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LIN TV Corp. Executes First Of Two Transactions To Resolve NBC JV Overhangs

Funding for the $100 million capital contribution to the NBC JV and transaction fees and expenses of approximately $7 million was provided by a combination of cash on hand, borrowings under LIN Television Corporation’s revolving credit facility and a new incremental term loan under its existing senior secured credit facility. This incremental facility is a five-year, $60 million term loan, priced at LIBOR+300bps, with a 1% LIBOR floor.

Commenting on the Comcast / GE Transaction, LIN’s President and Chief Executive Officer Vincent L. Sadusky said: “We are very excited about this transaction because it is the first step in resolving once and for all the NBC JV guarantee and tax overhangs that have in recent years limited our strategic options and have kept some investors on the sidelines. We plan to move as rapidly as practical to execute the merger that will cause the LLC Conversion and expect to close this transaction within the next four to six months.”

LLC Conversion Transaction Overview

The LLC Conversion will be effectuated by merging LIN into LIN Media LLC, whereby upon completion of the merger LIN Media LLC will be the surviving entity. We expect to be able to complete this transaction within the next four to six months, depending largely on how long it takes to complete the SEC review of the necessary registration statement and proxy materials and the time it takes to solicit and complete the formal vote and approval of our shareholders along with other customary closing conditions. Based on this plan, shares of LIN (classes A, B and C) will convert into like shares representing limited liability company interests of LIN Media LLC on a one to one basis with substantially equivalent interests and privileges (e.g., class A to class A).

The LLC Conversion is expected to generate sufficient capital losses to fully offset the capital gains recognized in the Comcast / GE Transaction if LIN’s stock price at the closing of the LLC 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 is expected to consume its remaining NOLs to fully offset the recognized capital gains. For each added $1.00 per share that LIN’s stock price exceeds $12.20 at closing, we expect to incur cash income taxes of approximately $19 million. For example, if LIN’s stock price at the closing of the LLC Conversion was $14.20 per share, we would expect to incur cash taxes of approximately $38 million to satisfy the federal and state income tax liability related to the unsheltered portion of the recognized capital gains.

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