Friday, October 28, 2005
Dissatisfied Investors in Granite Broadcasting Exert Power
"We are very concerned about the direction of Granite"
Those were the words of Philip A. Falcone, senior portfolio manager at Harbert Management Corporation.
Peter Passi reports in a story today for the Duluth News Tribune that a group of investors has become so dissatisfied with the performance of Granite Broadcasting Corporation, parent company of Fort Wayne television station WISE 33 and operator of WPTA 21 that they have exercised their power to add two outside directors to the Granite Board.
Passi also quoted Falcone as saying:
It's a telling development when a firm named Harbert Distressed Investment Master Fund starts buying up a corporation's stock.
Lately, Harbert has taken an increasingly active role in the affairs of Granite Broadcasting Corp., owner of KBJR-TV, Duluth's NBC affiliate.
Granite repeatedly failed to make dividend payments to Harbert and other holders of its preferred stock, and this week, those investors flexed their collective muscle.
Harbert joined forces with the John Hancock High Yield Fund and Somerset Capital Advisers to form a block of shareholders controlling a majority share of preferred stock in Granite. Together, they asserted their right Tuesday to appoint two members to Granite's board of directors.
"Selling assets to fund interest payments and continuing losses is not a viable business plan.Granite is highly leveraged and, with its current capital structure, we do not believe that it will be able to meet its ongoing and long-term obligations."News Release from Harbert.
Related: LIN Broadcasting, parent of WANE-TV reports third-quarter earnings.