Gray days ahead

[genlock]

Gray Television Inc. said Monday that it will likely be out of compliance with certain financing rules by the end of the month, which could lead lenders to demand faster debt repayment.

Its share sank.

The company, which operates 36 television stations around the U.S., said the loss of advertising revenue -- particularly from the automotive industry -- has hampered its ability to generate cash. That means it expects to violate a covenant requiring a specific ratio of debt to cash.

At the end of the fourth quarter, the company had $16 million in cash -- roughly half of the $30.6 million it had at the end of 2008. The company had about $791.8 million in long-term debt.

Gray said it is working to amend the credit facility with lenders, but said it was unsure if any agreement could be reached.

"If we are unable to obtain any required amendment or waiver on satisfactory terms to us, we would be in default under the senior credit facility and any such default could have a material effect on our liquidity and could allow the lenders that hold a majority of the outstanding debt under our facility to demand an acceleration of the repayment of all outstanding amounts under our senior credit facility," the company said in a statement.

Also Monday, Gray said its fourth-quarter revenue was $77.5 million, down 18 percent from $94.8 million during the same period in 2008. For the full year, revenue fell 17 percent to $270.4 million, down from $327.2 million in 2008.

Analysts surveyed by Thomson Reuters expected Gray, based in Atlanta, to have revenue of $71.3 million for the fourth quarter and $263.8 million for the full year.

Gray shares fell 25 cents, or 9.9 percent, to $2.28, in afternoon trading Monday.