by Ben Fidler
Updated 02:04 PM, Sep-28-2009 ET
Young Broadcasting Inc. aims to complete its transition to a bank-owned TV station operator under a reorganization plan the company has posted.

YBI filed the plan on Sept. 24 but hadn't filed the related disclosure statement — which explains a reorganization or liquidation plan in further detail — with the U.S. Bankruptcy Court for the Southern District of New York in Manhattan as of early Monday, Sept. 28.

No hearing can be set on a plan until a disclosure statement is filed.

Under the proposed plan, each of YBI's prepetition lenders, led by Wachovia Bank NA, would swap their piece of a $338.45 million claim for $75 million in new term notes and an unspecified amount of common stock and warrants.

Should YBI's 10% senior subordinated noteholders and 8.75% senior subordinated noteholders vote in favor of the plan, they would exchange their securities for 2 1/2-year warrants to purchase up to 2.5% of YBI's equity, with each share based on an enterprise value of $300 million. The noteholders would be wiped out if they rejected the plan, filings show.

General unsecured creditors would split $1 million in cash that would be distributed either on the plan's effective date or 30 days after each of their claims was allowed.

Old equity holders would be wiped out.

The plan also appears to include a $10 million exit loan, though it is unclear who would provide it. YBI will document the exit financing in a plan supplement that will be filed before the confirmation hearing, court papers said.

YBI is about two months removed from selling all of its assets to a group of lenders led by Wachovia for $220 million. The lending group, which offered a $200 million credit bid plus other considerations, bested three other bidding consortia at an auction for YBI: one led by Miami private equity firm H.I.G. Capital LLC, a second led by New York private equity firm Oak Hill Capital Partners LP and a third led by investment firm Lambert Media Group of Beverly Hills, Calif.

YBI filed for Chapter 11 on Feb. 13, suffering from a cash crisis triggered by plummeting ad revenue.

Before the sale, YBI operated 10 TV stations in nine states. All the stations are affiliates of NBC, ABC, CBS or MyNetwork TV. The New York company also runs a national TV representation firm, Adam Young Inc., and satellite stations that rebroadcast programming from its primary stations. Young's stations reach 6% of total U.S. television households and focus on local news, sports programming and community affairs.

The company had $348.22 million in assets and $936.06 million in debt as of Dec. 31, according to Securities and Exchange Commission filings. It lost $369.7 million on $190.8 million in revenue last year.

Jo Christine Reed, Peter Wolfson and Michael Carney are debtor counsel at Sonnenschein Nath & Rosenthal LLP.

Fred Neueld of Milbank, Tweed, Hadley & McCloy LLP represents the lending group. Loughlin Meghji + Co. is financial adviser for the lenders.