Lin TV's CEO Presents at NBC Joint Venture Transaction Conference [Transcript]
February 13, 2013 1:39 PM ET
Lin TV Corp. (TVL)
NBC Joint Venture Transaction Conference Call
February 13, 2013 10:30 am ET
Vincent L. Sadusky – President & Chief Executive Officer
Richard J. Schmaeling – Senior Vice President & Chief Financial Officer
Marci Ryvicker – Wells Fargo Securities, LLC
Barry L. Lucus – Gabelli & Company
Davis Hebert – Wells Fargo Securities, LLC
John Kornreich – JK Media
Dennis Leibowitz – Act II Partners
Sal Muoio – SM Investors
Avi Steiner – JPMorgan
Good morning, ladies and gentlemen and welcome to the Lin TV Corp Conference Call and NBC Joint Venture Transaction. Today’s call is being recorded. Now, the company will read a brief legal statement.
Unidentified Company Representative
This conference call may include forward-looking statements that involve risks and uncertainties. Factors that could cause actual results to differ materially from those expressed or implied by the forward-looking statements include, but are not limited to, those described in the company’s press release and filings made with the SEC, all of which are available in the Investor Relations section on the company’s website at linmedia.com and on the SEC’s website at sec.gov.
Many of these factors are beyond the company’s control and the company undertakes no obligation to publicly update or revise any forward-looking statements unless required by applicable law. The company will also file with the SEC, a proxy statement, regarding the proposed merger. Stockholders are urged to read the proxy statement and other documents related to the transaction, when they become available because they will contain important information. Investors will be able to obtain these documents in the company’s website and the SEC’s website or by contacting the company directly.
Please also note that the company and its Directors and Executive Officers may be deemed to be participants in the solicitation of proxies, when the proxies are solicited with respect to the proposed merger transaction. However, this communication is not a solicitation of a proxy from any security holder of the company. Investors may obtain information regarding the names, affiliations and interests of such individuals in the company’s filings.
At this time, I will turn the call over to the company’s President and CEO, Vince Sadusky. Vince?
Vincent L. Sadusky
Yeah, thanks Venice. Good morning and welcome to our NBC JV transaction conference call. I’ll begin by making a few opening remarks, and then I will hand it off to Rich Schmaeling, our Chief Financial Officer to take you through the details of the transaction.
I am very pleased that we are here today talking to you about the Comcast / GE Transaction that closed yesterday and the pending LLC Conversion transaction. These transactions will resolve once and for all the NBC JV guarantee and tax overhangs that created a cloud of uncertainty over our company for many years.
In addition, yesterday, we renewed our NBC affiliation agreements for all 7 television stations plus satellites that we own that are currently affiliated with NBC. The new agreements went into effect January 1, 2013 and expire January 1, 2017. We’ve been working very hard for a long time to resolve the JV and I’d like to spend just a moment of knowledge a number of people.
First, I would like to thank the teams in NBC and Comcast for pushing this transaction forward and for their continued support. I’d also like to thank many people like GE and GECC that over the years were willing to listen and entertain a number of different ideas for how we could unwind the joint venture. I’d also like to thank our hardworking and persistent LIN team and the great of professionals at Weil, Gotshal, and our advisers at Deutsche Bank. We won’t be here today without their commitment and their many important contributions.
I will now hand it over to Rich to take you through the details.
Richard J. Schmaeling
Thanks and good morning everyone. Yesterday in exchange for a $100 million payment to the NBC JV, which was used by JV to pay down the GECC Note to $715.5 million, LIN was released from its guarantee of the GECC Note. In addition, Comcast purchased the Note from GECC for $602 million and then GECC canceled the remaining Note balance of a $113.5 million.
As a result of this transaction, LIN will recognize a taxable gain of $715.5 million and we expect that about $142 million of this gain will be characterized as ordinary income and the remaining gain of about $773 million as capital gains. LIN intends to use its NOLs to shelter the ordinary income and an order to offset, in whole or in part the capital gains concurrent with the Comscast / GE transaction. LIN entered into an agreement to execute a transaction to convert into a partnership for tax purposes with the result that we expect to realize a built-in capital loss between LIN’s basis in the stock of its sub, LIN Television Corporation, and the fair market value of this stock as of the closing date of this transaction.
As further described in our press release the LLC Conversion is expected to generate sufficient capital losses to fully offset the recognized capital gains, if LIN’s stock price at the closing of the Conversion is less than or equal to approximately $10.75 per share. At closing prices greater than this amount up to approximately $12.20 per share, LIN will need to consume its remaining NOLs to offset the recognized capital gains. And at a closing price above $12.20, LIN will begin to incur cash taxes.
Copyright 2013 Seeking Alpha
Copyright © 2013 Microsoft. All rights reserved.
Quotes are real-time for NASDAQ, NYSE and AMEX. See delay times for other exchanges.
Fundamental company data and historical chart data provided by Thomson Reuters (click for restrictions). Real-time quotes provided by BATS Exchange. Real-time index quotes and delayed quotes supplied by Interactive Data Real-Time Services. Fund summary, fund performance and dividend data provided by Morningstar Inc. Analyst recommendations provided by Zacks Investment Research. StockScouter data provided by Verus Analytics. IPO data provided by Hoover's Inc. Index membership data provided by SIX Financial Information.