Company has pending several requests for waivers of the FCC's
radio-television, or "one to a market," rule, in connection with its
applications to acquire radio stations in the Heritage Acquisition in markets
where the Company owns or proposes to own a television station. There can be no
assurance that such waiver requests will be granted.
The Company is unable to predict (i) the ultimate outcome of possible
changes to the FCC's LMA and multiple ownership rules or the resolution of the
above-described petition to deny or (ii) the impact such factors may have upon
the Company's broadcast operations. As a result of regulatory changes, the
Company could be required to modify or terminate some or all of its LMAs,
resulting in termination penalties and/or divestitures of broadcast properties.
In addition, the Company's competitive position in certain markets could be
materially adversely affected. Thus, no assurance can be given that the changes
to the FCC rules or the resolution of this petition to deny will not have a
material adverse effect upon the Company.
LMAS - RIGHTS OF PREEMPTION AND TERMINATION
All of the Company's LMAs allow, in accordance with FCC rules, regulations
and policies, preemptions of the Company's programming by the owner-operator and
FCC licensee of each station with which the Company has an LMA. In addition,
each LMA provides that under certain limited circumstances the arrangement may
be terminated by the FCC licensee. Accordingly, the Company cannot be assured
that it will be able to air all of the programming expected to be aired on those
stations with which it has an LMA or that the Company will receive the
anticipated advertising revenue from the sale of advertising spots in such
programming. Although the Company believes that the terms and conditions of each
of its LMAs should enable the Company to air its programming and utilize the
programming and other non-broadcast license assets acquired for use on the LMA
stations, there can be no assurance that early terminations of the arrangements
or unanticipated preemptions of all or a significant portion of the programming
by the owner-operator and FCC licensee of such stations will not occur. An early
termination of one of the Company's LMAs, or repeated and material preemptions
of programming thereunder, could adversely affect the Company's operations. In
addition, the Company's LMAs expire on various dates from March 27, 2000 to May
31, 2006, unless extended or earlier terminated. There can be no assurance that
the Company will be able to negotiate extensions of its arrangements on terms
satisfactory to the Company.
In certain of its LMAs, the Company has agreed to indemnify the FCC
licensee against certain claims (including trademark and copyright infringement,
libel or slander and claims relating to certain FCC proceedings or
investigations) that may arise against the FCC licensee as a result of the
arrangement.
NET LOSSES
The Company experienced net losses of $7.9 million and $2.7 million during
1993 and 1994, respectively, net income of $76,000 in 1995 and net income of
$1.1 million in 1996 (a net loss of $29.0 million in 1996 on a pro forma basis
reflecting the 1996 Acquisitions, the Preferred Securities and the issuance
24
<PAGE>
of the New Notes). The Company experienced a net loss of $5.8 million during the
six months ended June 30, 1997. The losses include significant interest expense
as well as substantial non-cash expenses such as depreciation, amortization and
deferred compensation. Notwithstanding the slight net income in 1995 and 1996,
the Company expects to experience net losses in the future, principally as a
result of interest expense, amortization of programming and intangibles and
depreciation.
ABSENCE OF PUBLIC TRADING MARKET FOR THE NEW NOTES
There is no public market for the New Notes, and the Company does not
intend to apply for listing of the Notes on any national securities exchange or
for quotation of the New Notes through the Nasdaq Stock Market. The Company has
been advised by the Initial Purchasers that the Initial Purchasers intend to
make a market in the New Notes; however, they are under no obligation to do so
and may discontinue any market-making activities at any time without notice. No
assurance can be given as to the liquidity of the trading market for the New
Notes or that an active public market will develop. If an active public market
does not develop or is not maintained, the market price and liquidity of the New
Notes may be adversely affected.
CONSEQUENCES OF A FAILURE TO EXCHANGE OLD NOTES
The Old Notes have not been registered under the Securities Act or any
state securities laws and therefore may not be offered, sold or otherwise
transferred except in compliance with the registration requirements of the
Securities Act and any other applicable securities laws, or pursuant to an
exemption therefrom or in a transaction not subject thereto, and in each case in
compliance with certain other conditions and restrictions. Old Notes which
remain outstanding after consummation of the Exchange Offer will continue to
bear a legend reflecting such restrictions on transfer. In addition, upon
consummation of the Exchange Offer, holders of Old Notes that remain outstanding
will not be entitled to any rights to have such Old Notes registered under the
Securities Act or to any similar rights under the Registration Rights Agreement
(subject to certain limited exceptions as provided in the Registration Rights
Agreement). See "Description of the Old Notes." The Company does not intend to
register under the Securities Act any Old Notes that remain outstanding after
consummation of the Exchange Offer (subject to such limited exceptions, if
applicable).
To the extent that Old Notes are tendered and accepted in the Exchange
Offer, a holder's ability to sell untendered Old Notes could be adversely
affected. In addition, although the Old Notes have been designated for trading
in the Private Offerings, Resale and Trading through Automatic Linkages
("PORTAL") market, to the extent that Old Notes are tendered and accepted in
connection with the Exchange Offer, any trading market for Old Notes that remain
outstanding after the Exchange Offer could be adversely affected.
In the Registration Rights Agreement, the Company agreed that cash penalty
amounts would be payable to the holders of the Old Notes if, among other things,
(i) the Registration Statement of which this Prospectus forms a part was not
filed with the Commission by August 31, 1997, (ii) the Commission did not
declare such Registration Statement effective by October 30, 1997 or (iii) the
Exchange Offer was not consummated by December 14, 1997. See "Description of the
Old Notes" and "The Exchange Offer."
EXCHANGE OFFER PROCEDURES
Issuance of the New Notes in exchange for Old Notes pursuant to the
Exchange Offer will be made only after a timely receipt by the Company of such
Old Notes, a properly completed and duly executed Letter of Transmittal and all
other required documents. Therefore, holders of Old Notes desiring to tender
such Old Notes in exchange for New Notes should allow sufficient time to ensure
timely delivery. The Company is under no duty to give notification of defects or
irregularities with respect to the tenders of Old Notes for exchange.
FORWARD-LOOKING STATEMENTS
This Prospectus (including the documents or portions thereof incorporated
herein by reference and any Prospectus Supplement) contains forward-looking
statements. In addition, when used in this Prospectus, the words "intends to,"
"believes," "anticipates," "expects" and similar expressions are in-
25
<PAGE>
tended to identify forward-looking statements. Such statements are subject to a
number of risks and uncertainties. Actual results in the future could differ
materially and adversely from those described in the forward-looking statements
as a result of various important factors, including the impact of changes in
national and regional economies, successful integration of acquired television
and radio stations (including achievement of synergies and cost reductions),
pricing fluctuations in local and national advertising, volatility in
programming costs, the availability of suitable acquisitions on acceptable terms
and the other risk factors set forth above and the matters set forth in this
Prospectus generally. The Company undertakes no obligation to publicly release
the result of any revisions to these forward-looking statements that may be made
to reflect any future events or circumstances.
26
<PAGE>
USE OF PROCEEDS
The Company will not receive any cash proceeds from the issuance of the New
Notes offered hereby. The New Notes will be exchanged for Old Notes of like
principal amount. Old Notes that are exchanged will be retired and cancelled.
Approximately $162.5 million of the proceeds from the sale of the Old Notes
was used to repay all amounts outstanding under the Company's revolving credit
facility under the Bank Credit Agreement (which amount may be reborrowed). Such
amounts were borrowed to fund acquisitions and for general corporate purposes.
The remaining proceeds of the offering of the Old Notes (approximately $33
million) were used to pay part of a $63 million downpayment made by the Company
in connection with its acquisition of certain assets of Heritage.
27
<PAGE>
HISTORICAL AND PRO FORMA RATIOS OF EARNINGS TO FIXED CHARGES
The Company's consolidated ratios of earnings to fixed charges for each of
the periods indicated are set forth below:
SINCLAIR BROADCAST GROUP, INC. AND SUBSIDIARIES
RATIO OF EARNINGS TO FIXED CHARGES
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
SIX MONTHS
ENDED
YEARS ENDED DECEMBER 31, JUNE 30,
--------------------------------------------- ---------------
1992 1993 1994 1995 1996 1996 1997
------ ------- ------ ------- ------- ------- -----
(UNAUDITED)
<S> <C> <C> <C> <C> <C> <C> <C>
HISTORICAL
Ratio of earnings to fixed charges(a) ...... - 1.1 x - 1.3 x 1.1 x 1.1 x -
PRO FORMA(b)
Ratio of earnings to fixed charges(c) ...... - -
----- -
</TABLE>
- ----------
(a) Earnings were inadequate to cover fixed charges for the years ended December
31, 1992 and 1994, and for the six months ended June 30, 1997. Additional
earnings of $5,840, $3,387, and $9,922 would have been required to cover
fixed charges in the years ended December 31, 1992 and 1994, and the six
months ended June 30, 1997, respectively.
(b) The pro forma information for the year ended December 31, 1996 reflects the
pro forma effect of the completion of the offering of the Old Notes (the
"Old Notes Offering") (and the application of the net proceeds thereof as
set forth in "Use of Proceeds"), the 1996 Acquisitions, the issuance of the
Preferred Securities, the Heritage Acquisition and the Common Stock Offering
and Preferred Stock Offering as though each occurred on January 1, 1996. The
pro forma information for the six months ended June 30, 1997 reflects the
pro forma effect of such events as if each had occurred on January 1, 1997.
(c) Earnings were inadequate to cover fixed charges for the pro forma year ended
December 31, 1996 and pro forma six months ended June 30, 1997. Additional
earnings of $36,691 and $11,179 would have been required to cover fixed
charges for the pro forma year ended December 31, 1996 and pro forma six
months ended June 30, 1997, respectively.
28
<PAGE>
CAPITALIZATION
The following table sets forth, as of June 30, 1997, the capitalization of
the Company and the capitalization of the Company as adjusted to reflect the
consummation of the Old Notes Offering, the Heritage Acquisition and the Common
Stock Offering and Preferred Stock Offering and the application of the estimated
net proceeds thereof. The information set forth below should be read in
conjunction with the Pro Forma Consolidated Financial Data of the Company and
the historical Consolidated Financial Statements of the Company incorporated
herein by reference.
<TABLE>
<CAPTION>
JUNE 30, 1997
--------------------------
(DOLLARS IN THOUSANDS)
AS
ACTUAL ADJUSTED
-------------- -------------
<S> <C> <C>
Cash and cash equivalents .......................................... $ 2,740 $ 35,740
========== ==========
Current portion of long-term debt ................................. $ 66,881 $ 66,881
========== ==========
Long-term debt:
Commercial bank financing ....................................... $ 697,000 786,492
Notes and capital leases payable to affiliates .................. 11,872 11,872
Capital leases ................................................... 30 30
Senior subordinated notes ....................................... 400,000 600,000
---------- ----------
1,108,902 1,398,394
---------- ----------
Company Obligated Mandatorily Redeemable Security of Subsid-
iary Trust Holding Solely KDSM Senior Debentures .................. 200,000 200,000
---------- ----------
Stockholders' equity (deficit):
Series B Preferred Stock, par value $.01 per share; 1,106,608
shares issued and outstanding .................................. 11 11
Series D Preferred Stock, par value $.01 per share; 3,450,000
shares issued and outstanding post Preferred Stock Offering ...... - 34
Class A Common Stock, par value $.01 per share; 7,100,188 shares
issued and outstanding 13,195,188 shares issued and outstanding
post Common Stock Offering ....................................... 71 131
Class B Common Stock, par value $.01 per share; 27,591,581 shares
issued and outstanding; 25,841,581 shares issued and outstanding
post Common Stock Offering........................................ 277 260
Additional paid-in capital ....................................... 234,812 552,743
Accumulated deficit ............................................. (24,754) (24,754)
Additional paid-in capital-equity put options ..................... 23,117 23,117
Additional paid-in capital - deferred compensation ............... (896) (896)
---------- ----------
Total stockholders' equity .................................... 232,638 550,646
---------- ----------
Total capitalization .......................................... $1,541,540 $2,149,040
========== ==========
Net debt to Adjusted EBITDA(a) ................................... 5.4 x 5.3 x
Net debt plus Company Obligated Mandatorily Redeemable Secu-
rity of Subsidiary Trust Holding Solely KDSM Senior Debentures
to Adjusted EBITDA(a) ............................................. 6.3 x 6.1 x
</TABLE>
- ----------
(a) Net debt is defined as total debt less cash and cash equivalents.
29
<PAGE>
SELECTED HISTORICAL CONSOLIDATED
FINANCIAL INFORMATION
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
THE SELECTED HISTORICAL CONSOLIDATED FINANCIAL DATA FOR THE YEARS ENDED
DECEMBER 31, 1992, 1993, 1994, 1995 and 1996 have been derived from the
Company's audited Consolidated Financial Statements (the "Consolidated Financial
Statements"). The Consolidated Financial Statements for the years ended December
31, 1994, 1995 and 1996 are incorporated herein by reference. The selected
historical consolidated financial data for the six months ended June 30, 1996
and 1997 and as of June 30, 1996 and 1997 are unaudited, but in the opinion of
management, such financial data have been prepared on the same basis as the
Consolidated Financial Statements incorporated herein by reference and include
all adjustments, consisting only of normal recurring adjustments, necessary for
a fair presentation of the financial position and results of operations for
those periods. Results for the six months ended June 30, 1996 and 1997 are not
necessarily indicative of the results for a full year. Separate financial
information for the Trust is not provided since the Company believes it would
not be material to investors. The information below should be read in
conjunction with "Management's Discussion and Analysis of Financial Condition
and Results of Operations of Sinclair" and Sinclair's Consolidated Financial
Statements in Sinclair's Annual Report on Form 10-K (as amended) for the year
ended December 31, 1996 and Sinclair's Quarterly Report on Form 10-Q for the
quarter ended June 30, 1997, all of which are incorporated herein by reference.
Pro forma data showing the effect of the 1996 Acquisitions, the issuance of the
Preferred Securities, the issuance of the Old Notes, the Heritage Acquisition
and the Preferred Stock Offering and the Common Stock Offering is set forth in
the Company's Report on Form 8-K filed October 8, 1997, which is incorporated by
reference herein.
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
-----------------------------------------------------------
1992 1993 1994(A) 1995(A) 1996(A)
------------ ------------ ---------- ----------- ----------
<S> <C> <C> <C> <C> <C>
STATEMENT OF
OPERATIONS DATA:
NET BROADCAST REVENUES(B) ..................... $ 61,081 $ 69,532 $118,611 $187,934 $346,459
Barter revenues ................................. 8,805 6,892 10,743 18,200 32,029
-------- -------- -------- -------- ---------
Total revenues ................................. 69,886 76,424 129,354 206,134 378,488
-------- -------- -------- -------- ---------
Operating expenses, excluding depreciation and
amortization, deferred compensation and special
bonuses paid to executive ofFicers 32,993 32,295 50,545 80,446 167,765
Depreciation and amortization(c) ............... 30,943 22,486 55,587 80,410 121,081
Amortization of deferred compensation ......... - - - - 739
Special bonuses paid to executive officers ...... - 10,000 3,638 - -
-------- -------- -------- -------- ---------
Broadcast operating income ..................... 5,950 11,643 19,584 45,278 88,903
-------- -------- -------- -------- ---------
Interest and amortization of debt discount
expense ....................................... 12,997 12,852 25,418 39,253 84,314
Interest and other income ..................... 1,207 2,131 2,447 4,163 3,478
Subsidiary trust minority interest expense(d) - - - - -
-------- -------- -------- -------- ---------
Income (loss) before (provision) benefit for
income taxes and extraordinary item ............ $ (5,840) $ 922 $(3,387) $ 10,188 $ 8,067
======== ======== ======== ======== =========
Net income (loss) available to common
shareholders ................................. $ (4,651) $ (7,945) $(2,740) $ 76 $ 1,131
======== ======== ======== ======== =========
Earnings (loss) per common share:
Net income (loss) before extraordinary
item .......................................... $ (0.16) $ - $ (0.09) $ 0.15 $ 0.03
Extraordinary item ........................... - (0.27) - (0.15) -
-------- -------- -------- -------- ---------
Net income (loss) per common share ............ $ (0.16) $ (0.27) $ (0.09) $ - $ 0.03
======== ======== ======== ======== =========
Weighted average shares out-
standing (in thousands) ..................... 29,000 29,000 29,000 32,205 37,381
======== ======== ======== ======== =========
OTHER DATA:
Broadcast cash flow(e) ........................ $ 28,019 $ 37,498 $67,519 $111,124 $189,216
Broadcast cash flow margin(f) .................. 45.9% 53.9% 56.9% 59.1 % 54.6 %
Adjusted EBITDA(g) ........................... $ 26,466 $ 35,406 $64,547 $105,750 $180,272
Adjusted EBITDA margin(f) ..................... 43.3% 50.9% 54.4% 56.3 % 52.0 %
<CAPTION>
SIX MONTHS ENDED
JUNE 30,
-----------------------
1996 1997
---------- ------------
(UNAUDITED)
<S> <C> <C>
STATEMENT OF
OPERATIONS DATA:
NET BROADCAST REVENUES(B) ..................... $117,339 $219,701
Barter revenues ................................. 9,571 19,870
--------- --------
Total revenues ................................. 126,910 239,571
--------- --------
Operating expenses, excluding depreciation and
amortization, deferred compensation and special
bonuses paid to executive officers 52,826 114,697
Depreciation and amortization(c) ............... 45,493 76,650
Amortization of deferred compensation ......... 506 233
Special bonuses paid to executive officers ...... - -
--------- --------
Broadcast operating income ..................... 28,085 47,991
--------- --------
Interest and amortization of debt discount
expense ....................................... 27,646 51,993
Interest and other income ..................... 3,172 1,087
Subsidiary trust minority interest expense(d) - 7,007
--------- --------
Income (loss) before (provision) benefit for
income taxes and extraordinary item ............ $ 3,611 $ (9,922)
========= ========
Net income (loss) available to common
shareholders ................................. $ 1,511 $ (5,822)
========= ========
Earnings (loss) per common share:
Net income (loss) before extraordinary
item .......................................... $ 0.04 $ (0.17)
Extraordinary item ........................... - -
--------- --------
Net income (loss) per common share ............ $ 0.04 $ (0.17)
========= ========
Weighted average shares out-
standing (in thousands) ..................... 34,750 34,746
========= ========
OTHER DATA:
Broadcast cash flow(e) ........................ $ 65,079 $105,600
Broadcast cash flow margin(f) .................. 55.5% 48.1%
Adjusted EBITDA(g) ........................... $ 62,013 $ 98,615
Adjusted EBITDA margin(f) ..................... 52.8% 44.9%
</TABLE>
(Continued on following page)
30
<PAGE>
<TABLE>
<CAPTION>
AS OF DECEMBER 31,
---------------------------------------------------------------------
1992 1993 1994(A) 1995(A) 1996(A)
------------ ------------ ------------- ------------- ---------------
<S> <C> <C> <C> <C> <C>
After tax cash flow(h) ........................ $ 9,398 $ 17,950 $ 24,948 $ 51,288 $ 76,745
After tax cash flow margin(f) ............... 15.4% 25.8% 21.0% 27.3% 22.3%
Program contract payments ..................... $ 10,427 $ 8,723 $ 14,262 $ 19,938 $ 30,451
Capital expenditures ........................ 426 528 2,352 1,702 12,609
Corporate overhead expense .................. 1,553 2,092 2,972 5,374 8,944
Adjusted EBITDA to interest expense ......... 2.0 x 2.8 x 2.5 x 2.7 x 2.1 x
Adjusted EBITDA to interest expense plus
subsidiary trust minority interest expense 2.0 x 2.8 x 2.5 x 2.7 x 2.1 x
Adjusted EBITDA less capital expendi-
tures to interest expense plus subsidiary
trust minority interest expense ............ 2.0 x 2.7 x 2.4 x 2.7 x 2.0 x
Net debt to Adjusted EBITDA(i) ............... 4.1 x 5.8 x 5.3 x 2.9 x 7.1 x
Net debt plus Company Obligated Manda-
torily Redeemable Security of Subsidiary
Trust Holding Solely KDSM Senior De-
bentures to Adjusted EBITDA 4.1 x 5.8 x 5.3 x 2.9 x 7.1 x
Cash flows from operating activities(j) ...... $ 5,235 $ 11,230 $ 20,781 $ 55,909 $ 68,970
Cash flows from investing activities(j) ...... (1,051) 1,521 (249,781) (119,243) (1,011,897)
Cash flows from financing activities(j) ...... (3,741) 3,462 213,410 173,338 832,818
Ratio of:
Earnings to fixed charges(k) .................. - 1.1 x - 1.3 x 1.1 x
<CAPTION>
SIX MONTHS ENDED
JUNE 30,
---------------------------
1996 1997
------------- -------------
(UNAUDITED)
<S> <C> <C>
After tax cash flow(h) ........................ $ 30,441 $ 32,737
After tax cash flow margin(f) ............... 26.0% 15.0%
Program contract payments ..................... $ 12,071 $ 26,259
Capital expenditures ........................ 2,114 8,286
Corporate overhead expense .................. 3,066 6,985
Adjusted EBITDA to interest expense ......... 2.2 x 1.9 x
Adjusted EBITDA to interest expense plus
subsidiary trust minority interest expense 2.2 x 1.7 x
Adjusted EBITDA less capital expendi-
tures to interest expense plus subsidiary
trust minority interest expense ............ 2.2 x 1.5 x
Net debt to Adjusted EBITDA(i) ............... 10.4 x 5.4 x
Net debt plus Company Obligated Manda-
torily Redeemable Security of Subsidiary
Trust Holding Solely KDSM Senior De-
bentures to Adjusted EBITDA 10.4 x 6.3 x
Cash flows from operating activities(j) ...... $ 26,447 $ 42,483
Cash flows from investing activities(j) ...... (942,126) (112,429)
Cash flows from financing activities(j) ...... 807,425 70,345
Ratio of:
Earnings to fixed charges(k) .................. 1.1 x -
</TABLE>
<TABLE>
<CAPTION>
AS OF DECEMBER 31,
------------------------------------------------------------ AS OF JUNE 30,
1992 1993 1994(A) 1995(A) 1996(A) 1997
---------- ------------ ------------ ---------- ------------ ---------------
(UNAUDITED)
<S> <C> <C> <C> <C> <C> <C>
BALANCE SHEET DATA:
Cash and cash equivalents .................. $ 1,823 $ 18,036 $ 2,446 $112,450 $ 2,341 $ 2,740
Total assets .............................. 140,366 242,917 399,328 605,272 1,707,297 1,762,505
Total debt(l) .............................. 110,659 224,646 346,270 418,171 1,288,147 1,175,783
Company Obligated Mandatorily Re-
deemable Security of Subsidiary Trust
Holding Solely KDSM Senior Deben-
tures(m) - - - - - 200,000
Total stockholders' equity (deficit) ...... (3,127) (11,024) (13,723) 96,374 237,253 232,638
</TABLE>
NOTES TO SELECTED CONSOLIDATED HISTORICAL FINANCIAL INFORMATION
(a) The Company made acquisitions in 1994, 1995 and 1996 as described in
the footnotes to the Consolidated Financial Statements incorporated
herein by reference. The statement of operations data and other data
presented for periods preceding the dates of acquisitions do not
include amounts for these acquisitions and therefore are not comparable
to subsequent periods. Additionally, the years in which the specific
acquisitions occurred may not be comparable to subsequent periods
depending on when during the year the acquisition occurred.
(b) Net broadcast revenues are defined as broadcast revenues net of agency
commissions.
(c) Depreciation and amortization includes amortization of program contract
costs and net realizable value adjustments, depreciation and
amortization of property and equipment, and amortization of acquired
intangible broadcasting assets and other assets including amortization
of deferred financing costs and costs related to excess syndicated
programming.
(d) Subsidiary trust minority interest expense represents the distributions
on $200 million aggregate Liquidation Value of Preferred Securities at
an annual distribution rate of 11.625%.
(e) "Broadcast cash flow" is defined as broadcast operating income plus
corporate overhead expense, special bonuses paid to executive officers,
depreciation and amortization, (including film amortization and
amortization of deferred compensation and excess syndicated
programming), less cash payments for program contract rights. Cash
program payments represent cash payments made for current program
payables and do not
31
<PAGE>
necessarily correspond to program usage. Special bonuses paid to
executive officers are considered non-recurring expenses. The Company
has presented broadcast cash flow data, which the Company believes are
comparable to the data provided by other companies in the industry,
because such data are commonly used as a measure of performance for
broadcast companies. However, broadcast cash flow does not purport to
represent cash provided by operating activities as reflected in the
Company's consolidated statements of cash flow, is not a measure of
financial performance under generally accepted accounting principles
and should not be considered in isolation or as a substitute for
measures of performance prepared in accordance with generally accepted
accounting principles.
(f) "Broadcast cash flow margin" is defined as broadcast cash flow divided
by net broadcast revenues. "Adjusted EBITDA margin" is defined as
Adjusted EBITDA divided by net broadcast revenues. "After tax cash flow
margin" is defined as after tax cash flow divided by net broadcast
revenues.
(g) "Adjusted EBITDA" is defined as broadcast cash flow less corporate
overhead expense and is a commonly used measure of performance for
broadcast companies. Adjusted EBITDA does not purport to represent cash
provided by operating activities as reflected in the Company's
consolidated statements of cash flows, is not a measure of financial
performance under generally accepted accounting principles and should
not be considered in isolation or as a substitute for measures of
performance prepared in accordance with generally accepted accounting
principles.
(h) "After tax cash flow" is defined as net income (loss) plus depreciation
and amortization of intangibles (excluding film amortization),
amortization of deferred compensation, amortization of excess
syndicated programming, special bonuses paid to executive officers, and
the deferred tax provision (or minus the deferred tax benefit). After
tax cash flow is presented here not as a measure of operating results
and does not purport to represent cash provided by operating
activities. After tax cash flow should not be considered in isolation
or as a substitute for measures of performance prepared in accordance
with generally accepted accounting principles.
(i) Net debt is defined as total debt less cash and cash equivalents.
(j) These items are financial statement disclosures in accordance with
Generally Accepted Accounting Principles and are also presented in the
Company's consolidated financial statements incorporated by reference
herein.
(k) Earnings were inadequate to cover fixed charges for the years ended
December 31, 1992, 1994 and for the six months ended June 30, 1997.
Additional earnings of $5,840, $3,387, and $9,922 would have been
required to cover fixed charges in 1992, 1994 and the six months ended
June 30, 1997, respectively.
(l) "Total debt" is defined as long-term debt, net of unamortized discount,
and capital lease obligations, including current portion thereof. In
1992 total debt included warrants outstanding which were redeemable
outside the control of the Company. The warrants were purchased by the
Company for $10.4 million in 1993. Total debt as of December 31, 1993
included $100 million in principal amount of the 1993 Notes (as defined
herein), the proceeds of which were held in escrow to provide a source
of financing for acquisitions that were subsequently consummated in
1994 utilizing borrowings under the Bank Credit Agreement. $100 million
of the 1993 Notes was redeemed from the escrow in the first quarter of
1994. Total debt does not include the Preferred Securities or the
Company's preferred stock.
(m) Company Obligated Mandatorily Redeemable Security of Subsidiary Trust
Holding Solely KDSM Senior Debentures represents $200 million aggregate
Liquidation Value of Preferred Securities which carry a mandatory
redemption feature after twelve years.
32
<PAGE>
THE EXCHANGE OFFER
PURPOSE AND EFFECT
In connection with the Old Notes Offering, the Company entered into the
Registration Rights Agreement with the Initial Purchasers, pursuant to which the
Company agreed, among other things, (i) to use its best efforts to file under
the Securities Act a registration statement relating to an offer to exchange the
Old Notes for new notes with terms identical in all material respects (except as
described below) to the terms of the Old Notes and (ii) to use its best efforts
to cause such registration statement to become effective. A copy of the
Registration Rights Agreement is incorporated by reference into the Registration
Statement of which this Prospectus is a part. The Exchange Offer is being made
to satisfy the contractual obligations of the Company under the Registration
Rights Agreement.
The Old Notes provide, among other things, that, if the Exchange Offer is
not consummated by December 14, 1997, additional interest (the "Penalty
Amounts") will become payable on the Old Notes at the rate of .50% per annum for
the first 60 days starting on December 15, 1997 and increasing by an additional
.25% per annum at the beginning of each subsequent 90-day period; provided that
such Penalty Amounts will cease to accrue upon consummation of the Exchange
Offer; and provided further that the Penalty Amounts rate may not exceed 1.5%
per annum. See "Risk Factors - Consequences of a Failure to Exchange Old Notes"
and "Description of the Old Notes." The form and terms of the New Notes are
identical in all material respects to the form and terms of the Old Notes except
that the New Notes have been registered under the Securities Act and therefore
will not contain terms with respect to transfer restrictions and will not
provide for an increase in interest payments or other distributions thereon as a
consequence of a failure to take certain actions in connection with their
registration under the Securities Act.
The Exchange Offer is not being made to, nor will the Company accept
tenders for exchange from, holders of Old Notes in any jurisdiction in which the
Exchange Offer or the acceptance thereof would not be in compliance with the
securities or blue sky laws of such jurisdiction.
Unless the context requires otherwise, the term "holder" with respect to
the Exchange Offer means any person in whose name the Old Notes are registered
on the books of the Company or any other person who has obtained a properly
completed bond power from the registered holder, or any person whose Old Notes
are held of record by The Depository Trust Company who desires to deliver such
Old Notes by book-entry transfer at The Depository Trust Company.
TERMS OF THE EXCHANGE
The Company hereby offers, upon the terms and subject to the conditions set
forth in this Prospectus and in the accompanying Letter of Transmittal, to
exchange up to $200,000,000 aggregate principal amount of New Notes for a like
aggregate principal amount of Old Notes properly tendered on or prior to the
Expiration Date (as defined below) and not properly withdrawn in accordance with
the procedures described below. The Company will issue, promptly after the
Expiration Date, an aggregate principal amount of up to $200,000,000 of New
Notes in exchange for a like principal amount of outstanding Old Notes tendered
and accepted in connection with the Exchange Offer. The Exchange Offer is not
conditioned upon any minimum principal amount of Old Notes being tendered. As of
the date of this Prospectus $200,000,000 aggregate principal amount of the Old
Notes is outstanding.
Holders of Old Notes do not have any appraisal or dissenters' rights in
connection with the Exchange Offer. Old Notes that are not tendered for, or are
tendered but not accepted in connection with the Exchange Offer, will remain
outstanding and be entitled to the benefits of the Indenture, but will not be
entitled to any further registration rights under the Registration Rights
Agreement, except under limited circumstances. See "Risk Factors - Consequences
of a Failure to Exchange Old Notes" and "Description of the Old Notes." If any
tendered Old Notes are not accepted for exchange because of an invalid tender,
the occurrence of certain other events set forth herein or otherwise,
certificates for any
33
<PAGE>
such unaccepted Old Notes will be returned, without expense, to the tendering
holder thereof promptly after the Expiration Date, or, if such unaccepted Old
Notes are uncertificated, such securities will be returned, without expense to
the tendering holder thereof promptly after the Expiration Date via book entry
transfer.
Holders who tender Old Notes in connection with the Exchange Offer will not
be required to pay brokerage commissions or fees or, subject to the instructions
in the Letter of Transmittal, transfer taxes with respect to the exchange of Old
Notes in connection with the Exchange Offer. The Company will pay all charges
and expenses, other than certain applicable taxes described below, in connection
with the Exchange Offer. See "- Fees and Expenses."
THE BOARD OF DIRECTORS OF THE COMPANY DOES NOT MAKE ANY RECOMMENDATION TO
HOLDERS OF OLD NOTES AS TO WHETHER TO TENDER OR REFRAIN FROM TENDERING ALL OR
ANY PORTION OF THEIR OLD NOTES PURSUANT TO THE EXCHANGE OFFER. IN ADDITION, NO
ONE HAS BEEN AUTHORIZED TO MAKE ANY SUCH RECOMMENDATION. HOLDERS OF OLD NOTES
MUST MAKE THEIR OWN DECISION WHETHER TO TENDER PURSUANT TO THE EXCHANGE OFFER
AND, IF SO, THE AGGREGATE AMOUNT OF OLD NOTES TO TENDER AFTER READING THIS
PROSPECTUS AND THE LETTER OF TRANSMITTAL AND CONSULTING WITH THEIR ADVISERS, IF
ANY, BASED ON THEIR OWN FINANCIAL POSITION AND REQUIREMENTS.
EXPIRATION DATE; EXTENSIONS; AMENDMENTS
The term "Expiration Date" means 5:00 p.m., New York City time, on November
7, 1997 unless the Exchange Offer is extended by the Company (in which case the
term "Expiration Date" shall mean the latest date and time to which the Exchange
Offer is extended). The Company expressly reserves the right in its sole and
absolute discretion, subject to applicable law, at any time and from time to
time, (i) to delay the acceptance of the Old Notes for exchange, (ii) to
terminate the Exchange Offer (whether or not any Old Notes have theretofore been
accepted for exchange) if the Company determines, in its sole and absolute
discretion, that any of the events or conditions referred to under "- Conditions
to the Exchange Offer" have occurred or exist or have not been satisfied, (iii)
to extend the Expiration Date of the Exchange Offer and retain all Old Notes
tendered pursuant to the Exchange Offer, subject, however, to the right of
holders of Old Notes to withdraw their tendered Old Notes as described under "-
Withdrawal Rights," and (iv) to waive any condition or otherwise amend the terms
of the Exchange Offer in any respect. If the Exchange Offer is amended in a
manner determined by the Company to constitute a material change, or if the
Company waives a material condition of the Exchange Offer, the Company will
promptly disclose such amendment by means of a prospectus supplement that will
be distributed to the registered holders of the Old Notes, and the Company will
extend the Exchange Offer to the extent required by Rule 14e-1 under the
Exchange Act.
Any such delay in acceptance, extension, termination or amendment will be
followed promptly by oral or written notice thereof to the Exchange Agent and by
making a public announcement thereof, and such announcement in the case of an
extension will be made no later than 9:00 a.m., New York City time, on the next
business day after the previously scheduled Expiration Date. Without limiting
the manner in which the Company may choose to make any public announcement and
subject to applicable law, the Company shall have no obligation to publish,
advertise or otherwise communicate any such public announcement other than by
issuing a release to an appropriate news agency.
ACCEPTANCE OR EXCHANGE AND ISSUANCE OF NEW NOTES
Upon the terms and subject to the conditions of the Exchange Offer, the
Company will exchange, and will issue to the Exchange Agent, New Notes for Old
Notes validly tendered and not withdrawn (pursuant to the withdrawal rights
described under "- Withdrawal Rights") promptly after the Expiration Date. In
all cases, delivery of New Notes in exchange for Old Notes tendered and accepted
for exchange pursuant to the Exchange Offer will be made only after timely
receipt by the Exchange Agent of (i) Old Notes or a book-entry confirmation of a
book-entry transfer of Old Notes into the Exchange
34
<PAGE>
Agent's account at The Depository Trust Company ("DTC"), (ii) the Letter of
Transmittal (or facsimile thereof), properly completed and duly executed, with
any required signature guarantees, and (iii) any other documents required by the
Letter of Transmittal.
The term "book-entry confirmation" means a timely confirmation of a
book-entry transfer of Old Notes into the Exchange Agent's account at DTC.
Subject to the terms and conditions of the Exchange Offer, the Company will
be deemed to have accepted for exchange, and thereby exchanged, Old Notes
validly tendered and not withdrawn as, if and when the Company gives oral or
written notice to the Exchange Agent of the Company's acceptance of such Old
Notes for exchange pursuant to the Exchange Offer. The Exchange Agent will act
as agent for the Company for the purpose of receiving tenders of Old Notes,
Letters of Transmittal and related documents, and as agent for tendering holders
for the purpose of receiving Old Notes, Letters of Transmittal and related
documents and transmitting New Notes to validly tendering holders. Such exchange
will be made promptly after the Expiration Date. If for any reason whatsoever,
acceptance for exchange or the exchange of any Old Notes tendered pursuant to
the Exchange Offer is delayed (whether before or after the Company's acceptance
for exchange of Old Notes) or the Company extends the Exchange Offer or is
unable to accept for exchange or exchange Old Notes tendered pursuant to the
Exchange Offer, then, without prejudice to the Company's rights set forth
herein, the Exchange Agent may, nevertheless, on behalf of the Company and
subject to Rule 14e-1(c) under the Exchange Act, retain tendered Old Notes and
such Old Notes may not be withdrawn except to the extent tendering holders are
entitled to withdrawal rights as described under "- Withdrawal Rights."
Pursuant to the Letter of Transmittal, a holder of Old Notes will warrant
and agree in the Letter of Transmittal that it has full power and authority to
tender, exchange, sell, assign and transfer Old Notes, that the Company will
acquire good, marketable and unencumbered title to the tendered Old Notes, free
and clear of all liens, restrictions, charges and encumbrances, and that the Old
Notes tendered for exchange are not subject to any adverse claims or proxies.
The holder also will warrant and agree that it will, upon request, execute and
deliver any additional documents deemed by the Company or the Exchange Agent to
be necessary or desirable to complete the exchange, sale, assignment, and
transfer of the Old Notes tendered pursuant to the Exchange Offer.
PROCEDURES FOR TENDERING OLD NOTES
Valid Tender. Except as set forth below, in order for Old Notes to be
validly tendered pursuant to the Exchange Offer, a properly completed and duly
executed Letter of Transmittal (or facsimile thereof), with any required
signature guarantees and any other required documents, must be received by the
Exchange Agent at its address set forth under "- Exchange Agent," and either (i)
tendered Old Notes must be received by the Exchange Agent, or (ii) such Old
Notes must be tendered pursuant to the procedures for book-entry transfer set
forth below and a book-entry confirmation must be received by the Exchange
Agent, in each case on or prior to the Expiration Date, or (iii) the guaranteed
delivery procedures set forth below must be complied with.
If less than all of the Old Notes delivered are tendered for exchange, a
tendering holder should fill in the amount of Old Notes being tendered in the
appropriate box on the Letter of Transmittal. The entire amount of Old Notes
delivered to the Exchange Agent will be deemed to have been tendered unless
otherwise indicated.
THE METHOD OF DELIVERY OF CERTIFICATES, THE LETTER OF TRANSMITTAL AND ALL
OTHER REQUIRED DOCUMENTS, IS AT THE OPTION AND SOLE RISK OF THE TENDERING
HOLDER, AND DELIVERY WILL BE DEEMED MADE ONLY WHEN ACTUALLY RECEIVED BY THE
EXCHANGE AGENT. IF DELIVERY IS BY MAIL, REGISTERED MAIL, RETURN RECEIPT
REQUESTED, PROPERLY INSURED, OR AN OVERNIGHT DELIVERY SERVICE IS RECOMMENDED. IN
ALL CASES, SUFFICIENT TIME SHOULD BE ALLOWED TO ENSURE TIMELY DELIVERY.
35
<PAGE>
Book Entry Transfer. The Exchange Agent will establish an account with
respect to the Old Notes at DTC for purposes of the Exchange Offer within two
business days after the date of this Prospectus. Any financial institution that
is a participant in DTC's book-entry transfer facility system may make a
book-entry delivery of the Old Notes by causing DTC to transfer such Old Notes
into the Exchange Agent's account at DTC in accordance with DTC's procedures for
transfers. However, although delivery of Old Notes may be effected through
book-entry transfer into the Exchange Agent's account at DTC, the Letter of
Transmittal (or facsimile thereof), properly completed and duly executed, with
any required signature guarantees and any other required documents, must in any
case be delivered to and received by the Exchange Agent at its address set forth
under "- Exchange Agent" on or prior to the Expiration Date, or the guaranteed
delivery procedure set forth below must be complied with.
DELIVERY OF DOCUMENTS TO DTC IN ACCORDANCE WITH DTC'S PROCEDURES DOES NOT
CONSTITUTE DELIVERY TO THE EXCHANGE AGENT.
Signature Guarantees. Certificates for the Old Notes need not be endorsed
and signature guarantees on the Letter of Transmittal are unnecessary unless (a)
a certificate for the Old Notes is registered in a name other than that of the
person surrendering the certificate or (b) such registered holder completes the
box entitled "Special Issuance Instructions" or "Special Delivery Instructions"
in the Letter of Transmittal. In the case of (a) or (b) above, such certificates
for Old Notes must be duly endorsed or accompanied by a properly executed bond
power, with the endorsement or signature on the bond power and on the Letter of
Transmittal guaranteed by a firm or other entity identified in Rule 17Ad-15
under the Exchange Act as an "eligible guarantor institution," including (as
such terms are defined therein): (i) a bank; (ii) a broker, dealer, municipal
securities broker or dealer or government securities broker or dealer; (iii) a
credit union; (iv) a national securities exchange, registered securities
association or clearing agency; or (v) a savings association that is a
participant in a Securities Transfer Association (an "Eligible Institution"),
unless surrendered on behalf of such Eligible Institution. See Instruction 1 to
the Letter of Transmittal.
Guaranteed Delivery. If a holder desires to tender Old Notes pursuant to
the Exchange Offer and the certificates for such Old Notes are not immediately
available or time will not permit all required documents to reach the Exchange
Agent on or before the Expiration Date, or the procedures for book-entry
transfer cannot be completed on a timely basis, such Old Notes may nevertheless
be tendered, provided that all of the following guaranteed delivery procedures
are complied with:
(i) such tenders are made by or through an Eligible Institution;
(ii) a properly completed and duly executed Notice of Guaranteed Delivery,
substantially in the form accompanying the Letter of Transmittal, is
received by the Exchange Agent, as provided below, on or prior to
Expiration Date; and
(iii) the certificates (or a book-entry confirmation) representing all
tendered Old Notes, in proper form for transfer, together with a
properly completed and duly executed Letter of Transmittal (or
facsimile thereof), with any required signature guarantees and any
other documents required by the Letter of Transmittal, are received by
the Exchange Agent within three Nasdaq Stock Market trading days after
the date of execution of such Notice of Guaranteed Delivery.
The Notice of Guaranteed Delivery may be delivered by hand, or transmitted
by facsimile or mail to the Exchange Agent and must include a guarantee by an
Eligible Institution in the form set forth in such notice.
Notwithstanding any other provision hereof, the delivery of New Notes in
exchange for Old Notes tendered and accepted for exchange pursuant to the
Exchange Offer will in all cases be made only after timely receipt by the
Exchange Agent of Old Notes, or of a book-entry confirmation with respect to
such Old Notes, and a properly completed and duly executed Letter of Transmittal
(or facsimile thereof), together with any required signature guarantees and any
other documents required by the Letter of Transmittal. Accordingly, the delivery
of New Notes might not be made to all tendering holders at the same time, and
will depend upon when Old Notes, book-entry confirmations with respect to Old
Notes and other required documents are received by the Exchange Agent.
36
<PAGE>
The acceptance by the Company for exchange of Old Notes tendered pursuant
to any of the procedures described above will constitute a binding agreement
between the tendering holder and the Company upon the terms and subject to the
conditions of the Exchange Offer.
Determination of Validity. All questions as to the form of documents,
validity, eligibility (including time of receipt) and acceptance for exchange of
any tendered Old Notes will be determined by the Company, in its sole
discretion, whose determination shall be final and binding on all parties. The
Company reserves the absolute right, in its sole and absolute discretion, to
reject any and all tenders determined by them not to be in proper form or the
acceptance of which, or exchange for, may, in the view of counsel to the
Company, be unlawful. The Company also reserves the absolute right, subject to
applicable law, to waive any of the conditions of the Exchange Offer as set
forth under "- Conditions to the Exchange Offer" or any condition or
irregularity in any tender of Old Notes of any particular holder whether or not
similar conditions or irregularities are waived in the case of other holders.
The Company's interpretation of the terms and conditions of the Exchange
Offer (including the Letter of Transmittal and the instructions thereto) will be
final and binding. No tender of Old Notes will be deemed to have been validly
made until all irregularities with respect to such tender have been cured or
waived. None of the Company, any affiliates or assigns of the Company, the
Exchange Agent or any other person shall be under any duty to give any
notification of any irregularities in tenders or incur any liability for failure
to give any such notification.
If any Letter of Transmittal, endorsement, bond power, power of attorney,
or any other document required by the Letter of Transmittal is signed by a
trustee, executor, administrator, guardian, attorney-in-fact, officer of a
corporation or other person acting in a fiduciary or representative capacity,
such person should so indicate when signing, and unless waived by the Company,
proper evidence satisfactory to the Company, in its sole discretion, of such
person's authority to so act must be submitted.
A beneficial owner of Old Notes that are held by or registered in the name
of a broker, dealer, commercial bank, trust company or other nominee or
custodian is urged to contact such entity promptly if such beneficial holder
wishes to participate in the Exchange Offer.
RESALES OF NEW NOTES
The Company is making the Exchange Offer for the Old Notes in reliance on
the position of the staff of the Division of Corporation Finance of the
Commission (the "Staff") as set forth in certain interpretive letters addressed
to third parties in other transactions. However, the Company has not sought its
own interpretive letter and there can be no assurance that the Staff would make
a similar determination with respect to the Exchange Offer as it has in such
interpretive letters to third parties. Based on these interpretations by the
Staff, and subject to the two immediately following sentences, the Company
believes that New Notes issued pursuant to this Exchange Offer in exchange for
Old Notes may be offered for resale, resold and otherwise transferred by a
holder thereof (other than a holder who is a broker-dealer) without further
compliance with the registration and prospectus delivery requirements of the
Securities Act, provided that such New Notes are acquired in the ordinary course
of such holder's business and that such holder is not participating, and has no
arrangement or understanding with any person to participate, in a distribution
(within the meaning of the Securities Act) of such New Securities. However, any
holder of Old Notes who is an "affiliate" of the Company or who intends to
participate in the Exchange Offer for the purpose of distributing New Notes, or
any broker-dealer who purchased Old Notes from the Company to resell pursuant to
Rule 144A or any other available exemption under the Securities Act, (a) will
not be able to rely on the interpretations of the Staff set out in the
above-mentioned interpretive letters, (b) will not be permitted or entitled to
tender such Old Notes in the Exchange Offer and (c) must comply with the
registration and prospectus delivery requirements of the Securities Act in
connection with any sale or other transfer of such Old Notes unless such sale is
made pursuant to an exemption from such requirements. In addition, as described
below, if any broker-dealer holds Old Notes acquired for its own account as a
result of market-making or other trading activities and exchanges such Old Notes
for New Notes, then such broker-dealer must deliver a prospectus meeting the
requirements of the Securities Act in connection with any resales of such New
Notes.
37
<PAGE>
Each holder of Old Notes who wishes to exchange Old Notes for New Notes in
the Exchange Offer will be required to represent that (i) it is not an
"affiliate" of the Company, (ii) any New Notes to be received by it are being
acquired in the ordinary course of its business, (iii) it has no arrangement or
understanding with any person to participate in a distribution (within the
meaning of the Securities Act) of such New Notes, and (iv) if such holder is not
a broker-dealer, such holder is not engaged in, and does not intend to engage
in, a distribution (within the meaning of the Securities Act) of such New Notes.
In addition, the Company, may require such holder, as a condition to such
holder's eligibility to participate in the Exchange Offer, to furnish to the
Company (or an agent thereof) in writing information as to the number of
"beneficial owners" (within the meaning of Rule 13d-3 under the Exchange Act) on
behalf of whom such holder holds the Old Notes to be exchanged in the Exchange
Offer. Each broker-dealer that receives New Notes for its own account pursuant
to the Exchange Offer must acknowledge that it acquired the Old Notes for its
own account as the result of market-making activities or other trading
activities and must agree that it will deliver a prospectus meeting the
requirements of the Securities Act in connection with any resale of such New
Notes. The Letter of Transmittal states that by so acknowledging and by
delivering a prospectus, a broker-dealer will not be deemed to admit that it is
an "underwriter" within the meaning of the Securities Act. Based on the position
taken by the Staff in the interpretive letters referred to above, the Company
believes that broker-dealers who acquired Old Notes for their own accounts as a
result of market-making activities or other trading activities ("Participating
Broker-Dealers") may fulfill their prospectus delivery requirements with respect
to the New Notes received upon exchange of such Old Notes (other than Old Notes
which represent an unsold allotment from the original sale of the Old Notes)
with a prospectus meeting the requirements of the Securities Act, which may be
the prospectus prepared for an exchange offer so long as it contains a
description of the plan of distribution with respect to the resale of such New
Notes. Accordingly, this Prospectus, as it may be amended or supplemented from
time to time, may be used by a Participating Broker-Dealer during the period
referred to below in connection with resales of New Notes received in exchange
for Old Notes where such Old Notes were acquired by such Participating
Broker-Dealer for its own account as a result of market-making or other trading
activities. Subject to certain provisions set forth in the Registration Rights
Agreement, the Company has agreed that this Prospectus, as it may be amended or
supplemented from time to time, may be used by a Participating Broker-Dealer in
connection with resales of such New Notes for a period ending 180 days after the
Expiration Date or, if earlier, when all such New Notes have been disposed of by
such Participating Broker-Dealer. See "Plan of Distribution." Any Participating
Broker-Dealer who is an "affiliate" of the Company may not rely on such
interpretive letters and must comply with the registration and prospectus
delivery requirements of the Securities Act in connection with any resale
transaction.
In that regard, each Participating Broker-Dealer who surrenders Old Notes
pursuant to the Exchange Offer will be deemed to have agreed, by execution of
the Letter of Transmittal, that, upon receipt of notice from the Company of the
occurrence of any event or the discovery of any fact which makes any statement
contained or incorporated by reference in this Prospectus untrue in any material
respect or which causes this Prospectus to omit to state a material fact
necessary in order to make the statements contained or incorporated by reference
herein, in light of the circumstances under which they were made, not misleading
or of the occurrence of certain other events specified in the Registration
Rights Agreement, such Participating Broker-Dealer will suspend the sale of New
Notes pursuant to this Prospectus until the Company has amended or supplemented
this Prospectus to correct such misstatement or omission and has furnished
copies of the amended or supplemented Prospectus to such Participating
Broker-Dealer or the Company has given notice that the sale of the New Notes may
be resumed, as the case may be.
WITHDRAWAL RIGHTS
Except as otherwise provided herein, tenders of Old Notes may be withdrawn
at any time on or prior to the Expiration Date.
In order for a withdrawal to be effective a written, telegraphic, telex or
facsimile transmission of such notice of withdrawal must be timely received by
the Exchange Agent at its addresses set forth under "- Exchange Agent" on or
prior to the Expiration Date. Any such notice of withdrawal must specify the
name of the person who tendered the Old Notes to be withdrawn, the aggregate
principal amount of Old Notes to be withdrawn, and (if certificates for such Old
Notes have been tendered) the
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name of the registered holder of the Old Notes as set forth on the Old Notes, if
different from that of the person who tendered such Old Notes. If Old Notes have
been delivered or otherwise identified to the Exchange Agent, then prior to the
physical release of such Old Notes, the tendering holder must submit the serial
numbers shown on the particular Old Notes to be withdrawn and the signature on
the notice of withdrawal must be guaranteed by an Eligible Institution, except
in the case of Old Notes tendered for the account of an Eligible Institution. If
Old Notes have been tendered pursuant to the procedures for book-entry transfer
set forth in "- Procedures for Tendering Old Notes," the notice of withdrawal
must specify the name and number of the account at DTC to be credited with the
withdrawal of Old Notes, in which case a notice of withdrawal will be effective
if delivered to the Exchange Agent by written, telegraphic, telex or facsimile
transmission. Withdrawals of tenders of Old Notes may not be rescinded. Old
Notes properly withdrawn will not be deemed validly tendered for purposes of the
Exchange Offer, but may be retendered at any subsequent time on or prior to the
Expiration Date by following any of the procedures described above under "-
Procedures for Tendering Old Notes."
All questions as to the validity, form and eligibility (including time of
receipt) of such withdrawal notices will be determined by the Company, in its
sole discretion, whose determination shall be final and binding on all parties.
None of the Company, any affiliates or assigns of the Company, the Exchange
Agent or any other person shall be under any duty to give any notification of
any irregularities in any notice of withdrawal or incur any liability for
failure to give any such notification. Any Old Notes which have been tendered
but which are withdrawn will be returned to the holder thereof promptly after
withdrawal.
CONDITIONS TO THE EXCHANGE OFFER
Notwithstanding any other provisions of the Exchange Offer, or any
extension of the Exchange Offer, the Company will not be required to accept for
exchange, or to exchange, any Old Notes for any New Notes, and may terminate the
Exchange Offer (whether or not any Old Notes have theretofore been accepted for
exchange) or may waive any conditions to or amend the Exchange Offer, if, in the
opinion of legal counsel to the Company, the consummation of the Exchange Offer
or any portion thereof would violate any applicable law or any applicable
interpretation of the Commission or its staff. In such event, if the Company
determines to amend the Exchange Offer and such amendment constitutes a material
change to the Exchange Offer, the Company will promptly disclose such amendment
by means of a prospectus supplement that will be distributed to the registered
holders of the Old Notes, and the Company will extend the Exchange Offer to the
extent required by Rule 14e-1 under the Exchange Act. Holders of Old Notes are
entitled to certain rights under the Registration Rights Agreement in the event
the Trust is unable to consummate the Exchange Offer.
See "Description of the Old Notes."
EXCHANGE AGENT
First Union National Bank has been appointed as Exchange Agent for the
Exchange Offer. Delivery of the Letter of Transmittal and any other required
documents, questions, requests for assistance, and requests for additional
copies of this Prospectus or of the Letter of Transmittal should be directed to
the Exchange Agent as follows:
First Union National Bank
Corporate Trust Department
1525 W. W.T. Harris Blvd. - 3C3
Charlotte, N.C. 28262-1153
Phone: (704) 590-7408
Facsimile: (704) 590-7628
Attention: Mr. Michael Klotz
Delivery to other than the above address or facsimile number will not
constitute a valid delivery.
FEES AND EXPENSES
The Company has agreed to pay the Exchange Agent reasonable and customary
fees for its services and will reimburse it for its reasonable out-of-pocket
expenses in connection therewith. The Company
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will also pay brokerage houses and other custodians, nominees and fiduciaries
the reasonable out-of-pocket expenses incurred by them in forwarding copies of
this Prospectus and related documents to the beneficial owners of Old Notes, and
in handling or tendering for their customers.
Holders who tender their Old Notes for exchange will not be obligated to
pay any transfer taxes in connection therewith. If, however, New Notes are to be
delivered to, or are to be issued in the name of, any person other than the
registered holder of the Old Notes tendered, or if a transfer tax is imposed for
any reason other than the exchange of Old Notes in connection with the Exchange
Offer, then the amount of any such transfer taxes (whether imposed on the
registered holder or any other persons) will be payable by the tendering holder.
If satisfactory evidence of payment of such taxes or exemption therefrom is not
submitted with the Letter of Transmittal, the amount of such transfer taxes will
be billed directly to such tendering holder.
The Company will not make any payment to brokers, dealers or others
soliciting acceptances of the Exchange Offer.
ACCOUNTING TREATMENT
The New Notes will be recorded at the same carrying value as of the Old
Notes, which is face value, as reflected in the Company's accounting records on
the date of the exchange. Accordingly, no gain or loss for accounting purposes
will be recognized by the Company. The expense related to the issuance of the
New Notes and of the Exchange Offer will be amortized over the term of the New
Notes.
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DESCRIPTION OF THE NEW NOTES
The New Notes offered hereby are issued under an Indenture dated as of july
2, 1997 among the Company, the Guarantors and First Union National Bank of
Maryland as trustee (the "Trustee"). The following summary of the material
provisions of the Indenture does not purport to be complete, and where reference
is made to particular provisions of the Indenture, such provisions, including
the definitions of certain terms, are qualified in their entirety by reference
to all of the provisions of the Indenture and those terms made a part of the
Indenture by reference to the Trust Indenture Act. For definitions of certain
capitalized terms used in the following summary, see "- Certain Definitions." A
copy of the Indenture may be obtained from the Company.
GENERAL
The New Notes will mature on July 15, 2007, will be limited to $200,000,000
aggregate principal amount, and will be unsecured senior subordinated
obligations of the Company. Each New Note will bear interest at 9% per annum
from their date of issuance or from the most recent interest payment date to
which interest has been paid, payable semiannually on January 15 and July 15
each year, commencing January 15, 1998, to the Person in whose name the New Note
(or any predecessor New Note) is registered at the close of business on the
January 1 or July 1 next preceding such interest payment date.
Holders of Old Notes that are accepted for exchange will receive, in cash,
accrued interest thereon to, but not including, the date of issuance of the New
Notes. Such interest will be paid with the first interest payment on the New
Notes on January 15, 1998. Interest on the Old Notes accepted for exchange will
cease to accrue upon issuance of the New Notes.
Payment of the New Notes is guaranteed by the Guarantors, jointly and
severally, on a senior subordinated basis. The Guarantors are comprised of all
of the Subsidiaries of the Company other than Cresap Enterprises, Inc., KDSM,
Inc., KDSM Licensee, Inc. and the Trust. The Guarantors represented
approximately 97.9% of total tangible assets as of September 30, 1997 and 98.3%
of pro forma broadcast cash flow and 85.3% of income before provision or benefit
for income taxes for the year ended December 31, 1996 of the Company in each
case on a consolidated basis. See "- New Guarantees."
Principal of, premium, if any, and interest on the New Notes will be
payable, and the New Notes will be exchangeable and transferable (subject to
compliance with transfer restrictions imposed by applicable securities laws for
so long as the New Notes are not registered for resale under the Securities
Act), at the office or agency of the Company maintained for such purposes (which
initially will be the Trustee); provided, however, that payment of interest may
be made at the option of the Company by check mailed to the Person entitled
thereto as shown on the security register. The New Notes will be issued only in
fully registered form without coupons, in denominations of $1,000 and any
integral multiple thereof. (Section 302) See "- Book-Entry Securities; The
Depository Trust Company; Delivery and Form." No service charge will be made for
any registration of transfer, exchange or redemption of New Notes, except in
certain circumstances for any tax or other governmental charge that may be
imposed in connection therewith. (Section 305)
OPTIONAL REDEMPTION
The New Notes will be subject to redemption at any time on or after July
15, 2002, at the option of the Company, in whole or in part, on not less than 30
nor more than 60 days' prior notice by first-class mail in amounts of $1,000 or
an integral multiple thereof at the following redemption prices (expressed as
percentages of the principal amount), if redeemed during the 12-month period
beginning July 15 of the years indicated below:
REDEMPTION
YEAR PRICE
---- -----------
2002 104.50%
2003 103.00
2004 101.50
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and thereafter at 100% of the principal amount, in each case together with
accrued and unpaid interest, if any, to the redemption date (subject to the
right of holders of record on relevant record dates to receive interest due on
an interest payment date).
In addition, at any time on or prior to July 15, 2000, the Company may
redeem up to 25% of the original principal amount of New Notes with the net
proceeds of a Public Equity Offering of the Company at 109% of the aggregate
principal amount, together with accrued and unpaid interest, if any, to the
redemption date (subject to the right of holders of record on relevant record
dates to receive interest due on an interest payment date).
If less than all of the New Notes are to be redeemed, the Trustee shall
select the New Notes or portions thereof to be redeemed pro rata, by lot or by
any other method the Trustee shall deem fair and reasonable. (Sections 203,
1101, 1105 and 1107)
SINKING FUND
There will be no sinking fund.
SUBORDINATION
The payment of the principal of, premium, if any, and interest on, the New
Notes will be subordinated, as set forth in the Indenture, in right of payment
to the prior payment in full of all Senior Indebtedness in cash or cash
equivalents or in any other form as acceptable to the holders of Senior
Indebtedness. The New Notes will be senior subordinated indebtedness of the
Company ranking pari passu with all other existing and future senior
subordinated indebtedness of the Company and senior to all existing and future
Subordinated Indebtedness of the Company.
During the continuance of any default in the payment of any Designated
Senior Indebtedness no payment (other than payments previously made pursuant to
the provisions described under "- Defeasance or Covenant Defeasance of
Indenture") or distribution of any assets of the Company of any kind or
character (excluding certain permitted equity interests or subordinated
securities) shall be made on account of the principal of, premium, if any, or
interest on, the Notes or on account of the purchase, redemption, defeasance or
other acquisition of, the New Notes unless and until such default has been
cured, waived or has ceased to exist or such Designated Senior Indebtedness
shall have been discharged or paid in full in cash or cash equivalents or in any
other form as acceptable to the holders of Senior Indebtedness.
During the continuance of any non-payment default with respect to any
Designated Senior Indebtedness pursuant to which the maturity thereof may be
accelerated (a "Non-payment Default") and after the receipt by the Trustee from
a representative of the holder of any Designated Senior Indebtedness of a
written notice of such default, no payment (other than payments previously made
pursuant to the provisions described under "- Defeasance or Covenant Defeasance
of Indenture") or distribution of any assets of the Company of any kind or
character (excluding certain permitted equity or subordinated securities) may be
made by the Company on account of the principal of, premium, if any, or interest
on, the New Notes or on account of the purchase, redemption, defeasance or other
acquisition of, the New Notes for the period specified below (the "Payment
Blockage Period").
The Payment Blockage Period shall commence upon the receipt of notice of
the Non-payment Default by the Trustee and the Company from a representative of
the holder of any Designated Senior Indebtedness and shall end on the earliest
of (i) the first date on which more than 179 days shall have elapsed since the
receipt of such written notice (provided such Designated Senior Indebtedness as
to which notice was given shall not theretofore have been accelerated), (ii) the
date on which such Non-payment Default (and all Non-payment Defaults as to which
notice is given after such Payment Blockage Period is initiated) are cured,
waived or ceased to exist or on which such Designated Senior Indebtedness is
discharged or paid in full in cash or cash equivalents or in any other form as
acceptable to the holders of Designated Senior Indebtedness or (iii) the date on
which such Payment Blockage Period (and all Non-payment Defaults as to which
notice is given after such Payment Blockage Period is initiated) shall have been
terminated by written notice to the Company or the Trustee from the repre-
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sentatives of holders of Designated Senior Indebtedness initiating such Payment
Blockage Period, after which, in the case of clauses (i), (ii) and (iii), the
Company shall promptly resume making any and all required payments in respect of
the New Notes, including any missed payments. In no event will a Payment
Blockage Period extend beyond 179 days from the date of the receipt by the
Company or the Trustee of the notice initiating such Payment Blockage Period
(such 179-day period referred to as the "Initial Period"). Any number of notices
of Non-payment Defaults may be given during the Initial Period; provided that
during any 365-day consecutive period only one Payment Blockage Period during
which payment of principal of, or interest on, the New Notes may not be made may
commence and the duration of the Payment Blockage Period may not exceed 179
days. No Non-payment Default with respect to Designated Senior Indebtedness
which existed or was continuing on the date of the commencement of any Payment
Blockage Period will be, or can be, made the basis for the commencement of a
second Payment Blockage Period, whether or not within a period of 365
consecutive days, unless such default has been cured or waived for a period of
not less than 90 consecutive days. (Section 1203)
If the Company fails to make any payment on the New Notes when due or
within any applicable grace period, whether or not on account of the payment
blockage provisions referred to above, such failure would constitute an Event of
Default under the Indenture and would enable the holders of the New Notes to
accelerate the maturity thereof. See "- Events of Default."
The Indenture provides that in the event of any insolvency or bankruptcy
case or proceeding, or any receivership, liquidation, reorganization or other
similar case or proceeding in connection therewith, relative to the Company or
its assets, or any liquidation, dissolution or other winding up of the Company,
whether voluntary or involuntary and whether or not involving insolvency or
bankruptcy, or any assignment for the benefit of creditors or any other
marshalling of assets or liabilities of the Company, all Senior Indebtedness
must be paid in full in cash or cash equivalents or in any other manner
acceptable to the holders of Senior Indebtedness, or provision made for such
payment, before any payment or distribution (excluding distributions of certain
permitted equity or subordinated securities) is made on account of the principal
of, premium, if any, or interest on the New Notes. (Section 1202)
By reason of such subordination, in the event of liquidation or insolvency,
creditors of the Company who are holders of Senior Indebtedness may recover
more, ratably, than the holders of the New Notes, and funds which would be
otherwise payable to the holders of the New Notes will be paid to the holders of
the Senior Indebtedness to the extent necessary to pay the Senior Indebtedness
in full in cash or cash equivalents or in any other manner acceptable to the
holders of Senior Indebtedness, and the Company may be unable to meet its
obligations fully with respect to the New Notes.
Each New Guarantee of a Guarantor will be an unsecured senior subordinated
obligation of such Guarantor, ranking pari passu with, or senior in right of
payment to, all other existing and future Indebtedness of such Guarantor that is
expressly subordinated to Guarantor Senior Indebtedness. The Indebtedness
evidenced by the New Guarantees will be subordinated to Guarantor Senior
Indebtedness to the same extent as the New Notes are subordinated to Senior
Indebtedness and during any period when payment on the New Notes is blocked by
Designated Senior Indebtedness, payment on the New Guarantees is similarly
blocked.
"Senior Indebtedness" is defined as the principal of, premium, if any, and
interest (including interest accruing after the filing of a petition initiating
any proceeding under any state, federal or foreign bankruptcy law whether or not
allowable as a claim in such proceeding) on any Indebtedness of the Company
(other than as otherwise provided in this definition), whether outstanding on
the date of the Indenture or thereafter created, incurred or assumed, and
whether at any time owing, actually or contingent, unless, in the case of any
particular Indebtedness, the instrument creating or evidencing the same or
pursuant to which the same is outstanding expressly provides that such
Indebtedness shall not be senior in right of payment to the New Notes. Without
limiting the generality of the foregoing, "Senior Indebtedness" shall include
(i) the principal of, premium, if any, and interest (including interest accruing
after the filing of a petition initiating any proceeding under any state,
federal or foreign bankruptcy law whether or not allowable as a claim in such
proceeding) and all other obligations of every nature of the Company from time
to time owed to the lenders (or their agent) under the Bank Credit
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Agreement; provided, however, that any Indebtedness under any refinancing,
refunding or replacement of the Bank Credit Agreement shall not constitute
Senior Indebtedness to the extent that the Indebtedness thereunder is by its
express terms subordinate to any other Indebtedness of the Company, (ii)
Indebtedness outstanding under the Founders' Notes and (iii) Indebtedness under
Interest Rate Agreements. Notwithstanding the foregoing, "Senior Indebtedness"
shall not include (i) Indebtedness evidenced by the New Notes, (ii) Indebtedness
that is subordinate or junior in right of payment to any Indebtedness of the
Company, (iii) Indebtedness which when incurred and without respect to any
election under Section 1111(b) of Title 11 United States Code, is without
recourse to the Company, (iv) Indebtedness which is represented by Disqualified
Equity Interests, (v) any liability for foreign, federal, state, local or other
taxes owed or owing by the Company, (vi) Indebtedness of the Company to the
extent such liability constitutes Indebtedness to a Subsidiary or any other
Affiliate of the Company or any of such Affiliate's subsidiaries, (vii) that
portion of any Indebtedness which at the time of issuance is issued in violation
of the Indenture, (viii) Indebtedness owed by the Company for compensation to
employees or for services and (ix) Indebtedness outstanding under the Minority
Note.
"Guarantor Senior Indebtedness" is defined as the principal of, premium, if
any, and interest (including interest accruing after the filing of a petition
initiating any proceeding under any state, federal or foreign bankruptcy laws
whether or not allowable as a claim in such proceeding) on any Indebtedness of
any Guarantor (other than as otherwise provided in this definition), whether
outstanding on the date of the Indenture or thereafter created, incurred or
assumed, and whether at any time owing, actually or contingent, unless, in the
case of any particular Indebtedness, the instrument creating or evidencing the
same or pursuant to which the same is outstanding expressly provides that such
Indebtedness shall not be senior in right of payment to any New Guarantee.
Without limiting the generality of the foregoing, "Guarantor Senior
Indebtedness" shall include (i) the principal of, premium, if any, and interest
(including interest accruing after the filing of a petition initiating any
proceeding under any state, federal or foreign bankruptcy law whether or not
allowable as a claim in such proceeding) and all other obligations of every
nature of any Guarantor from time to time owed to the lenders (or their agent)
under the Bank Credit Agreement; provided, however, that any Indebtedness under
any refinancing, refunding, or replacement of the Bank Credit Agreement shall
not constitute Guarantor Senior Indebtedness to the extent that the Indebtedness
thereunder is by its express terms subordinate to any other Indebtedness of any
Guarantor, (ii) Indebtedness evidenced by any guarantee of the Founders' Notes
and (iii) Indebtedness under Interest Rate Agreements. Notwithstanding the
foregoing, "Guarantor Senior Indebtedness" shall not include (i) Indebtedness
evidenced by the New Guarantees, (ii) Indebtedness that is subordinate or junior
in right of payment to any Indebtedness of any Guarantor, (iii) Indebtedness
which when incurred and without respect to any election under Section 1111(b) of
Title 11 United States Code, is without recourse to any Guarantor, (iv)
Indebtedness which is represented by Disqualified Equity Interests, (v) any
liability for foreign, federal, state, local or other taxes owed or owing by any
Guarantor to the extent such liability constitutes Indebtedness, (vi)
Indebtedness of any Guarantor to a Subsidiary or any other Affiliate of the
Company or any of such Affiliate's subsidiaries, (vii) Indebtedness evidenced by
any guarantee of any Subordinated Indebtedness or Pari Passu Indebtedness,
(viii) that portion of any Indebtedness which at the time of issuance is issued
in violation of the Indenture, (ix) Indebtedness owed by any Guarantor for
compensation to employees or for services and (x) any guarantee of the Minority
Note.
"Designated Senior Indebtedness" is defined as (i) all Senior Indebtedness
outstanding under the Bank Credit Agreement and (ii) any other Senior
Indebtedness which is incurred pursuant to an agreement (or series of related
agreements) simultaneously entered into providing for indebtedness, or
commitments to lend, of at least $25,000,000 at the time of determination and is
specifically designated in the instrument evidencing such Senior Indebtedness or
the agreement under which such Senior Indebtedness arises as "Designated Senior
Indebtedness" by the Company.
As of October 1, 1997, the aggregate amount of Senior Indebtedness that
ranked senior in right of payment to the Notes would have been $332.3 million,
and the aggregate amount of indebtedness that is pari passu in right of payment
with the New Notes would have been $400 million. See "Risk Factors Subordination
of the New Notes and the New Guarantees; Asset Encumbrances." The Company's and
its Subsidiaries' ability to incur additional Indebtedness is restricted as set
forth under "- Certain
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Covenants - Limitation on Indebtedness." Any Indebtedness which can be incurred
may constitute additional Senior Indebtedness or Guarantor Senior Indebtedness.
NEW GUARANTEES
The Guarantors will, jointly and severally, unconditionally guarantee the
due and punctual payment of principal of, premium, if any, and interest on, the
New Notes. Such New Guarantees will be subordinated to the Guarantor Senior
Indebtedness. See "- Subordination." As of October 1, 1997, the aggregate amount
of Guarantor Senior Indebtedness that ranked senior in right of payment to the
Guarantees would have been $332.3 million (including $325.6 million of
outstanding indebtedness representing guarantees of Senior Indebtedness). In
addition, under certain circumstances described under "- Certain Covenants
Limitations on Issuances of Guarantees of and Pledges for Indebtedness," the
Company is required to cause the execution and delivery of additional New
Guarantees by Restricted Subsidiaries. (Section 1012)
In addition, upon any sale, exchange or transfer, to any Person not an
Affiliate of the Company, of all of the Company's Equity Interest in, or all or
substantially all of the assets of, any Guarantor, which is in compliance with
the Indenture, such Guarantor shall be released from all its obligations under
its New Guarantee.
The Guarantors consist of all of the Company's existing Subsidiaries other
than Cresap Enterprises, Inc., KDSM, Inc., KDSM Licensee Inc. and the Trust
which are: Chesapeake Television, Inc., a Maryland corporation, Chesapeake
Television Licensee, Inc., a Delaware corporation, FSF-TV, Inc., a North
Carolina corporation, KABB Licensee, Inc., a Delaware corporation, KDNL
Licensee, Inc., a Delaware corporation, KSMO, Inc., a Maryland corporation, KSMO
Licensee, Inc., a Delaware corporation, KUPN Licensee, Inc., a Maryland
corporation, SCI-Indiana Licensee, Inc., a Delaware corporation, SCI-Sacramento
Licensee, Inc., a Delaware corporation, Sinclair Communications, Inc., a
Maryland corporation, Sinclair Radio of Albuquerque, Inc., a Maryland
corporation, Sinclair Radio of Albuquerque Licensee, Inc., a Delaware
corporation, Sinclair Radio of Buffalo, Inc., a Maryland corporation, Sinclair
Radio of Buffalo Licensee, Inc., a Delaware corporation, Sinclair Radio of
Greenville, Inc., a Maryland corporation, Sinclair Radio of Greenville Licensee,
Inc., a Delaware corporation, Sinclair Radio of Los Angeles, Inc., a Maryland
corporation, Sinclair Radio of Los Angeles Licensee, Inc., a Delaware
corporation, Sinclair Radio of Memphis, Inc., a Maryland corporation, Sinclair
Radio of Memphis Licensee, Inc., a Delaware corporation, Sinclair Radio of
Nashville, Inc., a Maryland corporation, Sinclair Radio of Nashville Licensee,
Inc., a Delaware corporation, Sinclair Radio of New Orleans, Inc., a Maryland
corporation, Sinclair Radio of New Orleans Licensee, Inc., a Delaware
corporation, Sinclair Radio of St. Louis, Inc., a Maryland corporation, Sinclair
Radio of St. Louis Licensee, Inc., a Delaware corporation, Sinclair Radio of
Wilkes-Barre, Inc., a Maryland corporation, Sinclair Radio of Wilkes- Barre
Licensee, Inc., a Delaware corporation, Superior Communications of Kentucky,
Inc., a Delaware corporation, Superior Communications of Oklahoma, Inc., an OK
corporation, Superior KY License Corp., a Delaware corporation, Superior OK
License Corp., a Delaware corporation, Tuscaloosa Broadcasting, Inc., a Maryland
corporation, WCGV, Inc., a Maryland corporation, WCGV Licensee, Inc., a Delaware
corporation, WDBB, Inc., a Maryland corporation, WLFL, Inc., a Maryland
corporation, WLFL Licensee, Inc., a Delaware corporation, WLOS Licensee, Inc., a
Delaware corporation, WPGH, Inc., a Maryland corporation, WPGH Licensee, Inc., a
Maryland corporation, WSMH, Inc., a Maryland corporation, WSMH Licensee, Inc., a
Delaware corporation, WSTR, Inc., a Maryland corporation, WSTR Licensee, Inc., a
Maryland corporation, WSYX, Inc., a Maryland corporation, WTTE, Channel 28,
Inc., a Maryland corporation, WTTE, Channel 28 Licensee, Inc., a Maryland
corporation, WTTO, Inc., a Maryland corporation, WTTO Licensee, Inc., a Delaware
corporation, WTVZ, Inc., a Maryland corporation, WTVZ Licensee, Inc., a Maryland
corporation, WYZZ, Inc., a Maryland corporation, WYZZ Licensee, Inc., a Delaware
corporation.
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CERTAIN COVENANTS
The Indenture contains, among others, the following covenants:
Limitation on Indebtedness. The Company will not, and will not permit any
Restricted Subsidiary to, create, incur, assume or directly or indirectly
guarantee or in any other manner become directly or indirectly liable for
("incur") any Indebtedness (including Acquired Indebtedness), except that the
Company may incur Indebtedness and a Guarantor may incur Permitted Subsidiary
Indebtedness if, in each case, the Debt to Operating Cash Flow Ratio of the
Company and its Restricted Subsidiaries at the time of the incurrence of such
Indebtedness, after giving pro forma effect thereto, is (x) on or prior to
December 15, 1999, 7:1 or less or (y) after December 15, 1999, 6.5:1 or less.
The foregoing limitation will not apply to the incurrence of any of the
following (collectively, "Permitted Indebtedness"):
(i) Indebtedness of the Company under the Bank Credit Agreement in an
aggregate principal amount at any one time outstanding not to exceed $50.0
million under any revolving credit facility thereunder;
(ii) Indebtedness of the Company pursuant to the New Notes and
Indebtedness of any Guarantor pursuant to a New Guarantee;
(iii) Indebtedness of any Guarantor consisting of a guarantee of the
Company's Indebtedness under the Bank Credit Agreement;
(iv) Indebtedness of the Company or any Restricted Subsidiary outstanding
on the date of the Indenture and listed on Schedule I thereto;
(v) Indebtedness of the Company owing to a Restricted Subsidiary;
provided that any Indebtedness of the Company owing to a Restricted
Subsidiary that is not a Guarantor is made pursuant to an intercompany note
in the form attached to the Indenture and is subordinated in right of payment
from and after such time as the New Notes shall become due and payable
(whether at Stated Maturity, acceleration or otherwise) to the payment and
performance of the Company's obligations under the New Notes; provided,
further, that any disposition, pledge or transfer of any such Indebtedness to
a Person (other than a disposition, pledge or transfer to a Wholly Owned
Restricted Subsidiary or a pledge to or for the benefit of the lenders under
the Bank Credit Agreement) shall be deemed to be an incurrence of such
Indebtedness by the obligor not permitted by this clause (v);
(vi) Indebtedness of a Wholly Owned Restricted Subsidiary owing to the
Company or another Wholly Owned Restricted Subsidiary; provided that, with
respect to Indebtedness owing to a Wholly Owned Subsidiary that is not a
Guarantor, (x) any such Indebtedness is made pursuant to an intercompany note
in the form attached to the Indenture and (y) any such Indebtedness shall be
subordinated in right of payment from and after such time as the obligations
under the New Guarantee by such Wholly Owned Restricted Subsidiary shall
become due and payable to the payment and performance of such Wholly Owned
Restricted Subsidiary's obligations under its New Guarantee; provided,
further, that (a) any disposition, pledge or transfer of any such
Indebtedness to a Person (other than a disposition, pledge or transfer to the
Company or a Wholly Owned Restricted Subsidiary or pledge to or for the
benefit of the lenders under the Bank Credit Agreement) shall be deemed to be
an incurrence of such Indebtedness by the obligor not permitted by this
clause (vi) and (b) any transaction pursuant to which any Wholly Owned
Restricted Subsidiary, which has Indebtedness owing to the Company or any
other Wholly Owned Restricted Subsidiary, ceases to be a Wholly Owned
Restricted Subsidiary shall be deemed to be the incurrence of Indebtedness by
such Wholly Owned Restricted Subsidiary that is not permitted by this clause
(vi);
(vii) guarantees of any Restricted Subsidiary made in accordance with the
provisions of " - Limitation on Issuances of Guarantees of and Pledges for
Indebtedness;"
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(viii) obligations of the Company entered into in the ordinary course of
business pursuant to Interest Rate Agreements designed to protect the Company
against fluctuations in interest rates in respect of Indebtedness of the
Company as long as such obligations at the time incurred do not exceed the
aggregate principal amount of such Indebtedness then outstanding or in good
faith anticipated to be outstanding within 90 days of such occurrence;
(ix) any renewals, extensions, substitutions, refundings, refinancings or
replacements (collectively, a "refinancing") of any Indebtedness described in
clauses (ii), (iii), (iv) and (v) above, including any successive
refinancings so long as the aggregate principal amount of Indebtedness
represented thereby is not increased by such refinancing plus the lesser of
(I) the stated amount of any premium or other payment required to be paid in
connection with such a refinancing pursuant to the terms of the Indebtedness
being refinanced or (II) the amount of premium or other payment actually paid
at such time to refinance the Indebtedness, plus, in either case, the amount
of expenses of the Company incurred in connection with such refinancing and,
in the case of Pari Passu or Subordinated Indebtedness, such refinancing does
not reduce the Average Life to Stated Maturity or the Stated Maturity of such
Indebtedness; and
(x) Indebtedness of the Company in addition to that described in clauses
(i) through (ix) above, and any renewals, extensions, substitutions,
refinancings, or replacements of such Indebtedness, so long as the aggregate
principal amount of all such Indebtedness shall not exceed $10,000,000.
(Section 1008)
Limitation on Restricted Payments. (a) The Company will not, and will not
permit any Restricted Subsidiary to, directly or indirectly:
(i) declare or pay any dividend on, or make any distribution to holders
of, any of the Company's Equity Interests (other than dividends or
distributions payable solely in its Qualified Equity Interests);
(ii) purchase, redeem or otherwise acquire or retire for value, directly
or indirectly, any Equity Interest of the Company or any Affiliate thereof
(except Equity Interests held by the Company or a Wholly Owned Restricted
Subsidiary);
(iii) make any principal payment on, or repurchase, redeem, defease,
retire or otherwise acquire for value, prior to any scheduled principal
payment, sinking fund or maturity, any Subordinated Indebtedness;
(iv) declare or pay any dividend or distribution on any Equity Interests
of any Subsidiary to any Person (other than the Company or any of its Wholly
Owned Restricted Subsidiaries);
(v) incur, create or assume any guarantee of Indebtedness of any
Affiliate (other than a Wholly Owned Restricted Subsidiary of the Company);
or
(vi) make any Investment in any Person (other than any Permitted
Investments)
(any of the foregoing payments described in clauses (i) through (vi), other than
any such action that is a Permitted Payment, collectively, "Restricted
Payments") unless after giving effect to the proposed Restricted Payment (the
amount of any such Restricted Payment, if other than cash, as determined by the
Board of Directors of the Company, whose determination shall be conclusive and
evidenced by a Board resolution), (1) no Default or Event of Default shall have
occurred and be continuing and such Restricted Payment shall not be an event
which is, or after notice or lapse of time or both, would be, an "event of
default" under the terms of any Indebtedness of the Company or its Restricted
Subsidiaries; and (2) the aggregate amount of all such Restricted Payments
declared or made after the date of the Indenture does not exceed the sum of:
(A) an amount equal to the Company's Cumulative Adjusted EBITDA less
1.4 times the Company's Cumulative Consolidated Interest Expense; and
(B) the aggregate Net Cash Proceeds received after December 9, 1993 by
the Company from capital contributions (other than from a Subsidiary) or
from the issuance or sale (other than to any of its Subsidiaries) of its
Qualified Equity Interests (except, in each case, to the extent such
proceeds are used to purchase, redeem or otherwise retire Equity
Interests or Subordinated Indebtedness as set forth below).
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(b) Notwithstanding the foregoing, and in the case of clauses (ii) through
(v) below, so long as there is no Default or Event of Default continuing, the
foregoing provisions shall not prohibit the following actions (clauses (i)
through (v) being referred to as "Permitted Payments"):
(i) the payment of any dividend within 60 days after the date of
declaration thereof, if at such date of declaration such payment would be
permitted by the provisions of paragraph (a) of this Section and such payment
shall be deemed to have been paid on such date of declaration for purposes of
the calculation required by paragraph (a) of this Section;
(ii) any transaction with an officer or director of the Company entered
into in the ordinary course of business (including compensation or employee
benefit arrangements with any officer or director of the Company);
(iii) the repurchase, redemption, or other acquisition or retirement of
any Equity Interests of the Company in exchange for (including any such
exchange pursuant to the exercise of a conversion right or privilege in
connection therewith cash is paid in lieu of the issuance of fractional
shares or scrip), or out of the Net Cash Proceeds of, a substantially
concurrent issue and sale for cash (other than to a Subsidiary) of other
Qualified Equity Interests of the Company; provided that the Net Cash
Proceeds from the issuance of such Qualified Equity Interests are excluded
from clause (2)(B) of paragraph (a) of this Section;
(iv) any repurchase, redemption, defeasance, retirement, refinancing or
acquisition for value or payment of principal of any Subordinated
Indebtedness in exchange for, or out of the net proceeds of, a substantially
concurrent issuance and sale for cash (other than to any Subsidiary of the
Company) of any Qualified Equity Interests of the Company, provided that the
Net Cash Proceeds from the issuance of such shares of Qualified Equity
Interests are excluded from clause (2)(B) of paragraph (a) of this Section;
and
(v) the repurchase, redemption, defeasance, retirement, refinancing or
acquisition for value or payment of principal of any Subordinated
Indebtedness (other than Disqualified Equity Interests) (a "refinancing")
through the issuance of new Subordinated Indebtedness of the Company, as the
case may be, provided that any such new Indebtedness (1) shall be in a
principal amount that does not exceed the principal amount so refinanced or,
if such Subordinated Indebtedness provides for an amount less than the
principal amount thereof to be due and payable upon a declaration or
acceleration thereof, then such lesser amount as of the date of
determination), plus the lesser of (I) the stated amount of any premium,
interest or other payment required to be paid in connection with such a
refinancing pursuant to the terms of the Indebtedness being refinanced or
(II) the amount of premium, interest or other payment actually paid at such
time to refinance the Indebtedness, plus, in either case, the amount of
expenses of the Company incurred in connection with such refinancing; (2) has
an Average Life to Stated Maturity greater than the remaining Average Life to
Stated Maturity of the New Notes; (3) has a Stated Maturity for its final
scheduled principal payment later than the Stated Maturity for the final
scheduled principal payment of the New Notes; and (4) is expressly
subordinated in right of payment to the New Notes at least to the same extent
as the Indebtedness to be refinanced. (Section 1009)
Limitation on Transactions with Affiliates. The Company will not, and will
not permit any of its Restricted Subsidiaries to, directly or indirectly, enter
into or suffer to exist any transaction or series of related transactions
(including, without limitation, the sale, purchase, exchange or lease of assets,
property or services) with any Affiliate of the Company (other than the Company
or a Wholly Owned Restricted Subsidiary) unless (a) such transaction or series
of transactions is in writing on terms that are no less favorable to the Company
or such Restricted Subsidiary, as the case may be, than would be available in a
comparable transaction in arm's-length dealings with an unrelated third party
and (b) (i) with respect to any transaction or series of transactions involving
aggregate payments in excess of $1,000,000, the Company delivers an officers'
certificate to the Trustee certifying that such transaction or series of related
transactions complies with clause (a) above and such transaction or series of
related transactions has been approved by a majority of the members of the Board
of Directors of the Company (and approved by a majority of Independent Directors
or, in the event there is only one Independent
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Director, by such Independent Director) and (ii) with respect to any transaction
or series of transactions involving aggregate payments in excess of $5,000,000,
an opinion as to the fairness to the Company or such Restricted Subsidiary from
a financial point of view issued by an investment banking firm of national
standing. Notwithstanding the foregoing, this provision will not apply to (A)
any transaction with an officer or director of the Company entered into in the
ordinary course of business (including compensation or employee benefit
arrangements with any officer or director of the Company), (B) any transaction
entered into by the Company or one of its Wholly Owned Restricted Subsidiaries
with a Wholly Owned Restricted Subsidiary of the Company, and (C) transactions
in existence on the date of the Indenture. (Section 1010)
Limitation on Senior Subordinated Indebtedness. The Company will not, and
will not permit any Guarantor to, directly or indirectly, create, incur, issue,
assume, guarantee or otherwise in any manner become directly or indirectly
liable for or with respect to or otherwise permit to exist any Indebtedness that
is subordinate in right of payment to any Indebtedness of the Company or such
Guarantor, as the case may be, unless such Indebtedness is also pari passu with
the New Notes or the New Guarantee of such Guarantor, or subordinate in right of
payment to the New Notes or such New Guarantee to at least the same extent as
the New Notes or such New Guarantee are subordinate in right of payment to
Senior Indebtedness or Guarantor Senior Indebtedness, as the case may be, as set
forth in the Indenture. (Section 1011)
Limitation on Liens. The Company will not, and will not permit any
Restricted Subsidiary to, directly or indirectly, create, incur, affirm or
suffer to exist any Lien of any kind upon any of its property or assets
(including any intercompany notes), now owned or acquired after the date of the
Indenture, or any income or profits therefrom, except if the New Notes are
directly secured equally and ratably with (or prior to in the case of Liens with
respect to Subordinated Indebtedness) the obligation or liability secured by
such Lien, excluding, however, from the operation of the foregoing any of the
following:
(a) any Lien existing as of the date of the Indenture and listed on a
schedule thereto;
(b) any Lien arising by reason of (1) any judgment, decree or order of any
court, so long as such Lien is adequately bonded and any appropriate legal
proceedings which may have been duly initiated for the review of such judgment,
decree or order shall not have been finally terminated or the period within
which such proceedings may be initiated shall not have expired; (2) taxes not
yet delinquent or which are being contested in good faith; (3) security for
payment of workers' compensation or other insurance; (4) good faith deposits in
connection with tenders, leases, contracts (other than contracts for the payment
of money); (5) zoning restrictions, easements, licenses, reservations,
provisions, covenants, conditions, waivers, restrictions on the use of property
or minor irregularities of title (and with respect to leasehold interests,
mortgages, obligations, liens and other encumbrances incurred, created, assumed
or permitted to exist and arising by, through or under a landlord or owner of
the leased property, with or without consent of the lessee), none of which
materially impairs the use of any parcel of property material to the operation
of the business of the Company or any Subsidiary or the value of such property
for the purpose of such business; (6) deposits to secure public or statutory
obligations, or in lieu of surety or appeal bonds; (7) certain surveys,
exceptions, title defects, encumbrances, easements, reservations of, or rights
of others for, rights of way, sewers, electric lines, telegraph or telephone
lines and other similar purposes or zoning or other restrictions as to the use
of real property not interfering with the ordinary conduct of the business of
the Company or any of its Subsidiaries; or (8) operation of law in favor of
mechanics, materialmen, laborers, employees or suppliers, incurred in the
ordinary course of business for sums which are not yet delinquent or are being
contested in good faith by negotiations or by appropriate proceedings which
suspend the collection thereof;
(c) any Lien now or hereafter existing on property of the Company or any of
its Restricted Subsidiaries securing Senior Indebtedness or Guarantor Senior
Indebtedness, in each case which Indebtedness is permitted under the provisions
of "Limitation on Indebtedness" and provided that the provisions described under
"Limitation on Issuances of Guarantees of and Pledges for Indebtedness" are
complied with;
(d) any Lien securing Acquired Indebtedness created prior to (and not
created in connection with, or in contemplation of) the incurrence of such
Indebtedness by the Company or any Subsidiary, in each
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case which Indebtedness is permitted under the provisions of "Limitation on
Indebtedness"; provided that any such Lien only extends to the assets that were
subject to such Lien securing such Acquired Indebtedness prior to the related
transaction by the Company or its Subsidiaries;
(e) any Lien securing Permitted Subsidiary Indebtedness; and
(f) any extension, renewal, refinancing or replacement, in whole or in
part, of any Lien described in the foregoing clauses (a) through (e) so long as
the amount of security is not increased thereby. (Section 1012)
Limitation on Sale of Assets. (a) The Company will not, and will not permit
any of its Restricted Subsidiaries to, directly or indirectly, consummate an
Asset Sale unless (i) at least 80% of the consideration from such Asset Sale is
received in cash and (ii) the Company or such Restricted Subsidiary receives
consideration at the time of such Asset Sale at least equal to the Fair Market
Value of the shares or assets sold (other than in the case of an involuntary
Asset Sale, as determined by the Board of Directors of the Company and evidenced
in a Board resolution or in connection with an Asset Swap as determined in
writing by a nationally recognized investment banking or appraisal firm);
provided however, that in the event the Company or any Restricted Subsidiary
engages in an Asset Sale with any third party and receives in consideration
therefor, or simultaneously with such Asset Sale enters into, a Local Marketing
Agreement with such third party or any affiliate thereof, the Fair Market Value
of such Local Marketing Agreement (as determined in writing by a nationally
recognized investment banking or appraisal firm) shall be deemed cash and
considered when determining whether such Asset Sale complies with the foregoing
clauses (i) and (ii). Notwithstanding the foregoing, clause (i) of the preceding
sentence shall not be applicable to any Asset Swap.
(b) If all or a portion of the Net Cash Proceeds of any Asset Sale are not
required to be applied to repay permanently any Senior Indebtedness then
outstanding as required by the terms thereof, or the Company determines not to
apply such Net Cash Proceeds to the permanent prepayment of such Senior
Indebtedness or if no such Senior Indebtedness is then outstanding, then the
Company may within 12 months of the Asset Sale, invest the Net Cash Proceeds in
properties and assets that (as determined by the Board of Directors) replace the
properties and assets that were the subject of the Asset Sale or in properties
and assets that will be used in the businesses of the Company or its Restricted
Subsidiaries existing on the date of the Indenture or reasonably related
thereto. The amount of such Net Cash Proceeds neither used to permanently repay
or prepay Senior Indebtedness nor used or invested as set forth in this
paragraph constitutes "Excess Proceeds."
(c) When the aggregate amount of Excess Proceeds equals $5,000,000 or more,
the Company shall apply the Excess Proceeds to the repayment of the New Notes
and any Pari Passu Indebtedness required to be repurchased under the instrument
governing such Pari Passu Indebtedness as follows: (a) the Company shall make an
offer to purchase (an "Offer") from all holders of the New Notes in accordance
with the procedures set forth in the Indenture in the maximum principal amount
(expressed as a multiple of $1,000) of New Notes that may be purchased out of an
amount (the "Note Amount") equal to the product of such Excess Proceeds
multiplied by a fraction, the numerator of which is the outstanding principal
amount of the Notes, and the denominator of which is the sum of the outstanding
principal amount of the New Notes and such Pari Passu Indebtedness (subject to
proration in the event such amount is less than the aggregate Offered Price of
all New Notes tendered) and (b) to the extent required by such Pari Passu
Indebtedness to permanently reduce the principal amount of such Pari Passu
Indebtedness, the Company shall make an offer to purchase or otherwise
repurchase or redeem Pari Passu Indebtedness (a "Pari Passu Offer") in an amount
(the "Pari Passu Debt Amount") equal to the excess of the Excess Proceeds over
the Note Amount; provided that in no event shall the Pari Passu Debt Amount
exceed the principal amount of such Pari Passu Indebtedness plus the amount of
any premium required to be paid to repurchase such Pari Passu Indebtedness. The
offer price shall be payable in cash in an amount equal to 100% of the principal
amount of the New Notes plus accrued and unpaid interest, if any, to the date
(the "Offer Date") such Offer is consummated (the "Offered Price"), in
accordance with the procedures set forth in the Indenture. To the extent that
the aggregate Offered Price of the New Notes tendered pursuant to the Offer is
less than the Note Amount relating thereto or
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the aggregate amount of Pari Passu Indebtedness that is purchased is less than
the Pari Passu Debt Amount (the amount of such shortfall, if any, constituting a
"Deficiency"), the Company shall use such Deficiency in the business of the
Company and its Restricted Subsidiaries. Upon completion of the purchase of all
the Notes tendered pursuant to an Offer and repurchase of the Pari Passu
Indebtedness pursuant to a Pari Passu Offer, the amount of Excess Proceeds, if
any, shall be reset at zero.
(d) Whenever the Excess Proceeds received by the Company exceed $5,000,000,
such Excess Proceeds shall be set aside by the Company in a separate account
pending (i) deposit with the depositary or a paying agent of the amount required
to purchase the New Notes or Pari Passu Indebtedness tendered in an Offer or a
Pari Passu Offer, (ii) delivery by the Company of the Offered Price to the
holders of the New Notes or Pari Passu Indebtedness tendered in an Offer or a
Pari Passu Offer and (iii) application, as set forth above, of Excess Proceeds
in the business of the Company and its Restricted Subsidiaries. Such Excess
Proceeds may be invested in Temporary Cash Investments, provided that the
maturity date of any such investment made after the amount of Excess Proceeds
exceeds $5,000,000 shall not be later than the Offer Date. The Company shall be
entitled to any interest or dividends accrued, earned or paid on such Temporary
Cash Investments, provided that the Company shall not withdraw such interest
from the separate account if an Event of Default has occurred and is continuing.
(e) If the Company becomes obligated to make an Offer pursuant to clause
(c) above, the New Notes shall be purchased by the Company, at the option of the
holder thereof, in whole or in part in integral multiples of $1,000, on a date
that is not earlier than 45 days and not later than 60 days from the date the
notice is given to holders, or such later date as may be necessary for the
Company to comply with the requirements under the Exchange Act, subject to
proration in the event the Note Amount is less than the aggregate Offered Price
of all New Notes tendered.
(f) The Company shall comply with the applicable tender offer rules,
including Rule 14e-1 under the Exchange Act, and any other applicable securities
laws or regulations in connection with an Offer.
(g) The Company will not, and will not permit any Restricted Subsidiary to,
create or permit to exist or become effective any restriction (other than
restrictions existing under (i) Indebtedness as in effect on the date of the
Indenture listed on a schedule thereto as such Indebtedness may be refinanced
from time to time, provided that such restrictions are no less favorable to the
holders of the New Notes than those existing on the date of the Indenture or
(ii) any Senior Indebtedness and any Guarantor Senior Indebtedness) that would
materially impair the ability of the Company to make an Offer to purchase the
New Notes or, if such Offer is made, to pay for the New Notes tendered for
purchase. (Section 1013)
Limitation on Issuances of Guarantees of and Pledges for Indebtedness. (a)
The Company will not permit any Restricted Subsidiary, other than the
Guarantors, directly or indirectly, to secure the payment of any Senior
Indebtedness of the Company and the Company will not, and will not permit any
Restricted Subsidiary to, pledge any intercompany notes representing obligations
of any Restricted Subsidiary (other than the Guarantors) to secure the payment
of any Senior Indebtedness unless in each case such Restricted Subsidiary
simultaneously executes and delivers a supplemental indenture to the Indenture
providing for a guarantee of payment of the New Notes by such Restricted
Subsidiary, which guarantee shall be on the same terms as the guarantee of the
Senior Indebtedness (if a guarantee of Senior Indebtedness is granted by any
such Restricted Subsidiary) except that the guarantee of the New Notes need not
be secured and shall be subordinated to the claims against such Restricted
Subsidiary in respect of Senior Indebtedness to the same extent as the New Notes
are subordinated to Senior Indebtedness of the Company under the Indenture.
(b) The Company will not permit any Restricted Subsidiary, other than the
Guarantors, directly or indirectly, to guarantee, assume or in any other manner
become liable with respect to any Indebtedness of the Company (other than
guarantees in existence on the date of the Indenture) unless such Restricted
Subsidiary simultaneously executes and delivers a supplemental indenture to the
Indenture providing for a guarantee of the New Notes on the same terms as the
guarantee of such Indebtedness except that if the New Notes are subordinated in
right of payment to such Indebtedness, the guarantee under the supplemental
indenture shall be subordinated to the guarantee of such Indebtedness to the
same extent as the New Notes are subordinated to such Indebtedness under the
Indenture.
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(c) Each guarantee created pursuant to the provisions described in the
foregoing paragraph is referred to as a "Guarantee" and the issuer of each such
Guarantee is referred to as a "Guarantor." Notwithstanding the foregoing, any
Guarantee by a Restricted Subsidiary of the New Notes shall provide by its terms
that it shall be automatically and unconditionally released and discharged upon
(i) any sale, exchange or transfer, to any Person not an Affiliate of the
Company, of all of the Company's Equity Interest in, or all or substantially all
the assets of, such Restricted Subsidiary, which is in compliance with the
Indenture or (ii) (with respect to any Guarantees created after the date of the
Indenture) the release by the holders of the Indebtedness of the Company
described in clauses (a) and (b) above of their security interest or their
guarantee by such Restricted Subsidiary (including any deemed release upon
payment in full of all obligations under such Indebtedness), at a time when (A)
no other Indebtedness of the Company has been secured or guaranteed by such
Restricted Subsidiary, as the case may be, or (B) the holders of all such other
Indebtedness which is secured or guaranteed by such Restricted Subsidiary also
release their security interest in, or guarantee by, such Restricted Subsidiary
(including any deemed release upon payment in full of all obligations under such
Indebtedness). (Section 1014)
Restriction on Transfer of Assets. The Company and the Guarantors will not
sell, convey, transfer or otherwise dispose of their respective assets or
property to any of the Company's Restricted Subsidiaries (other than any
Guarantor), except for sales, conveyances, transfers or other dispositions made
in the ordinary course of business and except for capital contributions to any
Restricted Subsidiary, the only material assets of which are broadcast licenses.
For purposes of this provision, any sale, conveyance, transfer, lease or other
disposition of property or assets, having a Fair Market Value in excess of (a)
$1,000,000 for any sale, conveyance, transfer, leases or disposition or series
of related sales, conveyances, transfers, leases and dispositions and (b)
$5,000,000 in the aggregate for all such sales, conveyances, transfers, leases
or dispositions in any fiscal year of the Company shall not be considered "in
the ordinary course of business." (Section 1015)
Purchase of New Notes Upon a Change of Control. If a Change of Control
shall occur at any time, then each holder of New Notes shall have the right to
require that the Company purchase such holder's New Notes in whole or in part in
integral multiples of $1,000, at a purchase price (the "Change of Control
Purchase Price") in cash in an amount equal to 101% of the principal amount of
such New Notes, plus accrued and unpaid interest, if any, to the date of
purchase (the "Change of Control Purchase Date"), pursuant to the offer
described below (the "Change of Control Offer") and the other procedures set
forth in the Indenture.
Within 30 days following any Change of Control, the Company shall notify
the Trustee thereof and give written notice of such Change of Control to each
holder of New Notes, by first-class mail, postage prepaid, at his address
appearing in the security register, stating, among other things, the purchase
price and that the purchase date shall be a business day no earlier than 30 days
nor later than 60 days from the date such notice is mailed, or such later date
as is necessary to comply with requirements under the Exchange Act; that any New
Note not tendered will continue to accrue interest; that, unless the Company
defaults in the payment of the purchase price, any New Notes accepted for
payment pursuant to the Change of Control Offer shall cease to accrue interest
after the Change of Control Purchase Date; and certain other procedures that a
holder of New Notes must follow to accept a Change of Control Offer or to
withdraw such acceptance.
If a Change of Control Offer is made, there can be no assurance that the
Company will have available funds sufficient to pay the Change of Control
Purchase Price for all of the New Notes that might be delivered by holders of
the New Notes seeking to accept the Change of Control Offer. The holders of the
Old Notes have rights upon a Change of Control that are similar to the rights of
holders of the New Notes. A Change of Control will also result in an event of
default under the Bank Credit Agreement and could result in the acceleration of
all indebtedness under the Bank Credit Agreement. Moreover, the Bank Credit
Agreement prohibits the repurchase of the New Notes by the Company. The failure
of the Company to make or consummate the Change of Control Offer or pay the
Change of Control Purchase Price when due will result in an Event of Default
under the Indenture.
The term "all or substantially all" as used in the definition of "Change of
Control" has not been interpreted under New York law (which is the governing law
of the Indenture) to represent a specific
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quantitative test. As a consequence, in the event the holders of the New Notes
elected to exercise their rights under the Indenture and the Company elected to
contest such election, there could be no assurance as to how a court
interpreting New York law would interpret the phrase.
The existence of a holder's right to require the Company to repurchase such
holder's New Notes upon a Change of Control may deter a third party from
acquiring the Company in a transaction which constitutes a Change of Control.
"Change of Control" means the occurrence of either of the following events:
(i) any "person" or "group" (as such terms are used in Sections 13(d) and 14(d)
of the Exchange Act), other than Permitted Holders, is or becomes the
"beneficial owner" (as defined in Rules 13d-3 and 13d-5 under the Exchange Act,
except that a Person shall be deemed to have beneficial ownership of all shares
that such Person has the right to acquire, whether such right is exercisable
immediately or only after the passage of time), directly or indirectly, of more
than 40% of the total outstanding Voting Stock of the Company, provided that the
Permitted Holders "beneficially own" (as so defined) a lesser percentage of such
Voting Stock than such other Person and do not have the right or ability by
voting power, contract or otherwise to elect or designate for election a
majority of the Board of Directors of the Company; (ii) during any period of two
consecutive years, individuals who at the beginning of such period constituted
the Board of Directors of the Company (together with any new directors whose
election to such Board or whose nomination for election by the shareholders of
the Company, was approved by a vote of 66 2/3% of the directors then still in
office who were either directors at the beginning of such period or whose
election or nomination for election was previously so approved) cease for any
reason to constitute a majority of such Board of Directors then in office; (iii)
the Company consolidates with or merges with or into any Person or conveys,
transfers or leases all or substantially all of its assets to any Person, or any
corporation consolidates with or merges into or with the Company, in any such
event pursuant to a transaction in which the outstanding Voting Stock of the
Company is changed into or exchanged for cash, securities or other property,
other than any such transaction where the outstanding Voting Stock of the
Company is not changed or exchanged at all (except to the extent necessary to
reflect a change in the jurisdiction of incorporation of the Company) or where
(A) the outstanding Voting Stock of the Company is changed into or exchanged for
(x) Voting Stock of the surviving corporation which is not Disqualified Equity
Interests or (y) cash, securities and other property (other than Equity
Interests of the surviving corporation) in an amount which could be paid by the
Company as a Restricted Payment as described under "Limitation on Restricted
Payments" (and such amount shall be treated as a Restricted Payment subject to
the provisions in the Indenture described under "- Limitation on Restricted
Payments") and (B) no "person" or "group" other than Permitted Holders owns
immediately after such transaction, directly or indirectly, more than the
greater of (1) 40% of the total outstanding Voting Stock of the surviving
corporation and (2) the percentage of the outstanding Voting Stock of the
surviving corporation owned, directly or indirectly, by Permitted Holders
immediately after such transaction; or (iv) the Company is liquidated or
dissolved or adopts a plan of liquidation or dissolution other than in a
transaction which complies with the provisions described under "Consolidation,
Merger, Sale of Assets."
"Permitted Holders" means as of the date of determination (i) any of David
D. Smith, Frederick G. Smith, J. Duncan Smith and Robert E. Smith; (ii) family
members or the relatives of the Persons described in clause (i); (iii) any
trusts created for the benefit of the Persons described in clauses (i), (ii) or
(iv) or any trust for the benefit of any such trust; or (iv) in the event of the
incompetence or death of any of the Persons described in clauses (i) and (ii),
such Person's estate, executor, administrator, committee or other personal
representative or beneficiaries, in each case who at any particular date shall
beneficially own or have the right to acquire, directly or indirectly, Equity
Interests of the Company.
The provisions of the Indenture will not afford holders of New Notes the
right to require the Company to repurchase the New Notes in the event of a
highly leveraged transaction or certain transactions with the Company's
management or its affiliates, including a reorganization, restructuring, merger
or similar transaction (including, in certain circumstances, an acquisition of
the Company by management or its Affiliates) involving the Company that may
adversely affect holders of the New Notes, if such transaction is not a
transaction defined as a Change of Control. A transaction involving the
Company's management or its Affiliates, or a transaction involving a
recapitalization of the Company, will result in a Change of Control if it is the
type of transaction specified by such definition.
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The Company will comply with the applicable tender offer rules, including
Rule 14e-1 under the Exchange Act, and any other applicable securities laws or
regulations in connection with a Change of Control Offer.
The Company will not, and will not permit any Subsidiary to, create or
permit to exist or become effective any restriction (other than restrictions
existing under Indebtedness as in effect on the date of the Indenture) that
would materially impair the ability of the Company to make a Change of Control
Offer to purchase the New Notes or, if such Change of Control Offer is made, to
pay for the New Notes tendered for purchase. (Section 1016)
Limitation on Subsidiary Equity Interests. The Company will not permit any
Restricted Subsidiary of the Company to issue any Equity Interests, except for
(i) Equity Interests issued to and held by the Company or a Wholly Owned
Restricted Subsidiary, and (ii) Equity Interests issued by a Person prior to the
time (A) such Person becomes a Restricted Subsidiary, (B) such Person merges
with or into a Restricted Subsidiary or (C) a Restricted Subsidiary merges with
or into such Person; provided that such Equity Interests were not issued or
incurred by such Person in anticipation of the type of transaction contemplated
by subclause (A), (B) or (C). (Section 1017)
Limitation on Dividends and Other Payment Restrictions Affecting
Subsidiaries. The Company will not, and will not permit any of its Restricted
Subsidiaries to, directly or indirectly, create or otherwise cause or suffer to
exist or become effective any encumbrance or restriction on the ability of any
Restricted Subsidiary of the Company to (i) pay dividends or make any other
distribution on its Equity Interests, (ii) pay any Indebtedness owed to the
Company or a Restricted Subsidiary of the Company, (iii) make any Investment in
the Company or a Restricted Subsidiary of the Company or (iv) transfer any of
its properties or assets to the Company or any Restricted Subsidiary, except (a)
any encumbrance or restriction pursuant to an agreement in effect on the date of
the Indenture and listed as a schedule thereto; (b) any encumbrance or
restriction, with respect to a Restricted Subsidiary that is not a Subsidiary of
the Company on the date of the Indenture, in existence at the time such Person
becomes a Restricted Subsidiary of the Company and not incurred in connection
with, or in contemplation of, such Person becoming a Restricted Subsidiary; (c)
any encumbrance or restriction existing under any agreement that extends,
renews, refinances or replaces the agreements containing the encumbrances or
restrictions in the foregoing clauses (a) and (b), or in this clause (c),
provided that the terms and conditions of any such encumbrances or restrictions
are not materially less favorable to the holders of the New Notes than those
under or pursuant to the agreement evidencing the Indebtedness so extended,
renewed, refinanced or replaced or are not more restrictive than those set forth
in the Indenture; and (d) any encumbrance or restriction created pursuant to an
asset sale agreement, stock sale agreement or similar instrument pursuant to
which on Asset Sale permitted under "Limitations on Sale of Assets" is to be
consummated, so long as such restriction or encumbrance shall be effective only
for a period from the execution and delivery of such agreement or instrument
through a termination date not later than 270 days after such execution and
delivery. (Section 1018)
Limitation on Unrestricted Subsidiaries. The Company will not make, and
will not permit any of its Restricted Subsidiaries to make, any Investments in
Unrestricted Subsidiaries if, at the time thereof, the aggregate amount of such
Investments would exceed the amount of Restricted Payments then permitted to be
made pursuant to the "Limitation on Restricted Payments" covenant. Any
Investments in Unrestricted Subsidiaries permitted to be made pursuant to this
covenant (i) will be treated as the payment of a Restricted Payment in
calculating the amount of Restricted Payments made by the Company and (ii) may
be made in cash or property. (Section 1019)
Provision of Financial Statements. The Indenture provides that, whether or
not the Company is subject to Section 13(a) or 15(d) of the Exchange Act, the
Company will, to the extent permitted under the Exchange Act, file with the
Commission the annual reports, quarterly reports and other documents which the
Company would have been required to file with the Commission pursuant to such
Section 13(a) or 15(d) if the Company were so subject, such documents to be
filed with the Commission on or prior to the respective dates (the "Required
Filing Dates") by which the Company would have been required so to file such
documents if the Company were so subject. The Company will also in any event
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(x) within 15 days of each Required Filing Date (i) transmit by mail to all
holders, as their names and addresses appear in the New Note register, without
cost to such holders and (ii) file with the Trustee copies of the annual
reports, quarterly reports and other documents which the Company would have been
required to file with the Commission pursuant to Section 13(a) or 15(d) of the
Exchange Act if the Company were subject to such Sections and (y) if filing such
documents by the Company with the Commission is not permitted under the Exchange
Act, promptly upon written request and payment of the reasonable cost of
duplication and delivery, supply copies of such documents to any prospective
holder at the Company's cost. (Section 1020)
Additional Covenants. The Indenture also contains covenants with respect to
the following matters: (i) payment of principal, premium and interest; (ii)
maintenance of an office or agency; (iii) arrangements regarding the handling of
money held in trust; (iv) maintenance of corporate existence; (v) payment of
taxes and other claims; (vi) maintenance of properties; and (vii) maintenance of
insurance.
CONSOLIDATION, MERGER, SALE OF ASSETS
The Company shall not, in a single transaction or a series of related
transactions, consolidate with or merge with or into any other Person or sell,
assign, convey, transfer, lease or otherwise dispose of all or substantially all
of its properties and assets to any Person or group of affiliated Persons, or
permit any of its Subsidiaries to enter into any such transaction or
transactions if such transaction or transactions, in the aggregate, would result
in a sale, assignment, conveyance, transfer, lease or disposition of all or
substantially all of the properties and assets of the Company and its
Subsidiaries on a Consolidated basis to any other Person or group of affiliated
Persons, unless at the time and after giving effect thereto: (i) either (1) the
Company shall be the continuing corporation or (2) the Person (if other than the
Company) formed by such consolidation or into which the Company is merged or the
Person which acquires by sale, assignment, conveyance, transfer, lease or
disposition of all or substantially all of the properties and assets of the
Company and its Subsidiaries on a Consolidated basis (the "Surviving Entity")
shall be a corporation duly organized and validly existing under the laws of the
United States of America, any state thereof or the District of Columbia and such
Person assumes, by a supplemental indenture in a form reasonably satisfactory to
the Trustee, all the obligations of the Company under the Notes and the
Indenture, and the Indenture shall remain in full force and effect; (ii)
immediately before and immediately after giving effect to such transaction, no
Default or Event of Default shall have occurred and be continuing; (iii)
immediately after giving effect to such transaction on a pro forma basis, the
Consolidated Net Worth of the Company (or the Surviving Entity if the Company is
not the continuing obligor under the Indenture) is equal to or greater than the
Consolidated Net Worth of the Company immediately prior to such transaction;
(iv) immediately before and immediately after giving effect to such transaction
on a pro forma basis (on the assumption that the transaction occurred on the
first day of the four-quarter period immediately prior to the consummation of
such transaction with the appropriate adjustments with respect to the
transaction being included in such pro forma calculation), the Company (or the
Surviving Entity if the Company is not the continuing obligor under the
Indenture) could incur $1.00 of additional Indebtedness under the provisions of
"- Certain Covenants - Limitation on Indebtedness" (other than Permitted
Indebtedness); (v) each Guarantor, if any, unless it is the other party to the
transactions described above, shall have by supplemental indenture confirmed
that its Guarantee shall apply to such Person's obligations under the Indenture
and the New Notes; (vi) if any of the property or assets of the Company or any
of its Subsidiaries would thereupon become subject to any Lien, the provisions
of "- Certain Covenants - Limitation on Liens" are complied with; and (vii) the
Company or the Surviving Entity shall have delivered, or caused to be delivered,
to the Trustee, in form and substance reasonably satisfactory to the Trustee, an
officers' certificate and an opinion of counsel, each to the effect that such
consolidation, merger, transfer, sale, assignment, lease or other transaction
and the supplemental indenture in respect thereto comply with the provisions of
the Indenture and that all conditions precedent provided for in the Indenture
relating to such transaction have been complied with.
Each Guarantor will not, and the Company will not permit a Guarantor to, in
a single transaction or series of related transactions merge or consolidate with
or into any other corporation (other than the Company or any other Guarantor) or
other entity, or sell, assign, convey, transfer, lease or otherwise
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dispose of all or substantially all of its properties and assets on a
Consolidated basis to any entity (other than the Company or any other Guarantor)
unless at the time and giving effect thereto: (i) either (1) such Guarantor
shall be the continuing corporation or (2) the entity (if other than such
Guarantor) formed by such consolidation or into which such Guarantor is merged
or the entity which acquires by sale, assignment, conveyance, transfer, lease or
disposition the properties and assets of such Guarantor shall be a corporation
duly organized and validly existing under the laws of the United States, any
state thereof or the District of Columbia and shall expressly assume by a
supplemental indenture, executed and delivered to the Trustee, in a form
reasonably satisfactory to the Trustee, all the obligations of such Guarantor
under the Notes and the Indenture; (ii) immediately before and immediately after
giving effect to such transaction, no Default or Event of Default shall have
occurred and be continuing; and (iii) such Guarantor shall have delivered to the
Trustee, in form and substance reasonably satisfactory to the Trustee, an
officers' certificate and an opinion of counsel, each stating that such
consolidation, merger, sale, assignment, conveyance, transfer, lease or
disposition and such supplemental indenture comply with the Indenture, and
thereafter all obligations of the predecessor shall terminate. The provisions of
this paragraph shall not apply to any transaction (including an Asset Sale made
in accordance with "- Certain Covenants - Limitations on Sale of Assets") with
respect to any Guarantor if the Guarantee of such Guarantor is released in
connection with such transaction in accordance with paragraph (c) of "- Certain
Covenants - Limitations on Issuances of Guarantees of and Pledges for
Indebtedness." (Section 801)
In the event of any transaction (other than a lease) described in and
complying with the conditions listed in the immediately preceding paragraphs in
which the Company or any Guarantor is not the continuing corporation, the
successor Person formed or remaining shall succeed to, and be substituted for,
and may exercise every right and power of, the Company or such Guarantor, as the
case may be, and the Company or such Guarantor, as the case may be, would be
discharged from its obligations under the Indenture, the New Notes or its New
Guarantee, as the case may be. (Section 802)
EVENTS OF DEFAULT
An Event of Default will occur under the Indenture if:
(i) there shall be a default in the payment of any interest on any New
Note when it becomes due and payable, and such default shall continue for
a period of 30 days;
(ii) there shall be a default in the payment of the principal of (or
premium, if any, on) any New Note at its Maturity (upon acceleration,
optional or mandatory redemption, required repurchase or otherwise);
(iii) (a) there shall be a default in the performance, or breach, of any
covenant or agreement of the Company or any Guarantor under the Indenture
(other than a default in the performance, or breach, of a covenant or
agreement which is specifically dealt with in clause (i) or (ii) or in
clause (b), (c) or (d) of this clause (iii)) and such default or breach
shall continue for a period of 30 days after written notice has been
given, by certified mail, (x) to the Company by the Trustee or (y) to the
Company and the Trustee by the holders of at least 25% in aggregate
principal amount of the outstanding New Notes; (b) there shall be a
default in the performance or breach of the provisions described in "-
Consolidation, Merger, Sale of Assets;" (c) the Company shall have failed
to make or consummate an Offer in accordance with the provisions of "-
Certain Covenants - Limitation on Sale of Assets;" or (d) the Company
shall have failed to make or consummate a Change of Control Offer in
accordance with the provisions of "- Certain Covenants - Purchase of Notes
Upon a Change of Control;"
(iv) one or more defaults shall have occurred under any agreements,
indentures or instruments under which the Company, any Guarantor or any
Restricted Subsidiary then has outstanding Indebtedness in excess of
$5,000,000 in the aggregate and, if not already matured at its final
maturity in accordance with its terms, such Indebtedness shall have been
accelerated;
(v) any New Guarantee shall for any reason cease to be, or be asserted in
writing by any Guarantor or the Company not to be, in full force and
effect, enforceable in accordance with its terms, except to the extent
contemplated by the Indenture and any such New Guarantee;
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(vi) one or more judgments, orders or decrees for the payment of money in
excess of $5,000,000, either individually or in the aggregate (net of
amounts covered by insurance, bond, surety or similar instrument) shall be
entered against the Company, any Guarantor or any Restricted Subsidiary or
any of their respective properties and shall not be discharged and either
(a) any creditor shall have commenced an enforcement proceeding upon such
judgment, order or decree or (b) there shall have been a period of 60
consecutive days during which a stay of enforcement of such judgment or
order, by reason of an appeal or otherwise, shall not be in effect;
(vii) any holder or holders of at least $5,000,000 in aggregate principal
amount of Indebtedness of the Company, any Guarantor or any Restricted
Subsidiary after a default under such Indebtedness shall notify the
Trustee of the intended sale or disposition of any assets of the Company,
any Guarantor or any Restricted Subsidiary that have been pledged to or
for the benefit of such holder or holders to secure such Indebtedness or
shall commence proceedings, or take any action (including by way of
set-off), to retain in satisfaction of such Indebtedness or to collect on,
seize, dispose of or apply in satisfaction of Indebtedness, assets of the
Company or any Restricted Subsidiary (including funds on deposit or held
pursuant to lock-box and other similar arrangements);
(viii) there shall have been the entry by a court of competent
jurisdiction of (a) a decree or order for relief in respect of the
Company, any Guarantor or any Restricted Subsidiary in an involuntary case
or proceeding under any applicable Bankruptcy Law or (b) a decree or order
adjudging the Company, any Guarantor or any Restricted Subsidiary bankrupt
or insolvent, or seeking reorganization, arrangement, adjustment or
composition of or in respect of the Company, any Guarantor or any
Restricted Subsidiary under any applicable federal or state law, or
appointing a custodian, receiver, liquidator, assignee, trustee,
sequestrator (or other similar official) of the Company, any Guarantor or
any Restricted Subsidiary or of any substantial part of their respective
properties, or ordering the winding up or liquidation of their affairs,
and any such decree or order for relief shall continue to be in effect, or
any such other decree or order shall be unstayed and in effect, for a
period of 60 consecutive days; or
(ix) (a) the Company, any Guarantor or any Restricted Subsidiary
commences a voluntary case or proceeding under any applicable Bankruptcy
Law or any other case or proceeding to be adjudicated bankrupt or
insolvent, (b) the Company, any Guarantor or any Restricted Subsidiary
consents to the entry of a decree or order for relief in respect of the
Company, any Guarantor or such Restricted Subsidiary in an involuntary
case or proceeding under any applicable Bankruptcy Law or to the
commencement of any bankruptcy or insolvency case or proceeding against
it, (c) the Company, any Guarantor or any Restricted Subsidiary files a
petition or answer or consent seeking reorganization or relief under any
applicable federal or state law, (d) the Company, any Guarantor or any
Restricted Subsidiary (x) consents to the filing of such petition or the
appointment of, or taking possession by, a custodian, receiver,
liquidator, assignee, trustee, sequestrator or other similar official of
the Company, any Guarantor or such Restricted Subsidiary or of any
substantial part of their respective property, (y) makes an assignment for
the benefit of creditors or (z) admits in writing its inability to pay its
debts generally as they become due or (e) the Company, any Guarantor or
any Restricted Subsidiary takes any corporate action in furtherance of any
such actions in this paragraph (ix). (Section 501)
If an Event of Default (other than as specified in clauses (viii) and (ix)
of the prior paragraph) shall occur and be continuing, the Trustee or the
holders of not less than 25% in aggregate principal amount of the New Notes
outstanding may, and the Trustee at the request of such holders shall, declare
all unpaid principal of, premium, if any, and accrued interest on, all the New
Notes to be due and payable immediately by a notice in writing to the Company
(and to the Trustee if given by the holders of the New Notes); provided that so
long as the Bank Credit Agreement is in effect, such declaration shall not
become effective until the earlier of (a) five business days after receipt of
such notice of acceleration from the holders or the Trustee by the agent under
the Bank Credit Agreement or (b) acceleration of the Indebtedness under the Bank
Credit Agreement. Thereupon the Trustee may, at its discretion, proceed to
protect and enforce the rights of the holders of New Notes by appropriate
judicial proceeding. If an Event of Default specified in clause (viii) or (ix)
of the prior paragraph occurs and is continu-
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ing, then all the New Notes shall ipso facto become and be immediately due and
payable, in an amount equal to the principal amount of the New Notes, together
with accrued and unpaid interest, if any, to the date the New Notes become due
and payable, without any declaration or other act on the part of the Trustee or
any holder. The Trustee or, if notice of acceleration is given by the holders of
the New Notes, the holders of the New Notes shall give notice to the agent under
the Bank Credit Agreement of such acceleration.
After a declaration of acceleration, but before a judgment or decree for
payment of the money due has been obtained by the Trustee, the holders of a
majority in aggregate principal amount of New Notes outstanding, by written
notice to the Company and the Trustee, may rescind and annul such declaration if
(a) the Company has paid or deposited with the Trustee a sum sufficient to pay
(i) all sums paid or advanced by the Trustee under the Indenture and the
reasonable compensation, expenses, disbursements and advances of the Trustee,
its agents and counsel, (ii) all overdue interest on all New Notes, (iii) the
principal of and premium, if any, on any New Notes which have become due
otherwise than by such declaration of acceleration and interest thereon at a
rate borne by the New Notes and (iv) to the extent that payment of such interest
is lawful, interest upon overdue interest at the rate borne by the New Notes;
and (b) all Events of Default, other than the non-payment of principal of the
New Notes which have become due solely by such declaration of acceleration, have
been cured or waived. (Section 502)
The holders of not less than a majority in aggregate principal amount of
the New Notes outstanding may on behalf of the holders of all the New Notes
waive any past default under the Indenture and its consequences, except a
default in the payment of the principal of, premium, if any, or interest on any
New Note, or in respect of a covenant or provision which under the Indenture
cannot be modified or amended without the consent of the holder of each New Note
outstanding. (Section 513)
The Company is also required to notify the Trustee within five business
days of the occurrence of any Default. (Section 501) The Company is required to
deliver to the Trustee, on or before a date not more than 60 days after the end
of each fiscal quarter and not more than 120 days after the end of each fiscal
year, a written statement as to compliance with the Indenture, including whether
or not any default has occurred. (Section 1021) The Trustee is under no
obligation to exercise any of the rights or powers vested in it by the Indenture
at the request or direction of any of the holders of the New Notes unless such
holders offer to the Trustee security or indemnity satisfactory to the Trustee
against the costs, expenses and liabilities which might be incurred thereby.
(Section 602)
The Trust Indenture Act contains limitations on the rights of the Trustee,
should it become a creditor of the Company or any Guarantor, to obtain payment
of claims in certain cases or to realize on certain property received by it in
respect of any such claims, as security or otherwise. The Trustee is permitted
to engage in other transactions, provided that if it acquires any conflicting
interest it must eliminate such conflict upon the occurrence of an Event of
Default or else resign.
DEFEASANCE OR COVENANT DEFEASANCE OF INDENTURE
The Company may, at its option, at any time, elect to have the obligations
of the Company, each of the Guarantors and any other obligor upon the New Notes
discharged with respect to the outstanding New Notes ("defeasance"). Such
defeasance means that the Company, each of the Guarantors and any other obligor
under the Indenture shall be deemed to have paid and discharged the entire
indebtedness represented by the outstanding New Notes, except for (i) the rights
of holders of outstanding New Notes to receive payments in respect of the
principal of, premium, if any, and interest on such New Notes when such payments
are due, (ii) the Company's obligations with respect to the New Notes concerning
issuing temporary New Notes, registration of New Notes, mutilated, destroyed,
lost or stolen New Notes, and the maintenance of an office or agency for payment
and money for security payments held in trust, (iii) the rights, powers, trusts,
duties and immunities of the Trustee, and (iv) the defeasance provisions of the
Indenture. In addition, the Company may, at its option and at any time, elect to
have the obligations of the Company and any Guarantor released with respect to
certain covenants that are described in the Indenture ("covenant defeasance")
and any omission to comply with such obligations shall not constitute a Default
or an Event of Default with respect to the New Notes. In the event covenant
defeasance
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occurs, certain events (not including non-payment, enforceability of any
Guarantee, bankruptcy and insolvency events) described under "- Events of
Default" will no longer constitute an Event of Default with respect to the New
Notes. (Sections 401, 402 and 403)
In order to exercise either defeasance or covenant defeasance, (i) the
Company must irrevocably deposit with the Trustee, in trust, for the benefit of
the holders of the New Notes, cash in United States dollars, U.S. Government
Obligations (as defined in the Indenture), or a combination thereof, in such
amounts as will be sufficient, in the opinion of a nationally recognized firm of
independent public accountants or a nationally recognized investment banking
firm expressed in a written certification thereof delivered to the Trustee, to
pay and discharge the principal of, premium, if any, and interest on the
outstanding New Notes on the Stated Maturity of such principal or installment of
principal or interest (or on any date after July 15, 2002 (such date being
referred to as the "Defeasance Redemption Date"), if when exercising either
defeasance or covenant defeasance, the Company has delivered to the Trustee an
irrevocable notice to redeem all of the outstanding New Notes on the Defeasance
Redemption Date); (ii) in the case of defeasance, the Company shall have
delivered to the Trustee an opinion of independent counsel in the United States
stating that (A) the Company has received from, or there has been published by,
the Internal Revenue Service a ruling or (B) since the date of the Indenture,
there has been a change in the applicable federal income tax law, in either case
to the effect that, and based thereon such opinion of independent counsel in the
United States shall confirm that, the holders of the outstanding New Notes will
not recognize income, gain or loss for federal income tax purposes as a result
of such defeasance and will be subject to federal income tax on the same
amounts, in the same manner and at the same times as would have been the case if
such defeasance had not occurred; (iii) in the case of covenant defeasance, the
Company shall have delivered to the Trustee an opinion of independent counsel in
the United States to the effect that the holders of the outstanding New Notes
will not recognize income, gain or loss for federal income tax purposes as a
result of such covenant defeasance and will be subject to federal income tax on
the same amounts, in the same manner and at the same times as would have been
the case if such covenant defeasance had not occurred; (iv) no Default or Event
of Default shall have occurred and be continuing on the date of such deposit or
insofar as clause (vii) or (viii) under the first paragraph under "- Events of
Default" are concerned, at any time during the period ending on the 91st day
after the date of deposit; (v) such defeasance or covenant defeasance shall not
cause the Trustee for the New Notes to have a conflicting interest with respect
to any securities of the Company or any Guarantor; (vi) such defeasance or
covenant defeasance shall not result in a breach or violation of, or constitute
a Default under, the Indenture or any other material agreement or instrument to
which the Company or any Guarantor is a party or by which it is bound; (vii) the
Company shall have delivered to the Trustee an opinion of independent counsel to
the effect that (A) the trust funds will not be subject to any rights of holders
of Senior Indebtedness or Guarantor Senior Indebtedness, including, without
limitation, those arising under the Indenture and (B) after the 91st day
following the deposit, the trust funds will not be subject to the effect of any
applicable bankruptcy, insolvency, reorganization or similar laws affecting
creditors' rights generally; (viii) the Company shall have delivered to the
Trustee an officers' certificate stating that the deposit was not made by the
Company with the intent of preferring the holders of the New Notes or any New
Guarantee over the other creditors of the Company or any Guarantor with the
intent of defeating, hindering, delaying or defrauding creditors of the Company,
any Guarantor or others; (ix) no event or condition shall exist that would
prevent the Company from making payments of the principal of, premium, if any,
and interest on the New Notes on the date of such deposit or at any time ending
on the 91st day after the date of such deposit; and (x) the Company shall have
delivered to the Trustee an officers' certificate and an opinion of independent
counsel, each stating that all conditions precedent provided for relating to
either the defeasance or the covenant defeasance, as the case may be, have been
complied with. (Section 404)
SATISFACTION AND DISCHARGE
THE INDENTURE WILL CEASE TO BE OF FURTHER EFFECT (EXCEPT AS TO SURVIVING
RIGHTS OF REGISTRATION OF TRANSFER or exchange of New Notes, as expressly
provided for in the Indenture) as to all outstanding New Notes when (a) either
(i) all the New Notes theretofore authenticated and delivered (except lost,
stolen or destroyed New Notes which have been replaced or paid) have been
delivered to the Trustee for cancellation or (ii) all
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New Notes not theretofore delivered to the Trustee for cancellation (x) have
become due and payable, or (y) will become due and payable at their Stated
Maturity within one year, or (z) are to be called for redemption within one year
under arrangements satisfactory to the Trustee for the giving of notice of
redemption by the Trustee in the name, and at the expense, of the Company and
the Company or any Guarantor has irrevocably deposited or caused to be deposited
with the Trustee funds in an amount sufficient to pay and discharge the entire
indebtedness on the New Notes not theretofore delivered to the Trustee for
cancellation, including principal of, premium, if any, and accrued interest at
such Stated Maturity or redemption date; (b) the Company or any Guarantor has
paid or caused to be paid all other sums payable under the Indenture by the
Company or any Guarantor; and (c) the Company has delivered to the Trustee an
officers' certificate and an opinion of counsel stating that (i) all conditions
precedent under the Indenture relating to the satisfaction and discharge of the
Indenture have been complied with and (ii) such satisfaction and discharge will
not result in a breach or violation of, or constitute a default under, the
Indenture or any other material agreement or instrument to which the Company or
any Guarantor is a party or by which the Company or any Guarantor is bound.
(Section 1301)
MODIFICATIONS AND AMENDMENTS
Modifications and amendments of the indenture may be made by the Company,
any Guarantor and the Trustee with the consent of the holders of not less than a
majority in aggregate principal amount of the outstanding New Notes; provided,
however, that no such modification or amendment may, without the consent of the
holder of each outstanding New Note affected thereby: (i) change the Stated
Maturity of the principal of, or any installment of interest on, any New Note or
reduce the principal amount thereof or the rate of interest thereon or any
premium payable upon the redemption thereof, or change the coin or currency in
which the principal of any New Note or any premium or the interest thereon is
payable, or impair the right to institute suit for the enforcement of any such
payment after the Stated Maturity thereof (or in the case of redemption, on or
after the redemption date); (ii) amend, change or modify the obligation of the
Company to make and consummate an Offer with respect to any Asset Sale or Asset
Sales in accordance with "- Certain Covenants - Limitation on Sale of Assets" or
the obligation of the Company to make and consummate a Change of Control Offer
in the event of a Change of Control in accordance with "- Certain Covenants -
Purchase of New Notes Upon a Change of Control," including amending, changing or
modifying any definitions with respect thereto; (iii) reduce the percentage in
principal amount of outstanding New Notes, the consent of whose holders is
required for any such supplemental indenture, or the consent of whose holders is
required for any waiver or compliance with certain provisions of the Indenture
or certain defaults or with respect to any Guarantee; (iv) modify any of the
provisions relating to supplemental indentures requiring the consent of holders
or relating to the waiver of past defaults or relating to the waiver of certain
covenants, except to increase the percentage of outstanding New Notes required
for such actions or to provide that certain other provisions of the Indenture
cannot be modified or waived without the consent of the holder of each New Note
affected thereby; (v) except as otherwise permitted under "- Consolidation,
Merger, Sale of Assets," consent to the assignment or transfer by the Company or
any Guarantor of any of its rights and obligations under the Indenture; or (vi)
amend or modify any of the provisions of the Indenture relating to the
subordination of the New Notes or any Guarantee in any manner adverse to the
holders of the New Notes or any New Guarantee. (Section 902)
The holders of a majority in aggregate principal amount of the New Notes
outstanding may waive compliance with certain restrictive covenants and
provisions of the Indenture. (Section 1022)
GOVERNING LAW
The Indenture, the New Notes and the New Guarantees will be governed by,
and construed in accordance with the laws of the State of New York, without
giving effect to the conflicts of law principles thereof.
PAYMENT AND PAYING AGENT
Payments in respect of the Global Note shall be made to DTC, which shall
credit the relevant accounts at DTC on the applicable Interest Payment Dates or,
if the New Notes are not held by DTC, such payments shall be made at the office
or agency of the Paying Agent maintained for such purpose,
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or at the option of the Company, by check mailed to the address of the holder
entitled thereto as such address shall appear on the New Notes Register. The
Paying Agent shall initially be First Union National Bank. The Paying Agent
shall be permitted to resign as Paying Agent upon 30 days' written notice to the
Company. In the event that First Union National Bank chooses no longer to be the
Paying Agent, the Company shall appoint a successor (which shall be a bank or
trust company) acceptable to the Company to act as Paying Agent.
BOOK-ENTRY SECURITIES; THE DEPOSITORY TRUST COMPANY; DELIVERY AND FORM
DTC will act as notes depository for the New Notes.
Except as described in the next paragraph, the New Notes initially will be
represented by a Global Note. The Global Note will be deposited on the date of
initial issuance with, or on behalf of DTC and registered in the name of Cede &
Co. (DTC's nominee).
The New Notes issued to institutional Accredited Investors will be issued
as Certificated Notes. Upon the transfer to a QIB of any Certificated Note
initially issued to a Non-Global Notes holder, such Certificated Note will,
unless the Global Note has previously been exchanged in whole for Certificated
Notes, be exchanged for an interest in the Global Note.
The laws of certain jurisdictions require that certain purchasers of
securities take physical delivery of securities in definitive form. Such laws
may impair the ability to own, transfer or pledge beneficial interests in the
Global Note as represented by a global certificate.
DTC has informed the Company that it is a limited-purpose trust company
organized under the New York Banking Law, a "banking organization" within the
meaning of the New York Banking Law, a member of the Federal Reserve System, a
"clearing corporation" within the meaning of the New York Uniform Commercial
Code, and a "clearing agency" registered pursuant to the provisions of Section
17A of the Exchange Act. DTC holds securities that its participants
("Participants") deposit with DTC. DTC also facilitates the settlement of
securities transactions among Participants through electronic computerized
book-entry changes in Participants' accounts, thereby eliminating the need for
physical movement of securities certificates. Direct Participants include
securities brokers and dealers (including the Initial Purchasers), banks, trust
companies, clearing corporations and certain other organizations ("Direct
Participants"). DTC is owned by a number of its Direct Participants and by the
New York Stock Exchange, Inc., the American Stock Exchange, Inc. and the
National Association of Securities Dealers, Inc. Access to the DTC system is
also available to others such as securities brokers and dealers, banks and trust
companies that clear through or maintain a custodial relationship with a Direct
Participant, either directly or indirectly ("Indirect Participants"). The rules
applicable to DTC and its Participants are on file with the Commission.
Exchanges of New Notes that are represented by a Global Note within the DTC
system must be made by or through Direct Participants, which will receive a
credit for the New Notes on DTC's records. The ownership interest of each actual
owner of each New Note ("Beneficial Owner") is in turn to be recorded on the
Direct Participants and Indirect Participants' records. Beneficial Owners will
not receive written confirmation from DTC of their holdings, but Beneficial
Owners are expected to receive written confirmations providing details of the
transactions, as well as periodic statements of their holdings, from the Direct
Participants or Indirect Participants through which the Beneficial Owners hold
New Notes. Transfers of ownership interests in the New Notes are to be
accomplished by entries made on the books of Participants acting on behalf of
Beneficial Owners. Beneficial Owners will not receive certificates representing
their ownership interests in New Notes, except as described below.
DTC will have no knowledge of the actual Beneficial Owners of the New
Notes; DTC's records will reflect only the identity of the Direct Participants
to whose accounts such New Notes will be credited, which may or may not be the
Beneficial Owners. The Participants will be responsible for keeping account of
their holdings on behalf of their customers.
Conveyance of notices and other communications by DTC to Direct
Participants, by Direct Participants to Indirect Participants, and by Direct
Participants and Indirect Participants to Beneficial Owners will be governed by
arrangements among them, subject to any statutory or regulatory requirements as
may be in effect from time to time.
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Redemption notices shall be sent to DTC. If less than all of the New Notes
are being redeemed, DTC will reduce the amount of the interest of each Direct
Participant in such New Notes in accordance with its procedures.
Although voting with respect to the New Notes is limited in those cases
where a vote is required, neither DTC nor Cede & Co. will itself consent or vote
with respect to New Notes. Under its usual procedures, DTC would mail an Omnibus
Proxy to the Company as soon as possible after the record date. The Omnibus
Proxy assigns Cede & Co.'s consenting or voting rights to those Direct
Participants to whose accounts the New Notes are credited on the record date
(identified in a listing attached to the Omnibus Proxy).
Distribution payments on the New Notes will be made by the Company to DTC.
DTC's practice is to credit Direct Participants' accounts on the relevant
payment date in accordance with their respective holdings shown on DTC's records
unless DTC has reason to believe that it will not receive payments on such
payment date. Payments by Participants to Beneficial Owners will be governed by
standing instructions and customary practices and will be the responsibility of
each such Participant and not of DTC or any Trustee, subject to any statutory or
regulatory requirements as may be in effect from time to time. Payment of
distributions to DTC is the responsibility of the Company, disbursement of such
payments to Direct Participants is the responsibility of DTC, and disbursement
of such payments to the Beneficial Owners is the responsibility of Direct and
Indirect Participants.
Except as provided herein, a Beneficial Owner of an interest in a Global
Note will not be entitled to receive physical delivery of New Notes.
Accordingly, each Beneficial Owner must rely on the procedures of DTC to
exercise any rights under the New Notes.
DTC may discontinue providing its services as securities depository with
respect to the New Notes at any time by giving reasonable notice to the Company.
Under such circumstances, in the event that a successor securities depositary is
not obtained, Certificated Securities representing the New Notes will be printed
and delivered. If an Event of Default occurs under the Indenture or if the
Company decides to discontinue use of the system of book-entry transfers through
DTC (or a successor depositary), Certificated Securities representing the New
Notes will be printed and delivered.
The New Notes will be delivered in certificated form if (i) DTC ceases to
be registered as a clearing agency under the Exchange Act or is no longer
willing or able to provide securities depository services with respect to the
New Notes, (ii) the Company so determines, or (iii) there shall have occurred an
Event of Default or an event which, with the giving of notice or the lapse of
time or both, would constitute an Event of Default with respect to the New Notes
represented by such Global Note and such Event of Default or event continues for
a period of 90 days.
The information in this section concerning DTC and DTC's book-entry system
has been obtained from sources the Company believe to be reliable. Neither the
Company nor any Trustee has any responsibility for the accuracy of such
information or performance by DTC or its Participants of their respective
obligations as described herein or under the rules and procedures governing
their respective operations.
If the New Notes are issued to the public, the issuing entity will also
seek to have such securities represented by a global certificate or certificates
registered in the name of DTC or its nominees if permitted under the rules of
DTC.
REGISTRAR AND TRANSFER AGENT
The First Union National Bank will act as registrar and transfer agent for
the New Notes (the "Notes Registrar").
As described under "- Book-Entry Securities; The Depository Trust Company;
Delivery and Form," so long as the New Notes are in book-entry form,
registration of transfers and exchanges of New Notes will be made through Direct
Participants and Indirect Participants in DTC. If physical certificates
representing the New Notes are issued, registration of transfers and exchanges
of New Notes will be
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effected without charge by or on behalf of the Company, but, in the case of a
transfer, upon payment (with the giving of such indemnity as the Company may
require) in respect of any tax or other governmental charges which may be
imposed in relation to it.
The Company will not be required to register or cause to be registered any
transfer of New Notes during a period beginning 15 days prior to the mailing of
notice of redemption of New Notes and ending on the day of such mailing.
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DESCRIPTION OF THE OLD NOTES
The terms of the Old Notes are identical in all material respects to those
of the New Notes, except that the Old Notes (i) have not been registered under
the Securities Act, and, accordingly, contain terms with respect to transfer
restrictions, (ii) are entitled to certain registration rights under the
Registration Rights Agreement (which rights will terminate upon consummation of
the Exchange Offer, except under limited circumstances), and (iii) are entitled
under the Registration Rights Agreement to an increase in the rate of interest
payments thereon in the event that the Company fails to comply with certain
terms of the Registration Rights Agreement relating to the Exchange Offer.
Certain relevant terms of the Registration Rights Agreement are described more
fully below.
The Registration Rights Agreement provides that, in the event that (i) due
to a change in applicable law or current interpretations by the Commission, the
Company and the Guarantors are not permitted to effect the Exchange Offer for
all of the Old Notes, (ii) the Exchange Offer is not for any other reason
consummated by December 14, 1997, (iii) any holder of the Old Notes shall,
within 30 days after consummation of the Exchange Offer, notify the Company and
the Guarantors that such holder (x) is prohibited by applicable law or
Commission policy from participating in the Exchange Offer, (y) may not resell
New Notes acquired by it in the Exchange Offer to the public without delivering
a prospectus and that the prospectus contained in the Exchange Offer
Registration Statement is not appropriate or available for such resales by such
holder or (z) is a broker-dealer and holds New Notes acquired directly from the
Company and the Guarantors or an "affiliate" of the Company or any Guarantor, or
(iv) at the request of either of the Initial Purchasers, then in addition to or
in lieu of conducting the Exchange Offer, the Company and the Guarantors will be
required to file a registration statement (a "Shelf Registration Statement")
covering resales (a) by the holders of the Old Notes in the event the Company
and the Guarantors are not permitted to effect the Exchange Offer pursuant to
the foregoing clause (i) or the Exchange Offer is not consummated by December
14, 1997 pursuant to the foregoing clause (i) or (ii) or (b) by the holders of
Old Notes with respect to which the Company receives notice pursuant to the
foregoing clauses (iii) or (iv), and will use their best efforts to cause any
such Shelf Registration Statement to become effective and to keep such Shelf
Registration Statement continuously effective for two years from the effective
date thereof or such shorter period that will terminate when all of the
Securities covered by the Shelf Registration Statement have been sold pursuant
to the Shelf Registration Statement. The Company and the Guarantors shall, if
they file a Shelf Registration Statement, provide to each holder of the Old
Notes copies of the related prospectus and notify each such holder when the
Shelf Registration Statement has become effective. A holder that sells Old Notes
pursuant to a Shelf Registration Statement generally will be required to be
named as a selling securityholder in the related prospectus and to deliver a
current prospectus to purchasers, and will be subject to certain of the civil
liability provisions under the Securities Act in connection with such sales.
Under the Registration Rights Agreement, the Company and the Guarantors
have agreed to use their best efforts to commence the Exchange Offer and issue
the New Notes in exchange for all Old Notes validly tendered in accordance with
the terms of the Exchange Offer prior to the close of the Exchange Offer, or, in
addition or in the alternative, cause such Shelf Registration Statement to
remain continuously effective for two years from the effective date thereof or
such shorter period that will terminate when all of the Old Notes covered by the
Shelf Registration Statement have been sold pursuant to the Shelf Registration
Statement. Each holder of the Old Notes, by virtue of being a holder, is bound
by the provisions of the Registration Rights Agreement, which may require the
holder to furnish notice or other information to the Company and the Guarantors
as a condition to certain obligations of the Issuers to file a Shelf
Registration Statement by a particular date or to maintain its effectiveness for
the prescribed two-year period.
If the Company and the Guarantors fail to comply with the above provisions,
the Company and the Guarantors jointly and severally agreed to pay liquidated
damages ("Penalty Amounts") to each holder of Old Notes or New Notes that are
subject to transfer restrictions as follows. If either (A) the Company and the
Guarantors have not exchanged New Notes for all Old Notes validly tendered in
accordance with the terms of the Exchange Offer on or prior to December 14, 1997
or (B) if applicable, a Shelf Registration Statement has been declared effective
and such Shelf Registration Statement ceases to be
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effective prior to two years from its original effective date or such shorter
period that will terminate when all of the Old Notes covered by the Shelf
Registration Statement have been sold pursuant to the Shelf Registration
Statement, then, subject to certain exceptions, Penalty Amounts shall be accrued
on the Old Notes over and above the stated payment rates at a rate of .50% per
annum for the first 60 days immediately following (x) December 15, 1997 in the
case of (A) above, or (y) the day such Shelf Registration Statement ceases to be
effective in the case of (B) above, such Penalty Amounts rate increasing by an
additional .25% per annum at the beginning of each subsequent 90-day period;
provided, however, that the Penalty Amounts rate on the applicable Old Notes may
not exceed 1.5% per annum; and provided further that upon the exchange of New
Notes for all Old Notes tendered in the Exchange Offer or upon the effectiveness
of the Shelf Registration Statement which had ceased to remain effective prior
to two years from its original effective date (in the case of (iii) above),
Penalty Amounts as a result of such clause (i), (ii) or (iii) shall cease to
accrue.
Any Penalty Amounts due pursuant to clause (i), (ii) or (iii) above will be
payable in cash on the various payment dates related to the respective
securities. The Penalty Amounts will be determined by multiplying the applicable
Penalty Amounts rate by the Principal Amount of the Old Notes, multiplied by a
fraction, the numerator of which is the number of days such Penalty Amount rate
was applicable during such period, and the denominator of which is 360.
The foregoing summary of certain provisions of the Registration Rights
Agreement does not purport to be complete and is subject to, and is qualified in
its entirety by reference to, the provisions of the Registration Rights
Agreement. Copies of the Registration Rights Agreement are available from the
Company or the Initial Purchasers upon request. Holders of the Old Notes should
review the information set forth under "Risk Factors - Certain Consequences of a
Failure to Exchange Old Notes" and "Description of the New Notes."
CERTAIN DEFINITIONS
"Acquired Indebtedness" means indebtedness of a Person (i) existing at the
time such Person becomes a Subsidiary or (ii) assumed in connection with the
acquisition of assets from such Person, in each case, other than Indebtedness
incurred in connection with, or in contemplation of, such Person becoming a
Subsidiary or such acquisition. Acquired Indebtedness shall be deemed to be
incurred on the date of the related acquisition of assets from any Person or the
date the acquired Person becomes a Subsidiary.
"Adjusted EBITDA" means, for any period, the Consolidated Net Income of the
Company and its Restricted Subsidiaries for such period, plus (a) extraordinary
net losses and net losses on sales of assets outside the ordinary course of
business during such period, to the extent such losses were deducted in
computing Consolidated Net Income, plus (b) provision for taxes based on income
or profits, to the extent such provision for taxes was included in computing
such Consolidated Net Income, and any provision for taxes utilized in computing
the net losses under clause (a) hereof, plus (c) Consolidated Interest Expense
of the Company and its Restricted Subsidiaries for such period, plus (d)
depreciation, amortization and all other non-cash charges, to the extent such
depreciation, amortization and other non-cash charges were deducted in computing
such Consolidated Net Income (including amortization of goodwill and other
intangibles, including Film Contracts and write-downs of Film Contracts, minus
(f) any cash payments contractually required to be made with respect to Film
Contracts (to the extent not previously included in computing such Consolidated
Net Income).
"Affiliate" means, with respect to any specified Person, (i) any other
Person directly or indirectly controlling or controlled by or under direct or
indirect common control with such specified Person, (ii) any other Person that
owns, directly or indirectly, 5% or more of such Person's Equity Interest or any
officer or director of any such Person or other Person or, with respect to any
natural Person, any person having a relationship with such Person or other
Person by blood, marriage or adoption not more remote than first cousin or (iii)
any other Person 10% or more of the voting Equity Interests of which are
beneficially owned or held directly or indirectly by such specified person. For
the purposes of this
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definition, "control" when used with respect to any specified Person means the
power to direct the management and policies of such Person directly or
indirectly, whether through ownership of voting securities, by contract or
otherwise; and the terms "controlling" and "controlled" have meanings
correlative to the foregoing.
"Asset Sale" means any sale, issuance, conveyance, transfer, lease or other
disposition (including, without limitation, by way of merger, consolidation or
Sale and Leaseback Transaction) (collectively, a "transfer"), directly or
indirectly, in one or a series of related transactions, of (i) any Equity
Interest of any Restricted Subsidiary; (ii) all or substantially all of the
properties and assets of any division or line of business of the Company or its
Restricted Subsidiaries; or (iii) any other properties or assets of the Company
or any Restricted Subsidiary, other than in the ordinary course of business. For
the purposes of this definition, the term "Asset Sale" shall not include any
transfer of properties and assets (A) that is governed by the provisions
described under "- Consolidation, Merger, Sale of Assets," (B) that is by the
Company to any Wholly Owned Restricted Subsidiary, or by any Restricted
Subsidiary to the Company or any Wholly Owned Restricted Subsidiary in
accordance with the terms of the Indenture or (C) that aggregates not more than
$1,000,000 in gross proceeds.
"Asset Swap" means an Asset Sale by the Company or any Restricted
Subsidiary in exchange for properties or assets that will be used in the
business of the Company and its Restricted Subsidiaries existing on the date of
the Indenture or reasonably related thereto.
"Average Life to Stated Maturity" means, as of the date of determination
with respect to any Indebtedness, the quotient obtained by dividing (i) the sum
of the products of (a) the number of years from the date of determination to the
date or dates of each successive scheduled principal payment of such
Indebtedness multiplied by (b) the amount of each such principal payment by (ii)
the sum of all such principal payments.
"Bank Credit Agreement" means the Third Amended and Restated Credit
Agreement, dated as of May 20, 1997, between Sinclair, the subsidiaries of
Sinclair identified on the signature pages thereof under the caption "SUBSIDIARY
GUARANTORS," the lenders named therein and The Chase Manhattan Bank as agent, as
amended by the First Amendment and as such agreement may be further amended,
renewed, extended, substituted, refinanced, restructured, replaced, supplemented
or otherwise modified from time to time (including, without limitation, any
successive renewals, extensions, substitutions, refinancings, restructurings,
replacements, supplementations or other modifications of the foregoing). For all
purposes under the Indenture, "Bank Credit Agreement" shall include any
amendments, renewals, extensions, substitutions, refinancings, restructurings,
replacements, supplements or any other modifications that increase the principal
amount of the Indebtedness or the commitments to lend thereunder and have been
made in compliance with "- Certain Covenants - Limitation on Indebtedness;"
provided that, for purposes of the definition of "Permitted Indebtedness," no
such increase may result in the principal amount of Indebtedness of the Company
under the Bank Credit Agreement exceeding the amount permitted by clause (i) of
the definition of "Permitted Indebtedness."
"Bankruptcy Law" means Title 11, United States Bankruptcy Code of 1978, as
amended, or any similar United States federal or state law relating to
bankruptcy, insolvency, receivership, winding-up, liquidation, reorganization or
relief of debtors or any amendment to, succession to or change in any such law.
"Capital Lease Obligation" means any obligation of the Company and its
Restricted Subsidiaries on a Consolidated basis under any capital lease of real
or personal property which, in accordance with GAAP, has been recorded as a
capitalized lease obligation.
"Commission" means the Securities and Exchange Commission, as from time to
time constituted, created under the Exchange Act, or if at any time after the
execution of the Indenture such Commission is not existing and performing the
duties now assigned to it under the Trust Indenture Act, then the body
performing such duties at such time.
"Company" means Sinclair Broadcast Group, Inc., a corporation incorporated
under the laws of Maryland, until a successor Person shall have become such
pursuant to the applicable provisions of the Indenture, and thereafter "Company"
shall mean such successor Person.
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"Consolidated Interest Expense" means, without duplication, for any period,
the sum of (a) the interest expense of the Company and its Consolidated
Restricted Subsidiaries for such period, on a Consolidated basis, including,
without limitation, (i) amortization of debt discount, (ii) the net cost under
interest rate contracts (including amortization of discounts), (iii) the
interest portion of any deferred payment obligation and (iv) accrued interest,
plus (b) the interest component of the Capital Lease Obligations paid, accrued
and/or scheduled to be paid or accrued by the Company during such period, and
all capitalized interest of the Company and its Consolidated Restricted
Subsidiaries, in each case as determined in accordance with GAAP consistently
applied.
"Consolidated Net Income (Loss)" means, for any period, the Consolidated
net income (or loss) of the Company and its Consolidated Restricted Subsidiaries
for such period as determined in accordance with GAAP consistently applied,
adjusted, to the extent included in calculating such net income (or loss), by
excluding, without duplication, (i) all extraordinary gains but not losses (less
all fees and expenses relating thereto), (ii) the portion of net income (or
loss) of the Company and its Consolidated Restricted Subsidiaries allocable to
interests in unconsolidated Persons or Unrestricted Subsidiaries, except to the
extent of the amount of dividends or distributions actually paid to the Company
or its Consolidated Restricted Subsidiaries by such other Person during such
period, (iii) net income (or loss) of any Person combined with the Company or
any of its Restricted Subsidiaries on a "pooling of interests" basis
attributable to any period prior to the date of combination, (iv) any gain or
loss, net of taxes, realized upon the termination of any employee pension
benefit plan, (v) net gains but not losses (less all fees and expenses relating
thereto) in respect of dispositions of assets other than in the ordinary course
of business, or (vi) the net income of any Restricted Subsidiary to the extent
that the declaration of dividends or similar distributions by that Restricted
Subsidiary of that income is not at the time permitted, directly or indirectly,
by operation of the terms of its charter or any agreement, instrument, judgment,
decree, order, statute, rule or governmental regulation applicable to that
Restricted Subsidiary or its shareholders.
"Consolidated Net Worth" means the Consolidated equity of the holders of
Equity Interests (excluding Disqualified Equity Interests) of the Company and
its Restricted Subsidiaries, as determined in accordance with GAAP consistently
applied.
"Consolidation" means, with respect to any Person, the consolidation of the
accounts of such Person and each of its subsidiaries (other than any
Unrestricted Subsidiaries) if and to the extent the accounts of such Person and
each of its subsidiaries (other than any Unrestricted Subsidiaries) would
normally be consolidated with those of such Person, all in accordance with GAAP
consistently applied. The term "Consolidated" shall have a similar meaning.
"Cumulative Consolidated Interest Expense" means, as of any date of
determination, Consolidated Interest Expense from September 30, 1993 to the end
of the Company's most recently ended full fiscal quarter prior to such date,
taken as a single accounting period.
"Cumulative Operating Cash Flow" means, as of any date of determination,
Operating Cash Flow from September 30, 1993 to the end of the Company's most
recently ended full fiscal quarter prior to such date, taken as a single
accounting period.
"Default" means any event which is, or after notice or passage of any time
or both would be, an Event of Default.
"Disqualified Equity Interests" means any Equity Interests that, either by
their terms or by the terms of any security into which they are convertible or
exchangeable or otherwise, are or upon the happening of an event or passage of
time would be required to be redeemed prior to any Stated Maturity of the
principal of the New Notes or are redeemable at the option of the holder thereof
at any time prior to any such Stated Maturity, or are convertible into or
exchangeable for debt securities at any time prior to any such Stated Maturity
at the option of the holder thereof.
"Equity Interest" of any Person means any and all shares, interests, rights
to purchase, warrants, options, participations or other equivalents of or
interests in (however designated) corporate stock or other equity
participations, including partnership interests, whether general or limited, of
such Person, including any Preferred Equity Interests.
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"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Fair Market Value" means, with respect to any asset or property, the sale
value that would be obtained in an arm's-length transaction between an informed
and willing seller under no compulsion to sell and an informed and willing buyer
under no compulsion to buy.
"Film Contract" means contracts with suppliers that convey the right to
broadcast specified films, videotape motion pictures, syndicated television
programs or sports or other programming.
"Founders' Notes" means the term notes, dated September 30, 1990, made by
the Company to Julian S. Smith and to Carolyn C. Smith pursuant to a stock
redemption agreement, dated June 19, 1990, among the Company, certain of its
Subsidiaries, Julian S. Smith, Carolyn C. Smith, David D. Smith, Frederick G.
Smith, J. Duncan Smith and Robert E. Smith.
"Generally Accepted Accounting Principles" or "GAAP" means generally
accepted accounting principles in the United States, consistently applied, which
are in effect on the date of the Indenture.
"Governmental Approval" means the final non-appealable grant by the Federal
Communications Commission of the Permitted Acquisition to the extent required by
applicable rules and regulations of the Federal Communications Commission.
"Guarantee" means the guarantee by any Guarantor of the Company's Indenture
Obligations pursuant to a guarantee given in accordance with the Indenture.
"Guaranteed Debt" of any Person means, without duplication, all
Indebtedness of any other Person referred to in the definition of Indebtedness
contained in this Section guaranteed directly or indirectly in any manner by
such Person, or in effect guaranteed directly or indirectly by such Person
through an agreement (i) to pay or purchase such Indebtedness or to advance or
supply funds for the payment or purchase of such Indebtedness, (ii) to purchase,
sell or lease (as lessee or lessor) property, or to purchase or sell services,
primarily for the purpose of enabling the debtor to make payment of such
Indebtedness or to assure the holder of such Indebtedness against loss, (iii) to
supply funds to, or in any other manner invest in, the debtor (including any
agreement to pay for property or services without requiring that such property
be received or such services be rendered), (iv) to maintain working capital or
equity capital of the debtor, or otherwise to maintain the net worth, solvency
or other financial condition of the debtor or (v) otherwise to assure a creditor
against loss; provided that the term "guarantee" shall not include endorsements
for collection or deposit, in either case in the ordinary course of business.
"Guarantor" means the Subsidiaries listed as guarantors in the Indenture
or any other guarantor of the Indenture Obligations. The Guarantors currently
consist of all the Company's Subsidiaries other than Cresap Enterprises, Inc.,
KDSM, Inc., KDSM Licensee Inc. and the Trust.
"Indebtedness" means, with respect to any Person, without duplication, (i)
all indebtedness of such Person for borrowed money or for the deferred purchase
price of property or services, excluding any trade payables and other accrued
current liabilities arising in the ordinary course of business, but including,
without limitation, all obligations, contingent or otherwise, of such Person in
connection with any letters of credit issued under letter of credit facilities,
acceptance facilities or other similar facilities and in connection with any
agreement to purchase, redeem, exchange, convert or otherwise acquire for value
any Equity Interests of such Person, or any warrants, rights or options to
acquire such Equity Interests, now or hereafter outstanding, (ii) all
obligations of such Person evidenced by bonds, notes, debentures or other
similar instruments, (iii) all indebtedness created or arising under any
conditional sale or other title retention agreement with respect to property
acquired by such Person (even if the rights and remedies of the seller or lender
under such agreement in the event of default are limited to repossession or sale
of such property), but excluding trade payables arising in the ordinary course
of business, (iv) all obligations under Interest Rate Agreements of such Person,
(v) all Capital Lease Obligations of such Person, (vi) all Indebtedness referred
to in clauses (i) through (v) above of other Persons and all dividends of other
Persons, the payment of which is secured by (or for which the holder of such
Indebtedness has an existing right, contingent or otherwise, to be secured by)
any Lien, upon or with respect to property (including, without limitation,
accounts and contract rights) owned by such Person, even though
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such Person has not assumed or become liable for the payment of such
Indebtedness, (vii) all Guaranteed Debt of such Person, (viii) all Disqualified
Equity Interests valued at the greater of their voluntary or involuntary maximum
fixed repurchase price plus accrued and unpaid dividends, and (ix) any
amendment, supplement, modification, deferral, renewal, extension, refunding or
refinancing of any liability of the types referred to in clauses (i) through
(viii) above; provided, however, that the term Indebtedness shall not include
any obligations of the Company and its Restricted Subsidiaries with respect to
Film Contracts entered into in the ordinary course of business. The amount of
Indebtedness of any Person at any date shall be, without duplication, the
principal amount that would be shown on a balance sheet of such Person prepared
as of such date in accordance with GAAP and the maximum determinable liability
of any Guaranteed Debt referred to in clause (vii) above at such date. The
Indebtedness of the Company and its Restricted Subsidiaries shall not include
any Indebtedness of Unrestricted Subsidiaries so long as such Indebtedness is
non-recourse to the Company and the Restricted Subsidiaries. For purposes
hereof, the "maximum fixed repurchase price" of any Disqualified Equity
Interests which do not have a fixed repurchase price shall be calculated in
accordance with the terms of such Disqualified Equity Interests as if such
Disqualified Equity Interests were purchased on any date on which Indebtedness
shall be required to be determined pursuant to the Indenture, and if such price
is based upon, or measured by, the Fair Market Value of such Disqualified Equity
Interests, such Fair Market Value to be determined in good faith by the Board of
Directors of the issuer of such Disqualified Equity Interests.
"Indenture Obligations" means the obligations of the Company and any other
obligor under the Indenture or under the New Notes, including any Guarantor, to
pay principal, premium, if any, and interest when due and payable, and all other
amounts due or to become due under or in connection with the Indenture, the New
Notes and the performance of all other obligations to the Trustee and the
holders under the Indenture and the New Notes, according to the terms thereof.
"Independent Director" means a director of the Company other than a
director (i) who (apart from being a director of the Company or any Subsidiary)
is an employee, insider, associate or Affiliate of the Company or a Subsidiary
or has held any such position during the previous five years or (ii) who is a
director, an employee, insider, associate or Affiliate of another party to the
transaction in question.
"Interest Rate Agreements" means one or more of the following agreements
which shall be entered into by one or more financial institutions: interest rate
protection agreements (including, without limitation, interest rate swaps, caps,
floors, collars and similar agreements) and/or other types of interest rate
hedging agreements from time to time.
"Investments" means, with respect to any Person, directly or indirectly,
any advance, loan (including guarantees), or other extension of credit or
capital contribution to (by means of any transfer of cash or other property to
others or any payment for property or services for the account or use of
others), or any purchase, acquisition or ownership by such Person of any Equity
Interests, bonds, notes, debentures or other securities or assets issued or
owned by any other Person and all other items that would be classified as
investments on a balance sheet prepared in accordance with GAAP.
"Lien" means any mortgage, charge, pledge, lien (statutory or otherwise),
privilege, security interest, hypothecation or other encumbrance upon or with
respect to any property of any kind (including any conditional sale or other
title retention agreement, any leases in the nature thereof, and any agreement
to give any security interest), real or personal, movable or immovable, now
owned or hereafter acquired.
"Local Marketing Agreement" means a local marketing arrangement, sale
agreement, time brokerage agreement, management agreement or similar arrangement
pursuant to which a Person (i) obtains the right to sell at least a majority of
the advertising inventory of a television station on behalf of a third party,
(ii) purchases at least a majority of the air time of a television station to
exhibit programming and sell advertising time, (iii) manages the selling
operations of a television station with respect to at least a majority of the
advertising inventory of such station, (iv) manages the acquisition of
programming for a television station, (v) acts as a program consultant for a
television station, or (vi) manages the operation of a television station
generally.
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"Maturity," when used with respect to any Note, means the date on which the
principal of such Note becomes due and payable as provided in the Note or as
provided in the Indenture, whether at Stated Maturity, the offer date, or the
redemption date and whether by declaration of acceleration, Offer in respect of
excess proceeds, Change of Control, call for redemption or otherwise.
"Minority Note" means the promissory note, dated December 26, 1986, made by
the Company to Frederick M. Himes, B. Stanley Resnick and Edward A. Johnston, as
representatives, pursuant to a stock purchase agreement, dated December 22,
1986, among the Company, Commercial Radio Institute, Inc., Chesapeake
Television, Inc. and certain individuals.
"Net Cash Proceeds" means (a) with respect to any Asset Sale by any Person,
the proceeds thereof in the form of cash or Temporary Cash Investments including
payments in respect of deferred payment obligations when received in the form
of, or stock or other assets when disposed of for, cash or Temporary Cash
Investments (except to the extent that such obligations are financed or sold
with recourse to the Company or any Restricted Subsidiary) net of (i) brokerage
commissions and other reasonable fees and expenses (including fees and expenses
of counsel and investment bankers) related to such Asset Sale, (ii) provisions
for all taxes payable as a result of such Asset Sale, (iii) payments made to
retire Indebtedness where payment of such Indebtedness is secured by the assets
or properties the subject of such Asset Sale, (iv) amounts required to be paid
to any Person (other than the Company or any Restricted Subsidiary) owning a
beneficial interest in the assets subject to the Asset Sale and (v) appropriate
amounts to be provided by the Company or any Restricted Subsidiary, as the case
may be, as a reserve, in accordance with GAAP, against any liabilities
associated with such Asset Sale and retained by the Company or any Restricted
Subsidiary, as the case may be, after such Asset Sale, including, without
limitation, pension and other post-employment benefit liabilities, liabilities
related to environmental matters and liabilities under any indemnification
obligations associated with such Asset Sale, all as reflected in an officers'
certificate delivered to the Trustee and (b) with respect to any issuance or
sale of Equity Interests, or debt securities or Equity Interests that have been
converted into or exchanged for Equity Interests, as referred to under "-
Certain Covenants - Limitation on Restricted Payments," the proceeds of such
issuance or sale in the form of cash or Temporary Cash Investments, including
payments in respect of deferred payment obligations when received in the form
of, or stock or other assets when disposed for, cash or Temporary Cash
Investments (except to the extent that such obligations are financed or sold
with recourse to the Company or any Restricted Subsidiary), net of attorney's
fees, accountant's fees and brokerage, consultation, underwriting and other fees
and expenses actually incurred in connection with such issuance or sale and net
of taxes paid or payable as a result thereof.
"Net Debt to Adjusted EBITDA Ratio" means, as of any date of determination,
the ratio of (a) the aggregate principal amount of all outstanding Indebtedness
of the Company and its Restricted Subsidiaries as of such date on a Consolidated
basis plus the aggregate liquidation preference or redemption amount of all
Disqualified Equity Interests of the Company (excluding any such Disqualified
Equity Interests held by the Company or a Wholly Owned Restricted Subsidiary of
the Company), less cash and cash equivalents to (b) adjusted EBITDA of the
Company and its Restricted Subsidiaries on a Consolidated basis for the four
most recent full fiscal quarters ending immediately prior to such date,
determined on a pro forma basis (and after giving pro forma effect to (i) the
incurrence of such Indebtedness and (if applicable) the application of the net
proceeds therefrom, including to refinance other Indebtedness, as if such
Indebtedness was incurred, and the application of such proceeds occurred, at the
beginning of such four-quarter period; (ii) the incurrence, repayment or
retirement of any other Indebtedness by the Company and its Restricted
Subsidiaries since the first day of such four-quarter period as if such
Indebtedness was incurred, repaid or retired at the beginning of such
four-quarter period (except that, in making such computation, the amount of
Indebtedness under any revolving credit facility shall be computed based upon
the average balance of such Indebtedness at the end of each month during such
four-quarter period); (iii) in the case of Acquired Indebtedness, the related
acquisition as if such acquisition had occurred at the beginning of such
four-quarter period; and (iv) any acquisition or disposition by the Company and
its Restricted Subsidiaries of any company or any business or any assets out of
the ordinary course of business, or any related repayment of Indebtedness, in
each case since the first day of such four-quarter period, assuming such
acquisition or disposition had been consummated on the first day of such
four-quarter period).
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"Pari Passu Indebtedness" means any Indebtedness of the Company or any
Guarantor that is pari passu in right of payment to the New Notes or any
Guarantees, as the case may be.
"Permitted Subsidiary Indebtedness" means:
(i) Indebtedness of any Guarantor under Capital Lease Obligations
incurred in the ordinary course of business; and
(ii) Indebtedness of any Guarantor (a) issued to finance or refinance the
purchase or construction of any assets of such Guarantor or (b) secured by a
Lien on any assets of such Guarantor where the lender's sole recourse is to
the assets so encumbered, in either case (x) to the extent the purchase or
construction prices for such assets are or should be included in "property
and equipment" in accordance with GAAP and (y) if the purchase or
construction of such assets is not part of any acquisition of a Person or
business unit.
"Person" means any individual, corporation, limited liability company,
partnership, joint venture, association, joint-stock company, trust,
unincorporated organization or government or any agency or political
subdivisions thereof.
"Preferred Equity Interest," as applied to the Equity Interest of any
Person, means an Equity Interest of any class or classes (however designated)
which is preferred as to the payment of dividends or distributions, or as to the
distribution of assets upon any voluntary or involuntary liquidation or
dissolution of such person, over Equity Interests of any other class of such
Person.
"Public Equity Offering" means, with respect to any Person, an underwritten
public offering by such Person of some or all of its Equity Interests (other
than Disqualified Equity Interests), the net proceeds of which (after deducting
any underwriting discounts and commissions) exceed $10,000,000.
"Qualified Equity Interests" of any Person means any and all Equity
Interests of such Person other than Disqualified Equity Interests.
"Restricted Subsidiary" means a Subsidiary of the Company other than an
Unrestricted Subsidiary.
"Sale and Leaseback Transaction" means any transaction or series of related
transactions pursuant to which the Company or a Restricted Subsidiary sells or
transfers any property or asset in connection with the leasing, or the resale
against installment payments, of such property or asset to the seller or
transferor.
"Securities Act" means the Securities Act of 1933, as amended.
"Stated Maturity," when used with respect to any Indebtedness or any
installment of interest thereon, means the date specified in such Indebtedness
as the fixed date on which the principal of such Indebtedness or such
installment of interest is due and payable.
"Subordinated Indebtedness" means Indebtedness of the Company or any
Guarantor subordinated in right of payment to the New Notes or any New
Guarantee, as the case may be.
"Subsidiary" means any Person a majority of the equity ownership or the
Voting Stock of which is at the time owned, directly or indirectly, by the
Company or by one or more other Subsidiaries, or by the Company and one or more
other Subsidiaries.
"Temporary Cash Investments" means (i) any evidence of Indebtedness,
maturing not more than one year after the date of acquisition, issued by the
United States of America, or an instrumentality or agency thereof and guaranteed
fully as to principal, premium, if any, and interest by the United States of
America, (ii) any certificate of deposit, maturing not more than one year after
the date of acquisition, issued by, or time deposit of, a commercial banking
institution that is a member of the Federal Reserve System and that has combined
capital and surplus and undivided profits of not less than $500,000,000, whose
debt has a rating, at the time as of which any investment therein is made, of
"P-1" (or higher) according to Moody's Investors Service, Inc. ("Moody's") or
any successor rating agency or "A-1" (or higher) according to Standard & Poor's
Corporation ("S&P") or any successor rating agency, (iii) commercial paper,
maturing not more than one year after the date of acquisition, issued by a
corporation
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(other than an Affiliate or Subsidiary of the Company) organized and existing
under the laws of the United States of America with a rating, at the time as of
which any investment therein is made, of "P-1" (or higher) according to Moody's
or "A-1" (or higher) according to S&P and (iv) any money market deposit accounts
issued or offered by a domestic commercial bank having capital and surplus in
excess of $500,000,000.
"Trust Indenture Act" means the Trust Indenture Act of 1939, as amended.
"Unrestricted Subsidiary" means (i) any Subsidiary of the Company that at
the time of determination shall be an Unrestricted Subsidiary (as designated by
the Board of Directors of the Company, as provided below) and (ii) any
Subsidiary of an Unrestricted Subsidiary. The Board of Directors of the Company
may designate any Subsidiary of the Company (including any newly acquired or
newly formed Subsidiary) to be an Unrestricted Subsidiary if all of the
following conditions apply: (a) such Subsidiary is not liable, directly or
indirectly, with respect to any Indebtedness other than Unrestricted Subsidiary
Indebtedness and (b) any Investment in such Subsidiary made as a result of
designating such Subsidiary an Unrestricted Subsidiary shall not violate the
provisions of the "Certain Covenants - Limitation on Unrestricted Subsidiaries"
covenant. Any such designation by the Board of Directors of the Company shall be
evidenced to the Trustee by filing with the Trustee a Board resolution giving
effect to such designation and an officers' certificate certifying that such
designation complies with the foregoing conditions. The Board of Directors of
the Company may designate any Unrestricted Subsidiary as a Restricted
Subsidiary; provided that immediately after giving effect to such designation,
the Company could incur $1.00 of additional Indebtedness (other than Permitted
Indebtedness) pursuant to the restrictions under the "Certain Covenants
Limitation on Indebtedness" covenant. Cresap Enterprises, Inc., KDSM, Inc., KDSM
Licensee, Inc. and the Trust are Unrestricted Subsidiaries.
"Unrestricted Subsidiary Indebtedness" of any Unrestricted Subsidiary means
Indebtedness of such Unrestricted Subsidiary (i) as to which neither the Company
nor any Restricted Subsidiary is directly or indirectly liable (by virtue of the
Company or any such Restricted Subsidiary being the primary obligor on,
guarantor of, or otherwise liable in any respect to, such Indebtedness), except
Guaranteed Debt of the Company or any Restricted Subsidiary to any Affiliate, in
which case (unless the incurrence of such Guaranteed Debt resulted in a
Restricted Payment at the time of incurrence) the Company shall be deemed to
have made a Restricted Payment equal to the principal amount of any such
Indebtedness to the extent guaranteed at the time such Affiliate is designated
an Unrestricted Subsidiary and (ii) which, upon the occurrence of a default with
respect thereto, does not result in, or permit any holder of any Indebtedness of
the Company or any Restricted Subsidiary to declare, a default on such
Indebtedness of the Company or any Restricted Subsidiary or cause the payment
thereof to be accelerated or payable prior to its Stated Maturity.
"Voting Stock" means stock of the class or classes pursuant to which the
holders thereof have the general voting power under ordinary circumstances to
elect at least a majority of the board of directors, managers or trustees of a
corporation (irrespective of whether or not at the time stock of any other class
or classes shall have or might have voting power by reason of the happening of
any contingency).
"Wholly Owned Restricted Subsidiary" means a Restricted Subsidiary all the
Equity Interest of which is owned by the Company or another Wholly Owned
Restricted Subsidiary. The Wholly Owned Restricted Subsidiaries of the Company
currently consist of all the Company's Subsidiaries other than Cresap
Enterprises, Inc., KDSM, Inc. and KDSM Licensee, Inc.
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CERTAIN FEDERAL INCOME TAX CONSEQUENCES
The following summary describes certain United States federal income tax
consequences of the acquisition, ownership and disposition of the New Notes. The
summary is based on the Internal Revenue Code of 1986, as amended (the "Code"),
and regulations, rulings and judicial decisions as of the date hereof, all of
which may be repealed, revoked or modified so as to result in federal income tax
consequences different from those described below. Such changes could be applied
retroactively in a manner that could adversely affect holders of the New Notes.
In addition, the authorities on which this summary is based are subject to
various interpretations. It is therefore possible that the consequences of the
acquisition, ownership and disposition of the New Notes may differ from the
treatment described below.
The tax treatment of a holder of the New Notes may vary depending upon the
particular situation of the holder. This summary is limited to investors who
will hold the New Notes as capital assets within the meaning of Section 1221 of
the Code and does not deal with holders that may be subject to special tax rules
(including, but not limited to, insurance companies, tax-exempt organizations,
financial institutions, dealers in securities or currencies, holders whose
functional currency is not the U.S. dollar or holders who will hold the New
Notes as a hedge against currency risks or as part of a straddle, synthetic
security, conversion transaction or other integrated investment comprised of the
New Notes and one or more other investments). Moreover, the summary is
applicable only to holders that acquire New Notes for Old Notes pursuant to the
Exchange Offer. As used herein, the term "U.S. Holder" means an individual who
is a citizen or resident of the United States (including certain former citizens
and former long-time residents); a partnership, corporation or other entity
organized in or under the laws of the United States or any state thereof; an
estate the income of which is subject to federal income taxation regardless of
its source; or a trust if a court within the United States is able to exercise
primary supervision over the administration of the trust and one or more United
States fiduciaries have the authority to control all the substantial decisions
of the trust.
This summary is for general information only and does not constitute, nor
should it be considered as, legal or tax advice to prospective holders of the
New Notes. Moreover, the summary does not address all aspects of federal income
taxation that may be relevant to holders of the New Notes in light of their
particular circumstances, and it does not address any tax consequences arising
under the laws of any state, local or foreign taxing jurisdiction. Prospective
holders should consult their own tax advisors as to the particular tax
consequences to them of acquiring, holding or disposing of the New Notes.
CONSEQUENCES OF THE EXCHANGE OFFER
An exchange of Old Notes for New Notes pursuant to the Exchange Offer
should not be treated as an "exchange" for federal income tax purposes because
the New Notes should not be considered to differ materially in kind or extent
from the Old Notes. Rather, the New Notes received by a holder should be treated
as a continuation of the Old Notes in the hands of that holder. As a result,
there should be no federal income tax consequences for holders who exchange Old
Notes for New Notes. Such holders will have the same tax basis and holding
period in the New Notes as the Old Notes exchanged therefor. For purposes of the
following discussion, it is assumed that the New Notes and the Old Notes
exchanged therefor will be treated as the same instruments for U.S. federal
income tax purposes, and accordingly references to a "Note" (or with correlative
meaning "Notes") include both a New Note and the Old Note for which that New
Note is exchanged.
INTEREST AND ORIGINAL ISSUE DISCOUNT
The Notes will be treated as having been issued at an original issue
discount. The original issue discount for a Note will be equal to the excess of
the "stated redemption price at maturity" of the Note over its issue price
(defined as the first price at which a substantial amount of Notes of the same
issue is sold to the public). The "stated redemption price at maturity" of a
Note is the total of all payments provided by the Note that are not payments of
"qualified stated interest." A U.S. Holder will be re-
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quired to include original issue discount on a Note in income as it accrues
(using the constant-yield method described in the applicable United States
Treasury Regulations), which will result in recognition of income before the
receipt of cash attributable to such income.
Qualified stated interest on a Note will be taxable to a U.S. Holder as
ordinary interest income at the time it is accrued or is received in accordance
with the U.S. Holder's method of accounting for tax purposes. A "qualified
stated interest" payment is a payment of stated interest that is unconditionally
payable in cash or property (other than debt instruments of the issuer) at least
annually during the entire term of the Note, including short periods at a single
fixed rate.
A U.S. Holder may elect to treat all interest on a Note as original issue
discount and calculate the amount includable in gross income under the
constant-yield method. The election is made for the year in which the U.S.
Holder acquired the Note, and may not be revoked without the consent of the
United States Internal Revenue Service.
A U.S. Holder that purchased an Old Note at a market discount, as defined
in Section 1278 of the Code, will be subject to the market discount rules of the
Code with respect to a New Note exchanged for that Old Note. A U.S. Holder that
purchased an Old Note with bond premium, as defined in Section 171 of the Code,
will be subject to the bond premium amortization rules of the Code with respect
to a New Note exchanged for that Old Note.
PURCHASE, SALE AND RETIREMENT OF THE NOTES
A U.S. Holder's adjusted tax basis in a Note will be its cost, (i)
increased by the amount of any original issue discount and accrued market
discount included in the U.S. Holder's income with respect to the Note, and (ii)
reduced by the amount of any cash payments that are not qualified stated
interest payments and any amortized bond premium with respect to the Note. A
U.S. Holder will recognize gain or loss on the sale or retirement of a New Note
equal to the difference between the amount realized on the sale or retirement
and the U.S. Holder's adjusted tax basis in the Note. As a general rule (with
the exception, among other things, of amounts attributable to accrued but unpaid
interest and accrued market discount not previously included in income), gain or
loss recognized on the sale or retirement of a New Note will be capital gain or
loss. For certain non-corporate U.S. Holders (including individuals), the rate
of taxation of capital gain will depend upon (i) the U.S. Holder's holding
period for the Note (with the lowest rate available only for a Note held more
than 18 months) and (ii) the U.S. Holder's marginal tax rate for ordinary
income. U.S. Holders should consult their tax advisors with respect to
applicable rates and holding periods, and netting rules for capital losses.
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PLAN OF DISTRIBUTION
Each broker-dealer that receives New Notes for its own account in
connection with the Exchange Offer must acknowledge that it will deliver a
prospectus in connection with any resale of such New Notes. This Prospectus, as
it may be amended or supplemented from time to time, may be used by
Participating Broker-Dealers during the period referred to below in connection
with resales of New Notes received in exchange for Old Notes if such Old Notes
were acquired by such Participating Broker-Dealers for their own accounts as a
result of market-making activities or other trading activities. The Company has
agreed that this Prospectus, as it may be amended or supplemented from time to
time, may be used by a Participating Broker-Dealer in connection with resales of
such New Notes for a period ending 180 days after the Registration Statement of
which this Prospectus constitutes a part is declared effective. See "The
Exchange Offer - Resales of New Notes."
New Notes received by broker-dealers for their own accounts in connection
with the Exchange Offer may be sold from time to time in one or more
transactions in the over-the-counter market, in negotiated transactions, through
the writing of options on the New Notes or a combination of such methods of
resale, at market prices prevailing at the time of resale, at prices related to
such prevailing market prices or at negotiated prices. Any such resale may be
made directly to purchasers or to or through brokers or dealers who may receive
compensation in the form of commissions or concessions from any such
broker-dealer and/or the purchasers of any such New Notes. Any broker-dealer
that resells New Notes that were received by it for its own account in
connection with the Exchange Offer and any broker or dealer that participates in
a distribution of such New Notes may be deemed to be an "underwriter" within the
meaning of the Securities Act, and any profit on any such resale of New Notes
and any commissions or concessions received by any such persons may be deemed to
be underwriting compensation under the Securities Act. The Letter of Transmittal
states that by acknowledging that it will deliver and by delivering a
prospectus, a broker-dealer will not be deemed to admit that it is an
"underwriter" within the meaning of the Securities Act.
The Company shall not be liable for any delay by the Depository or any
Participant or Indirect Participant in identifying the beneficial owners of the
related New Notes and each such person may conclusively rely on, and shall be
protected in relying on, instructions from the Depository for all purposes
(including with respect to the registration and delivery, and the respective
principal amounts, of the New Notes to be issued).
LEGAL MATTERS
The validity of the New Notes being offered hereby and certain other legal
matters regarding the New Notes will be passed upon for the Company by Thomas &
Libowitz, P.A., Baltimore, Maryland, counsel to the Company, and by Wilmer,
Cutler & Pickering, Baltimore, Maryland, special securities counsel and tax
counsel to the Company.
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EXPERTS
The Consolidated Financial Statements and schedules of the Company as of
December 31, 1995 and 1996 and for each of the years ended December 31, 1994,
1995 and 1996, incorporated by reference in this Prospectus and elsewhere in the
registration statement have been audited by Arthur Andersen LLP, independent
public accountants, as indicated in their reports with respect thereto, and are
incorporated herein in reliance upon the authority of said firm as experts in
giving said reports.
The consolidated financial statements of River City Broadcasting, L.P. as
of December 31, 1995 and 1994 and for each of the years in the three-year period
ended December 31, 1995 have been incorporated by reference herein and in the
registration statement in reliance upon the report of KPMG Peat Marwick LLP,
independent certified public accountants, incorporated by reference herein, and
upon the authority of said firm as experts in accounting and auditing.
The financial statements of Paramount Stations Group of Kerrville, Inc. as
of December 31, 1994 and August 3, 1995 and for the year ended December 31, 1994
and the period from January 1, 1995 through August 3, 1995, incorporated by
reference in this Prospectus and elsewhere in the registration statement have
been audited by Arthur Andersen LLP, independent public accountants, as
indicated in their reports with respect thereto, and are incorporated herein in
reliance upon the authority of said firm as experts in giving said reports.
The financial statements of KRRT, Inc. as of December 31, 1995 and for the
period from July 25, 1995 through December 31, 1995, incorporated by reference
in this Prospectus and elsewhere in the registration statement have been audited
by Arthur Andersen LLP, independent public accountants, as indicated in their
reports with respect thereto, and are incorporated herein in reliance upon the
authority of said firm as experts in giving said reports.
The consolidated financial statements of Superior Communications Group,
Inc. at December 31, 1995 and 1994, and for each of the two years in the period
ended December 31, 1995, incorporated by reference in this Prospectus and
Registration Statement have been audited by Ernst & Young LLP, independent
auditors, as set forth in their report thereon incorporated by reference herein,
and are included in reliance upon such report given upon the authority of such
firm as experts in accounting and auditing.
The financial statements of Flint TV, Inc. as of December 31, 1994 and 1995
and for each of the years ended December 31, 1994 and 1995, incorporated by
reference in this Prospectus and elsewhere in this registration statement have
been audited by Arthur Andersen LLP, independent public accountants, as stated
in their reports with respect thereto, and are incorporated herein in reliance
on the authority of said firm as experts in giving said reports.
The financial statements of Kansas City TV 62 Limited Partnership and
Cincinnati TV 64 Limited Partnership as of and for the year ended December 31,
1995 incorporated in this Prospectus by reference to the Form 8-K of Sinclair
Broadcast Group, Inc. dated May 9, 1996 (filed May 17, 1996) have been so
incorporated in reliance on the report of Price Waterhouse LLP, independent
accountants, given on the authority of said firm as experts in auditing and
accounting.
The financial statements of Heritage Media Services, Inc. - Broadcasting
Segment as of and for the year ended December 31, 1996, incorporated by
reference in this Prospectus and elsewhere in this Registration Statement have
been audited by Arthur Andersen LLP, independent public accountants, as stated
in their reports with respect thereto, and are incorporated herein in reliance
on the authority of said firm as experts in giving said reports.
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<TABLE>
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NO PERSON IS AUTHORIZED IN CONNECTION WITH ANY
OFFER MADE HEREBY TO GIVE ANY INFORMATION OR TO MAKE
ANY REPRESENTATIONS NOT CONTAINED IN THIS PROSPECTUS
AND, IF GIVEN OR MADE, SUCH INFORMATION OR
REPRESENTATIONS MAY NOT BE RELIED UPON AS HAVING BEEN OFFER FOR ALL OUTSTANDING
AUTHORIZED BY THE COMPANY. THIS PROSPECTUS DOES NOT 9% SENIOR SUBORDINATED NOTES DUE 2007
CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF AN IN EXCHANGE FOR
OFFER TO BUY ANY SECURITY OTHER THAN THE NEW NOTES 9% SENIOR SUBORDINATED NOTES DUE 2007
OFFERED HEREBY, NOR DOES IT CONSTITUTE AN OFFER TO SELL THAT HAVE BEEN REGISTERED UNDER
OR A SOLICITATION OF AN OFFER TO BUY ANY OF THE THE SECURITIES ACT OF 1933
SECURITIES OFFERED HEREBY TO ANY PERSON IN ANY OF
JURISDICTION IN WHICH IT IS UNLAWFUL TO MAKE SUCH OFFER
OR SOLICITATION. NEITHER THE DELIVERY OF THIS
PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL UNDER ANY
CIRCUMSTANCES CREATE ANY IMPLICATION THAT INFORMATION
CONTAINED HEREIN IS CORRECT AS OF ANY DATE SUBSEQUENT [GRAPHIC OMITTED]
TO THE DATE HEREOF.
</TABLE>
--------------------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
-----
<S> <C>
Summary ....................................... 1
Risk Factors ................................. 12
Use of Proceeds .............................. 26
Historical and Pro Forma Ratio of Earnings
to Fixed Charges ........................... 27
Capitalization .............................. 28
Selected Historical Consolidated Financial In-
formation 29 ------------------------
The Exchange Offer ........................... 33 PROSPECTUS
Description of the New Notes .................. 40 OCTOBER 10, 1997
Description of the Old Notes ............... 63 ------------------------
Certain Definitions ........................... 64
Certain Federal Income Tax Consequences ...... 72
Plan of Distribution ........................ 74
Legal Matters ................................. 74
Experts ....................................... 75
--------------------------
UNTIL APRIL 8, 1998 (180 DAYS AFTER THE DATE OF
THIS PROSPECTUS) ALL DEALERS EFFECTING TRANSACTIONS IN
THE REGISTERED SECURITIES, WHETHER OR NOT PARTICIPATING
IN THIS DISTRIBUTION, MAY BE REQUIRED TO DELIVER A
PROSPECTUS.
======================================================= ====================================================
</TABLE>
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 20. INDEMNIFICATION OF DIRECTORS AND OFFICERS
The Articles of Amendment and Restatement and By-Laws of the Company state
that the Company shall indemnify, and advance expenses to, its directors and
officers whether serving the Company or at the request of another entity to the
fullest extent permitted by and in accordance with Section 2-418 of the Maryland
General Corporation Law. Section 2-418 contains certain provisions which
establish that a Maryland corporation may indemnify any director or officer made
party to any proceeding by reason of service in that capacity, against
judgments, penalties, fines, settlements and reasonable expenses actually
incurred by the director or officer in connection with such proceeding unless it
is established that the director's or officer's act or omission was material to
the matter giving rise to the proceeding and the director or officer (i) acted
in bad faith or with active and deliberate dishonesty; (ii) actually received an
improper personal benefit in money, property or services; or (iii) in the case
of a criminal proceeding, had reasonable cause to believe that his act was
unlawful. However, if the proceeding was one by or in the right of the
corporation, indemnification may not be made if the director or officer is
adjudged to be liable to the corporation. The statute also provides for
indemnification of directors and officers by court order.
Section 12 of Article II of the Amended By-Laws of the Company provides as
follows:
A director shall perform his duties as a director, including his duties as
a member of any Committee of the Board upon which he may serve, in good faith,
in a manner he reasonably believes to be in the best interests of the
Corporation, and with such care as an ordinarily prudent person in a like
position would use under similar circumstances. In performing his duties, a
director shall be entitled to rely on information, opinions, reports, or
statements, including financial statements and other financial data, in each
case prepared or presented by:
(a) one or more officers or employees of the Corporation whom the
director reasonably believes to be reliable and competent in the
matters presented;
(b) counsel, certified public accountants, or other persons as to matters
which the director reasonably believes to be within such person's
professional or expert competence; or
(c) a Committee of the Board upon which he does not serve, duly
designated in accordance with a provision of the Articles of
Incorporation or the By-Laws, as to matters within its designated
authority, which Committee the director reasonably believes to merit
confidence.
A director shall not be considered to be acting in good faith if he has
knowledge concerning the matter in question that would cause such reliance
described above to be unwarranted. A person who performs his duties in
compliance with this Section shall have no liability by reason of being or
having been a director of the Corporation.
The Company has also entered into indemnification agreements with certain
officers and directors which provide that the Company shall indemnify and
advance expenses to such officers and directors to the fullest extent
permitted by applicable law in effect on the date of the agreement, and to
such greater extent as applicable law may thereafter from time to time
permit. Such agreements provide for the advancement of expenses (subject to
reimbursement if it is ultimately determined that the officer or director is
not entitled to indemnification) prior to the disposition of any claim or
proceeding.
II-1
<PAGE>
ITEM 21. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION
- ------------- -------------------------------------------------------------------------------------
<S> <C>
3.1* Amended and Restated Articles of Incorporation of Sinclair Broadcast Group, Inc., as
amended as of August 14, 1997
3.2 Amended By-Laws of Sinclair Broadcast Group, Inc., as amended as of May 31, 1995 (1)
3.3 Amended and Restated Charter of Chesapeake Television, Inc. (2)
3.4 Amended By-laws of Chesapeake Television, Inc. (2)
3.5 Certificate of Incorporation of Chesapeake Television Licensee, Inc. (2)
3.6 By-laws of Chesapeake Television Licensee, Inc. (2)
3.7 Articles of Incorporation of FSF-TV, Inc. (4)
3.8 By-laws of FSF-TV, Inc. (4)
3.9* Certificate of Incorporation of KABB Licensee, Inc.
3.10* By-laws of KABB Licensee, Inc.
3.11* Certificate of Incorporation of KDNL Licensee, Inc.
3.12* By-laws of KDNL Licensee, Inc.
3.13* Articles of Incorporation of KSMO, Inc.
3.14* By-laws of KSMO, Inc.
3.15* Certificate of Incorporation of KSMO Licensee, Inc.
3.16* By-laws of KSMO Licensee, Inc.
3.17* Articles of Incorporation of KUPN Licensee, Inc.
3.18* By-laws of KUPN Licensee, Inc.
3.19* Certificate of Incorporation of SCI-Indiana Licensee, Inc.
3.20* By-laws of SCI-Indiana Licensee, Inc.
3.21* Certificate of Incorporation SCI-Sacramento Licensee, Inc.
3.22* By-laws of SCI-Sacramento Licensee, Inc.
3.23* Articles of Incorporation of Sinclair Communications, Inc.
3.24* By-laws of Sinclair Communications, Inc.
3.25* Articles of Incorporation of Sinclair Radio of Albuquerque, Inc.
3.26* By-laws of Sinclair Radio of Albuquerque, Inc.
3.27* Certificate of Incorporation of Sinclair Radio of Albuquerque Licensee, Inc.
3.28* By-laws of Sinclair Radio of Albuquerque Licensee, Inc.
3.29* Articles of Incorporation of Sinclair Radio of Buffalo, Inc.
3.30* By-laws of Sinclair Radio of Buffalo, Inc.
3.31* Certificate of Incorporation of Sinclair Radio of Buffalo Licensee, Inc.
3.32* By-laws of Sinclair Radio of Buffalo Licensee, Inc.
3.33* Articles of Incorporation of Sinclair Radio of Greenville, Inc.
3.34* By-laws of Sinclair Radio of Greenville, Inc.
3.35* Certificate of Incorporation of Sinclair Radio of Greenville Licensee, Inc.
3.36* By-laws of Sinclair of Greenville Licensee, Inc.
3.37* Articles of Incorporation of Sinclair Radio of Los Angeles, Inc.
</TABLE>
II-2
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION
- ------------- ------------------------------------------------------------------------------
<S> <C>
3.38* By-laws of Sinclair Radio of Los Angeles, Inc.
3.39* Certificate of Incorporation of Sinclair Radio of Los Angeles Licensee, Inc.
3.40* By-laws of Sinclair Radio of Los Angeles Licensee, Inc.
3.41* Articles of Incorporation of Sinclair Radio of Memphis, Inc.
3.42* By-laws of Sinclair Radio of Memphis, Inc.
3.43* Certificate of Incorporation of Sinclair Radio of Memphis Licensee, Inc.
3.44* By-laws of Sinclair Radio of Memphis Licensee, Inc.
3.45* Articles of Incorporation of Sinclair Radio of Nashville, Inc.
3.46* By-laws of Sinclair Radio of Nashville, Inc.
3.47* Certificate of Incorporation of Sinclair Radio of Nashville Licensee, Inc.
3.48* By-laws of Sinclair Radio of Nashville Licensee, Inc.
3.49* Articles of Incorporation of Sinclair Radio of New Orleans, Inc.
3.50* By-laws of Sinclair Radio of New Orleans, Inc.
3.51* Certificate of Incorporation of Sinclair Radio of New Orleans Licensee, Inc.
3.52* By-laws of Sinclair Radio of New Orleans Licensee, Inc.
3.53* Articles of Incorporation of Sinclair Radio of St. Louis, Inc.
3.54* By-laws of Sinclair Radio of St. Louis, Inc.
3.55* Certificate of Incorporation of Sinclair Radio of St. Louis Licensee, Inc.
3.56* By-laws of Sinclair Radio of St. Louis Licensee, Inc.
3.57* Articles of Incorporation of Sinclair Radio of Wilkes-Barre, Inc.
3.58* By-laws of Sinclair Radio of Wilkes-Barre, Inc.
3.59* Certificate of Incorporation of Sinclair Radio of Wilkes-Barre Licensee, Inc.
3.60* By-laws of Sinclair Radio of Wilkes-Barre Licensee, Inc.
3.61* Certificate of Incorporation of Superior Communications of Kentucky, Inc.
3.62* By-laws of Superior Communications of Kentucky, Inc.
3.63* Articles of Incorporation of Superior Communications of Oklahoma, Inc.
3.64* By-laws of Superior Communications of Oklahoma, Inc.
3.65* Certificate of Incorporation of Superior KY License Corp.
3.66* By-laws of Superior KY License Corp.
3.67* Certificate of Incorporation of Superior OK License Corporation
3.68* By-laws of Superior OK License Corporation
3.69 Articles of Incorporation of Tuscaloosa Broadcasting, Inc. (6)
3.70 By-laws of Tuscaloosa Broadcasting, Inc. (6)
3.71 Articles of Incorporation of WCGV, Inc. (2)
3.72 By-laws of WCGV, Inc. (2)
3.73 Certificate of Incorporation of WCGV Licensee, Inc. (2)
3.74 By-laws of WCGV Licensee, Inc. (2)
3.75* Articles of Incorporation of WDBB, Inc.
3.76* By-laws of WDBB, Inc.
3.77 Articles of Incorporation of WLFL, Inc. (4)
</TABLE>
II-3
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION
- ------------- -----------------------------------------------------------------------------------------
<S> <C>
3.78 By-laws of WLFL, Inc. (4)
3.79 Certificate of Incorporation of WLFL Licensee, Inc. (4)
3.80 By-laws of WLFL Licensee, Inc. (4)
3.81* Certificate of Incorporation of WLOS Licensee, Inc.
3.82* By-laws of WLOS Licensee, Inc.
3.83 Articles of Incorporation of WPGH, Inc., as amended (2)
3.84 By-laws of WPGH, Inc. (2)
3.85 Amended and Restated Charter of WPGH Licensee, Inc. (2)
3.86 Amended By-laws of WPGH Licensee, Inc. (2)
3.87 Articles of Incorporation of WSMH, Inc. (4)
3.88 By-laws of WSMH, Inc. (4)
3.89 Certificate of Incorporation of WSMH Licensee, Inc. (4)
3.90 By-laws of WSMH Licensee, Inc. (4)
3.91* Articles of Incorporation of WSTR, Inc.
3.92* By-laws of WSTR, Inc.
3.93* Articles of Incorporation of WSTR Licensee, Inc.
3.94* By-laws of WSTR Licensee, Inc.
3.95* Articles of Incorporation of WSYX, Inc.
3.96* By-laws of WSYX, Inc.
3.97 Amended and Restated Charter of WTTE, Channel 28, Inc. (2)
3.98 Amended By-laws of WTTE, Channel 28, Inc. (2)
3.99 Amended and Restated Charter of WTTE, Channel 28 Licensee, Inc. (2)
3.100 Amended By-laws of WTTE, Channel 28 Licensee, Inc. (2)
3.101 Articles of Incorporation of WTTO, Inc. (2)
3.102 By-laws of WTTO, Inc. (2)
3.103 Certificate of Incorporation of WTTO Licensee, Inc. (2)
3.104 By-law of WTTO Licensee, Inc. (2)
3.105 Articles of Incorporation of WTVZ, Inc., as amended (5)
3.106 By-laws of WTVZ, Inc. (4)
3.107 Articles of Incorporation of WTVZ Licensee, Inc., as amended (5)
3.108 By-laws of WTVZ Licensee, Inc. (4)
3.109* Articles of Incorporation of WYZZ, Inc.
3.110* By-laws of WYZZ, Inc.
3.111* Certificate of Incorporation of WYZZ Licensee, Inc.
3.112* By-laws of WYZZ Licensee, Inc.
4.1 Indenture, dated as of July 2, 1997 among Sinclair Broadcast Group, Inc., the Guarantors
(3) and First Union National Bank of Maryland (7)
4.2 Registration Rights Agreement, dated as of July 2, 1997 among Sinclair Broadcast Group,
Inc., the Guarantors (3), Smith Barney Inc., Chase Securities Inc., Salomon Brothers Inc
and Furman Selz (7)
</TABLE>
II-4
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION
- ------------- ----------------------------------------------------------------------------------------------
<S> <C>
5.1* Opinion of Wilmer, Cutler & Pickering as to the legality of the 9% Senior Subordinated Notes
due 2007
5.2* Opinion of Thomas & Libowitz as to the legality of the 9% Senior Subordinated Notes due
2007
8.1* Opinion of Wilmer, Cutler & Pickering as to certain federal income tax matters
12.1 Calculation of Ratio of Earnings to Fixed Charges of Sinclair Broadcast Group, Inc.
23.1 Consent of Arthur Andersen LLP, independent certified public accountants
23.2 Consent of KPMG Peat Marwick LLP, independent certified public accountants, relating to
financial statements of River City Broadcasting, L.P.
23.3 Consent of Price Waterhouse LLP, independent accountants, relating to financial statements
of Kansas City TV 62 Limited Partnership
23.4 Consent of Price Waterhouse LLP, independent accountants, relating to financial statements
of Cincinnati TV 64 Limited Partnership
23.5 Consent of Ernst & Young LLP, independent certified public accountants, relating to financial
statements of Superior Communication Group, Inc.
24 Powers of Attorney (Included in the signature pages to the Registration
Statement) 25.1* Form T-1 Statement of Eligibility of First Union National Bank
to act as trustee under the Indenture
99.1* Form of Letter of Transmittal
99.2* Form of Notice of Guaranteed Delivery
99.3* Form of Exchange Agent Agreement
</TABLE>
- ----------
(1) Incorporated by reference from the Company's Registration Statement on Form
S-1, No. 33-90682.
(2) Incorporated by reference from the Company's Registration Statement on Form
S-1, No. 33-69482.
(3) The Guarantors are Chesapeake Television, Inc., Chesapeake Television
Licensee, Inc., FSF-TV, Inc., KABB Licensee, Inc., KDNL Licensee, Inc.,
KSMO, Inc., KSMO Licensee, Inc., KUPN Licensee, Inc., SCI-Indiana Licensee,
Inc., SCI-Sacramento Licensee, Inc., Sinclair Communications, Inc., Sinclair
Radio of Albuquerque, Inc., Sinclair Radio of Albuquerque Licensee, Inc.,
Sinclair Radio of Buffalo, Inc., Sinclair Radio of Buffalo Licensee, Inc.,
Sinclair Radio of Greenville, Inc., Sinclair Radio of Greenville Licensee,
Inc., Sinclair Radio of Los Angeles, Inc., Sinclair Radio of Los Angeles
Licensee, Inc., Sinclair Radio of Memphis, Inc., Sinclair Radio of Memphis
Licensee, Inc., Sinclair Radio of Nashville, Inc., Sinclair Radio of
Nashville Licensee, Inc., Sinclair Radio of New Orleans, Inc., Sinclair
Radio of New Orleans Licensee, Inc., Sinclair Radio of St. Louis, Inc.,
Sinclair Radio of St. Louis Licensee, Inc., Sinclair Radio of Wilkes-Barre,
Inc., Sinclair Radio of Wilkes-Barre Licensee, Inc., Superior Communications
of Kentucky, Inc., Superior Communications of Oklahoma, Inc., Superior KY
License Corp., Superior OK License Corp., Tuscaloosa Broadcasting Inc.,
WCGV, Inc., WCGV Licensee, Inc., WDBB, Inc., WLFL, Inc., WLFL Licensee,
Inc., WLOS Licensee, Inc., WPGH, Inc., WPGH Licensee, Inc., WSMH, Inc., WSMH
Licensee, Inc., WSTR, Inc., WSTR Licensee, Inc., WSYX, Inc., WTTE, Channel
28, Inc., WTTE, Channel 28 Licensee, Inc., WTTO, Inc., WTTO Licensee, Inc.,
WTVZ, Inc., WTVZ Licensee, Inc., WYZZ, Inc., and WYZZ Licensee, Inc.
(4) Incorporated by reference from the Company's Registration Statement on Form
S-3, No. 33-94982.
(5) Incorporated by reference from Amendment No. 1 to the Company's Registration
Statement on Form S-3, No. 33-94982.
(6) Incorporated by reference from Amendment No. 2 to the Company's Registration
Statement on Form S-3, No. 33-94982.
(7) Incorporated by reference from the Company's Quarterly Report on Form 10-Q
for the period ended June 30, 1997.
* Previously filed.
II-5
<PAGE>
ITEM 22. UNDERTAKINGS
Each of the undersigned registrants hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
registrant's annual report pursuant to section 13(a) or section 15(d) of the
Securities Exchange Act of 1934 (and, where applicable, each filing of an
employee benefit plan's annual report pursuant to section 15(d) of the
Securities Exchange Act of 1934) that is incorporated by reference in the
registration statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.
Each of the undersigned registrants also hereby undertakes to respond to
requests for information that is incorporated by reference into the prospectus
pursuant to Items 4, 10(b), 11, or 13 of this Form, within one business day of
receipt of such request, and to send the incorporated documents by first class
mail or other equally prompt means. This includes information contained in
documents filed subsequent to the effective date of the registration statement
through the date of responding to the request.
Each of the undersigned registrants hereby undertakes to supply by means of
a post-effective amendment all information concerning a transaction, and the
company being acquired involved therein, that was not the subject of and
included in the registration statement when it became effective.
Each of the undersigned registrants hereby undertakes:
To file, during any period in which offers or sales are being made, a
post-effective amendment to this registration statement:
(i) To include any prospectus required by section 10(a)(3) of the
Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events arising after
the effective date of the registration statement (or the most recent
post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set forth in
the registration statement. Notwithstanding the foregoing, any increase
or decrease in volume of securities offered (if the total dollar value of
securities offered would not exceed that which was registered) and any
deviation from the low or high end of the estimated maximum offering
range may be reflected in the form of prospectus filed with the
Commission pursuant to Rule 424(b) if, in the aggregate, the changes in
volume and price represent no more than a 20% change in the maximum
aggregate offering price set forth in the "Calculation of Registration
Fee" table in the effective registration statement.
(iii) To include any material information with respect to the plan of
distribution not previously disclosed in the registration statement or
any material change to such information in the registration statement.
Each of the undersigned registrants hereby undertakes as follows: that
prior to any public reoffering of the securities registered hereunder through
use of a prospectus which is a part of this registration statement, by any
person or party who is deemed to be an underwriter within the meaning of Rule
145(c), the issuers undertake that such reoffering prospectus will contain the
information called for by the applicable registration form with respect to
reofferings by persons who may be deemed underwriters, in addition to the
information called for by the other items of the applicable form.
Each of the registrants undertakes that every prospectus (i) that is filed
pursuant to the immediately preceding paragraph, or (ii) that purports to meet
the requirements of section 10(a)(3) of the Act and is used in connection with
an offering of securities subject to Rule 415, will be filed as a part of an
amendment to the registration statement and will not be used until such
amendment is effective, and that, for purposes of determining any liability
under the Securities Act of 1933, each such post-effective amendment shall be
deemed to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed to be
the initial bona fide offering thereof.
II-6
<PAGE>
Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers and controlling persons of the
registrants pursuant to the foregoing provisions, or otherwise, the registrants
have been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Act and is,
therefore, unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by the registrants of expenses incurred
or paid by a director, officer or controlling person of the registrants in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the registrants will, unless in the opinion of their counsel the
matter has been settled by controlling precedent, submit to a court of
appropriate jurisdiction the question whether such indemnification by them is
against public policy as expressed in the Act and will be governed by the final
adjudication of such issue.
II-7
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrants
certify that they have reasonable grounds to believe that they meet all of the
requirements for filing on Form S-4 and have duly caused this Amendment to the
Registration Statement to be signed on their behalf by the undersigned,
thereunto duly authorized, in the City of Baltimore, Maryland on the 8th day of
October, 1997.
SINCLAIR BROADCAST GROUP, INC.
By: *
---------------------------------------
David D. Smith
Chief Executive Officer and President
THE GUARANTORS LISTED BELOW
By: *
---------------------------------------
David D. Smith
President
Pursuant to the requirements of the Securities Act of 1933, this Amendment
to the Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- ----------------------------- -------------------------------------------- ----------------
<S> <C> <C>
* Chairman of The Board, October 8, 1997
- --------------------------- Chief Executive Officer, President and
David D. Smith Director of Sinclair Broadcast Group,
Inc. and President and Director of the
Guarantors listed below (Principal
Executive Officer)
/s/ DAVID B. AMY Chief Financial Officer of Sinclair October 8, 1997
- --------------------------- Broadcast Group, Inc. and Director of
David B. Amy the Guarantors listed below (other than
Sinclair Communications, Inc.) (Principal
Financial and Accounting Officer of
Sinclair Broadcast Group, Inc. and the
Guarantors listed below)
* Director of Sinclair Broadcast Group, Inc. October 8, 1997
- --------------------------- and Sinclair Communications, Inc.
Frederick G. Smith
* Director of Sinclair Broadcast Group, Inc. October 8, 1997
- --------------------------- and Sinclair Communications, Inc.
J. Duncan Smith
* Director of Sinclair Broadcast Group, Inc. October 8, 1997
- --------------------------- and Sinclair Communications, Inc.
Robert E. Smith
* Director of Sinclair Broadcast Group, Inc. October 8, 1997
- --------------------------- and Sinclair Communications, Inc.
Basil A. Thomas
</TABLE>
II-8
<PAGE>
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- ----------------------------- -------------------------------------------- ----------------
<S> <C> <C>
* Director of Sinclair Broadcast Group, Inc. October 8, 1997
- --------------------------- and Sinclair Communications, Inc.
Lawrence E. McCanna
</TABLE>
*By: /s/ David B. Amy
-----------------------
David B. Amy
Attorney-in-fact
GUARANTORS
<TABLE>
<S> <C>
Chesapeake Television, Inc. Sinclair Radio of Wilkes-Barre Licensee, Inc.
Chesapeake Television Licensee, Inc. Superior Communications of Kentucky, Inc.
FSF-TV, Inc. Superior Communications of Oklahoma, Inc.
KABB Licensee, Inc. Superior KY License Corp.
KDNL Licensee, Inc. Superior OK License Corp.
KSMO, Inc. Tuscaloosa Broadcasting Inc.
KSMO Licensee, Inc. WCGV, Inc.
KUPN Licensee, Inc. WCGV Licensee, Inc.
SCI-Indiana Licensee, Inc. WDBB, Inc.
SCI-Sacramento Licensee, Inc. WLFL, Inc.
Sinclair Communications, Inc. WLFL Licensee, Inc.
Sinclair Radio of Albuquerque, Inc. WLOS Licensee, Inc.
Sinclair Radio of Albuquerque Licensee, Inc. WPGH, Inc.
Sinclair Radio of Buffalo, Inc. WPGH Licensee, Inc.
Sinclair Radio of Buffalo Licensee, Inc. WSMH, Inc.
Sinclair Radio of Greenville, Inc. WSMH Licensee, Inc.
Sinclair Radio of Greenville Licensee, Inc. WSTR, Inc.
Sinclair Radio of Los Angeles, Inc. WSTR Licensee, Inc.
Sinclair Radio of Los Angeles Licensee, Inc. WSYX, Inc.
Sinclair Radio of Memphis, Inc. WTTE, Channel 28, Inc.
Sinclair Radio of Memphis Licensee, Inc. WTTE, Channel 28 Licensee, Inc.
Sinclair Radio of Nashville, Inc. WTTO, Inc.
Sinclair Radio of Nashville Licensee, Inc. WTTO Licensee, Inc.
Sinclair Radio of New Orleans, Inc. WTVZ, Inc.
Sinclair Radio of New Orleans Licensee, Inc. WTVZ Licensee, Inc.
Sinclair Radio of St. Louis, Inc. WYZZ, Inc.
Sinclair Radio of St. Louis Licensee, Inc. WYZZ Licensee, Inc.
Sinclair Radio of Wilkes-Barre, Inc.
</TABLE>
II-9
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION
- ------------- -------------------------------------------------------------------------------------
<S> <C>
3.1* Amended and Restated Articles of Incorporation of Sinclair Broadcast Group, Inc., as
amended as of August 14, 1997
3.2 Amended By-Laws of Sinclair Broadcast Group, Inc., as amended as of May 31, 1995 (1)
3.3 Amended and Restated Charter of Chesapeake Television, Inc. (2)
3.4 Amended By-laws of Chesapeake Television, Inc. (2)
3.5 Certificate of Incorporation of Chesapeake Television Licensee, Inc. (2)
3.6 By-laws of Chesapeake Television Licensee, Inc. (2)
3.7 Articles of Incorporation of FSF-TV, Inc. (4)
3.8 By-laws of FSF-TV, Inc. (4)
3.9* Certificate of Incorporation of KABB Licensee, Inc.
3.10* By-laws of KABB Licensee, Inc.
3.11* Certificate of Incorporation of KDNL Licensee, Inc.
3.12* By-laws of KDNL Licensee, Inc.
3.13* Articles of Incorporation of KSMO, Inc.
3.14* By-laws of KSMO, Inc.
3.15* Certificate of Incorporation of KSMO Licensee, Inc.
3.16* By-laws of KSMO Licensee, Inc.
3.17* Articles of Incorporation of KUPN Licensee, Inc.
3.18* By-laws of KUPN Licensee, Inc.
3.19* Certificate of Incorporation of SCI-Indiana Licensee, Inc.
3.20* By-laws of SCI-Indiana Licensee, Inc.
3.21* Certificate of Incorporation SCI-Sacramento Licensee, Inc.
3.22* By-laws of SCI-Sacramento Licensee, Inc.
3.23* Articles of Incorporation of Sinclair Communications, Inc.
3.24* By-laws of Sinclair Communications, Inc.
3.25* Articles of Incorporation of Sinclair Radio of Albuquerque, Inc.
3.26* By-laws of Sinclair Radio of Albuquerque, Inc.
3.27* Certificate of Incorporation of Sinclair Radio of Albuquerque Licensee, Inc.
3.28* By-laws of Sinclair Radio of Albuquerque Licensee, Inc.
3.29* Articles of Incorporation of Sinclair Radio of Buffalo, Inc.
3.30* By-laws of Sinclair Radio of Buffalo, Inc.
3.31* Certificate of Incorporation of Sinclair Radio of Buffalo Licensee, Inc.
3.32* By-laws of Sinclair Radio of Buffalo Licensee, Inc.
3.33* Articles of Incorporation of Sinclair Radio of Greenville, Inc.
3.34* By-laws of Sinclair Radio of Greenville, Inc.
3.35* Certificate of Incorporation of Sinclair Radio of Greenville Licensee, Inc.
3.36* By-laws of Sinclair of Greenville Licensee, Inc.
3.37* Articles of Incorporation of Sinclair Radio of Los Angeles, Inc.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION
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3.38* By-laws of Sinclair Radio of Los Angeles, Inc.
3.39* Certificate of Incorporation of Sinclair Radio of Los Angeles Licensee, Inc.
3.40* By-laws of Sinclair Radio of Los Angeles Licensee, Inc.
3.41* Articles of Incorporation of Sinclair Radio of Memphis, Inc.
3.42* By-laws of Sinclair Radio of Memphis, Inc.
3.43* Certificate of Incorporation of Sinclair Radio of Memphis Licensee, Inc.
3.44* By-laws of Sinclair Radio of Memphis Licensee, Inc.
3.45* Articles of Incorporation of Sinclair Radio of Nashville, Inc.
3.46* By-laws of Sinclair Radio of Nashville, Inc.
3.47* Certificate of Incorporation of Sinclair Radio of Nashville Licensee, Inc.
3.48* By-laws of Sinclair Radio of Nashville Licensee, Inc.
3.49* Articles of Incorporation of Sinclair Radio of New Orleans, Inc.
3.50* By-laws of Sinclair Radio of New Orleans, Inc.
3.51* Certificate of Incorporation of Sinclair Radio of New Orleans Licensee, Inc.
3.52* By-laws of Sinclair Radio of New Orleans Licensee, Inc.
3.53* Articles of Incorporation of Sinclair Radio of St. Louis, Inc.
3.54* By-laws of Sinclair Radio of St. Louis, Inc.
3.55* Certificate of Incorporation of Sinclair Radio of St. Louis Licensee, Inc.
3.56* By-laws of Sinclair Radio of St. Louis Licensee, Inc.
3.57* Articles of Incorporation of Sinclair Radio of Wilkes-Barre, Inc.
3.58* By-laws of Sinclair Radio of Wilkes-Barre, Inc.
3.59* Certificate of Incorporation of Sinclair Radio of Wilkes-Barre Licensee, Inc.
3.60* By-laws of Sinclair Radio of Wilkes-Barre Licensee, Inc.
3.61* Certificate of Incorporation of Superior Communications of Kentucky, Inc.
3.62* By-laws of Superior Communications of Kentucky, Inc.
3.63* Articles of Incorporation of Superior Communications of Oklahoma, Inc.
3.64* By-laws of Superior Communications of Oklahoma, Inc.
3.65* Certificate of Incorporation of Superior KY License Corp.
3.66* By-laws of Superior KY License Corp.
3.67* Certificate of Incorporation of Superior OK License Corporation
3.68* By-laws of Superior OK License Corporation
3.69 Articles of Incorporation of Tuscaloosa Broadcasting, Inc. (6)
3.70 By-laws of Tuscaloosa Broadcasting, Inc. (6)
3.71 Articles of Incorporation of WCGV, Inc. (2)
3.72 By-laws of WCGV, Inc. (2)
3.73 Certificate of Incorporation of WCGV Licensee, Inc. (2)
3.74 By-laws of WCGV Licensee, Inc. (2)
3.75* Articles of Incorporation of WDBB, Inc.
3.76* By-laws of WDBB, Inc.
3.77 Articles of Incorporation of WLFL, Inc. (4)
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EXHIBIT NO. DESCRIPTION
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3.78 By-laws of WLFL, Inc. (4)
3.79 Certificate of Incorporation of WLFL Licensee, Inc. (4)
3.80 By-laws of WLFL Licensee, Inc. (4)
3.81* Certificate of Incorporation of WLOS Licensee, Inc.
3.82* By-laws of WLOS Licensee, Inc.
3.83 Articles of Incorporation of WPGH, Inc., as amended (2)
3.84 By-laws of WPGH, Inc. (2)
3.85 Amended and Restated Charter of WPGH Licensee, Inc. (2)
3.86 Amended By-laws of WPGH Licensee, Inc. (2)
3.87 Articles of Incorporation of WSMH, Inc. (4)
3.88 By-laws of WSMH, Inc. (4)
3.89 Certificate of Incorporation of WSMH Licensee, Inc. (4)
3.90 By-laws of WSMH Licensee, Inc. (4)
3.91* Articles of Incorporation of WSTR, Inc.
3.92* By-laws of WSTR, Inc.
3.93* Articles of Incorporation of WSTR Licensee, Inc.
3.94* By-laws of WSTR Licensee, Inc.
3.95* Articles of Incorporation of WSYX, Inc.
3.96* By-laws of WSYX, Inc.
3.97 Amended and Restated Charter of WTTE, Channel 28, Inc. (2)
3.98 Amended By-laws of WTTE, Channel 28, Inc. (2)
3.99 Amended and Restated Charter of WTTE, Channel 28 Licensee, Inc. (2)
3.100 Amended By-laws of WTTE, Channel 28 Licensee, Inc. (2)
3.101 Articles of Incorporation of WTTO, Inc. (2)
3.102 By-laws of WTTO, Inc. (2)
3.103 Certificate of Incorporation of WTTO Licensee, Inc. (2)
3.104 By-law of WTTO Licensee, Inc. (2)
3.105 Articles of Incorporation of WTVZ, Inc., as amended (5)
3.106 By-laws of WTVZ, Inc. (4)
3.107 Articles of Incorporation of WTVZ Licensee, Inc., as amended (5)
3.108 By-laws of WTVZ Licensee, Inc. (4)
3.109* Articles of Incorporation of WYZZ, Inc.
3.110* By-laws of WYZZ, Inc.
3.111* Certificate of Incorporation of WYZZ Licensee, Inc.
3.112* By-laws of WYZZ Licensee, Inc.
4.1 Indenture, dated as of July 2, 1997 among Sinclair Broadcast Group, Inc., the Guarantors
(3) and First Union National Bank of Maryland (7)
4.2 Registration Rights Agreement, dated as of July 2, 1997 among Sinclair Broadcast Group,
Inc., the Guarantors (3), Smith Barney Inc., Chase Securities Inc., Salomon Brothers Inc
and Furman Selz (7)
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EXHIBIT NO. DESCRIPTION
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5.1* Opinion of Wilmer, Cutler & Pickering as to the legality of the 9% Senior Subordinated Notes
due 2007
5.2* Opinion of Thomas & Libowitz as to the legality of the 9% Senior Subordinated Notes due
2007
8.1* Opinion of Wilmer, Cutler & Pickering as to certain federal income tax matters
12.1 Calculation of Ratio of Earnings to Fixed Charges of Sinclair Broadcast Group, Inc.
23.1 Consent of Arthur Andersen LLP, independent certified public accountants
23.2 Consent of KPMG Peat Marwick LLP, independent certified public accountants, relating to
financial statements of River City Broadcasting, L.P.
23.3 Consent of Price Waterhouse LLP, independent accountants, relating to financial statements
of Kansas City TV 62 Limited Partnership
23.4 Consent of Price Waterhouse LLP, independent accountants, relating to financial statements
of Cincinnati TV 64 Limited Partnership
23.5 Consent of Ernst & Young LLP, independent certified public accountants, relating to financial
statements of Superior Communication Group, Inc.
24 Powers of Attorney (Included in the signature pages to the Registration
Statement) 25.1* Form T-1 Statement of Eligibility of First Union National Bank
to act as trustee under the Indenture
99.1* Form of Letter of Transmittal
99.2* Form of Notice of Guaranteed Delivery
99.3* Form of Exchange Agent Agreement
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(1) Incorporated by reference from the Company's Registration Statement on Form
S-1, No. 33-90682.
(2) Incorporated by reference from the Company's Registration Statement on Form
S-1, No. 33-69482.
(3) The Guarantors are Chesapeake Television, Inc., Chesapeake Television
Licensee, Inc., FSF-TV, Inc., KABB Licensee, Inc., KDNL Licensee, Inc.,
KSMO, Inc., KSMO Licensee, Inc., KUPN Licensee, Inc., SCI-Indiana Licensee,
Inc., SCI-Sacramento Licensee, Inc., Sinclair Communications, Inc., Sinclair
Radio of Albuquerque, Inc., Sinclair Radio of Albuquerque Licensee, Inc.,
Sinclair Radio of Buffalo, Inc., Sinclair Radio of Buffalo Licensee, Inc.,
Sinclair Radio of Greenville, Inc., Sinclair Radio of Greenville Licensee,
Inc., Sinclair Radio of Los Angeles, Inc., Sinclair Radio of Los Angeles
Licensee, Inc., Sinclair Radio of Memphis, Inc., Sinclair Radio of Memphis
Licensee, Inc., Sinclair Radio of Nashville, Inc., Sinclair Radio of
Nashville Licensee, Inc., Sinclair Radio of New Orleans, Inc., Sinclair
Radio of New Orleans Licensee, Inc., Sinclair Radio of St. Louis, Inc.,
Sinclair Radio of St. Louis Licensee, Inc., Sinclair Radio of Wilkes-Barre,
Inc., Sinclair Radio of Wilkes-Barre Licensee, Inc., Superior Communications
of Kentucky, Inc., Superior Communications of Oklahoma, Inc., Superior KY
License Corp., Superior OK License Corp., Tuscaloosa Broadcasting Inc.,
WCGV, Inc., WCGV Licensee, Inc., WDBB, Inc., WLFL, Inc., WLFL Licensee,
Inc., WLOS Licensee, Inc., WPGH, Inc., WPGH Licensee, Inc., WSMH, Inc., WSMH
Licensee, Inc., WSTR, Inc., WSTR Licensee, Inc., WSYX, Inc., WTTE, Channel
28, Inc., WTTE, Channel 28 Licensee, Inc., WTTO, Inc., WTTO Licensee, Inc.,
WTVZ, Inc., WTVZ Licensee, Inc., WYZZ, Inc., and WYZZ Licensee, Inc.
(4) Incorporated by reference from the Company's Registration Statement on Form
S-3, No. 33-94982.
(5) Incorporated by reference from Amendment No. 1 to the Company's Registration
Statement on Form S-3, No. 33-94982.
(6) Incorporated by reference from Amendment No. 2 to the Company's Registration
Statement on Form S-3, No. 33-94982.
(7) Incorporated by reference from the Company's Quarterly Report on Form 10-Q
for the period ended June 30, 1997.
* Previously filed.
EXHIBIT 12.1
HISTORICAL AND PRO FORMA RATIOS OF EARNINGS TO FIXED CHARGES
The Company's consolidated ratios of earnings to fixed charges for each of
the periods indicated are set forth below:
SINCLAIR BROADCAST GROUP, INC. AND SUBSIDIARIES
RATIO OF EARNINGS TO FIXED CHARGES
(DOLLARS IN THOUSANDS)
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YEARS ENDED DECEMBER 31,
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1992 1993 1994 1995 1996
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<S> <C> <C> <C> <C> <C>
HISTORICAL
Income (loss) before provision (benefit) for
income taxes and extraordinary items ....... $ (5,840) $ 922 $ (3,387) $ 10,188 $ 8,067
Fixed charges(a) ............................ 12,997 12,852 25,418 39,253 84,314
-------- -------- -------- -------- --------
Earnings available for fixed charges ........ 7,157 13,774 22,031 49,441 92,381
Fixed charges ............................... 12,997 12,852 25,418 39,253 84,314
-------- -------- -------- -------- --------
Ratio of earnings to fixed charges(b) ....... - 1.1 x - 1.3 x 1.1 x
PRO FORMA(C)
Income (loss) before provision (benefit) for
income taxes and extraordinary items ....... $(36,691)
Fixed charges(a) ............................ 141,438
---------
Earnings available for fixed charges ........ 104,747
Fixed charges ............................... 141,438
--------
Ratio of earnings to fixed charges(d) ....... -
--------
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SIX MONTHS ENDED
JUNE 30,
------------------------
1996 1997
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(UNAUDITED)
<S> <C> <C>
HISTORICAL
Income (loss) before provision (benefit) for
income taxes and extraordinary items ....... $ 3,611 $ (9,922)
Fixed charges(a) ............................ 27,646 51,993
--------- ---------
Earnings available for fixed charges ........ 31,257 42,071
Fixed charges ............................... 27,646 51,993
--------- ---------
Ratio of earnings to fixed charges(b) ....... 1.1 x -
PRO FORMA(C)
Income (loss) before provision (benefit) for
income taxes and extraordinary items ....... $ (11,179)
Fixed charges(a) ............................ 67,537
---------
Earnings available for fixed charges ........ 56,358
Fixed charges ............................... 67,537
---------
Ratio of earnings to fixed charges(d) ....... -
---------
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(a) Fixed charges consist of interest expense, which includes interest on all
debt and amortization of debt discount, and deferred financing costs.
(b) Earnings were inadequate to cover fixed charges for the years ended December
31, 1992 and 1994, and for the six months ended June 30, 1997. Additional
earnings of $5,840, $3,387, and $9,922 would have been required to cover
fixed charges in the years ended December 31, 1992 and 1994, and the six
months ended June 30, 1997, respectively.
(c) The pro forma information for the year ended December 31, 1996 reflects the
pro forma effect of the completion of the offering of the Old Notes (the
"Old Notes Offering") (and the application of the net proceeds thereof as
set forth in "Use of Proceeds"), the 1996 Acquisition, the issuance of the
Preferred Securities, the Heritage Acquisition and the Common Stock Offering
and Preferred Stock Offering as though each occurred on January 1, 1996. The
pro forma information for the six months ended June 30, 1997 reflects the
pro forma effect of such events as if each had occurred on January 1, 1997.
(d) Earnings were inadequate to cover fixed charges for the pro forma year ended
December 31, 1996 and pro forma six months ended June 30, 1997. Additional
earnings of $36,691 and $11,179 would have been required to cover fixed
charges for the pro forma year ended December 31, 1996 and pro forma six
months ended June 30, 1997, respectively.
EXHIBIT 23.1
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the use of our reports
(and to all references to our Firm) included in or made a part of this Form S-4
Registration Statement under the Securities Act of 1933.
Arthur Andersen LLP
Baltimore, Maryland
October 7, 1997
EXHIBIT 23.2
INDEPENDENT AUDITORS' CONSENT
The Partners
River City Broadcasting, L.P.:
We consent to the incorporation by reference in the registration statement on
Form S-4 of Sinclair Broadcast Group, Inc. of our report dated February 23, 1996
with respect to the consolidated balance sheets of River City Broadcasting, L.P.
as of December 31, 1994 and 1995 and the related consolidated statements of
operations, partners' capital (deficit), and cash flows for each of the years in
the three-year period ended December 31, 1995 which report appears in the form
8-K/A of Sinclair Broadcast Group, Inc. dated May 9, 1996 and to the reference
to our firm under the heading "Experts" in the prospectus.
KPMG PEAT MARWICK LLP
St. Louis, Missouri
October 6, 1997
EXHIBIT 23.3
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in the Prospectus
constituting part of this Registration Statement on Form S-4 of Sinclair
Broadcast Group, Inc. (the "Company") of our report dated March 22, 1996
relating to the financial statements of Kansas City TV 62 Limited Partnership,
which appears in the Company's Form 8-K dated May 9, 1996 (filed May 17, 1996).
We also consent to the reference to us under the heading "Experts" in such
Prospectus.
/s/ Price Waterhouse LLP
- ---------------------
Price Waterhouse LLP
Boston, Massachusetts
October 6, 1997
EXHIBIT 23.4
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in the Prospectus
constituting part of this Registration Statement on Form S-4 of Sinclair
Broadcast Group, Inc. (the "Company") of our report dated March 22, 1996
relating to the financial statements of Cincinnati TV 64 Limited Partnership,
which appears in the Company's Form 8-K dated May 9, 1996 (filed May 17, 1996).
We also consent to the reference to us under the heading "Experts" in such
Prospectus.
/s/ Price Waterhouse LLP
- ---------------------
Price Waterhouse LLP
Boston, Massachusetts
October 6, 1997
CONSENT OF INDEPENDENT AUDITORS
We consent to the reference to our firm under the caption "Experts" and to the
use of our report dated February 23, 1996, with respect to the financial
statements of Superior Communication Group, Inc. incorporated by reference in
Amendment No. 1 to the Registration Statement (Form S-4 No.333-34753) and
related Prospectus of Sinclair Broadcast Group, Inc.
/s/ ERNST & YOUNG LLP
Pittsburgh, Pennsylvania
October 6, 1997
