Spectrum Radio Group financing issues

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unchoopfan
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Spectrum Radio Group financing issues

Post by unchoopfan » Wed Apr 19, 2017 2:31 pm

'Legal issues,' delinquent loans forcing county to re-think economic development program
John Mark Shaver/Fairmont News STAFF WRITER

A Marion County program designed to give new or existing businesses low-interest funds for expansion and additional jobs is changing because of what officials say are “legal issues” involving two local recipients.

According to County Administrator Kris Cinalli, out of more than 30 loans awarded by the Marion County Development Authority (MCDA), Spectrum Radio and Demus Specialty Foods Inc. have yet to repay the debt they’ve incurred.

Spectrum Radio Group, which owns Rock 94, Variety 101, News-Talk 1490 and Sports-Talk 920, was loaned $75,000 in 2013, according to a recent audit of the loan program.

Spectrum, located at 450 Leonard Ave., was set to pay back the loan in quarterly installments of $562 with 3 percent interest, but the company made only two or three payments before stopping them altogether about a year ago, Cinalli told The Fairmont News.

“They’ve basically made no progress in the payback because by the time you factor in interest, those couple of payments that they made really don’t amount to anything,” Cinalli said. “So basically, they owe the whole amount.”

Cinalli said Spectrum officials applied for the loan in July or August of 2013, with the first payment scheduled for September of that year.

“We were told that they wanted a ‘mix’ of funding from several different sources, which wasn’t uncommon, especially since we generally only provided secondary funding behind a bank pursuant to our loan program guidelines,” Cinalli said.

Spectrum Radio Group purchased Fantasia Broadcasting Inc.’s licenses in 2013 to take ownership of the stations. That purchase marked the newly formed Spectrum’s first and only acquisition to date.

“The $75,000 was basically closing the gap in financing,” Spectrum co-managing member Alan Michaels said. “I prefer to refer to it as part of the capital stack, including equity and borrowing. One source of borrowing is the (MCDA). We thought it was a good deal with the county.”

But, according to Michaels, the final result was more complicated, and the business didn’t grow as expected.

“Unfortunately, we’ve been operating this station for several years, and we’ve had difficulty meeting our financial obligations because (the business) hasn’t expanded like we thought it would,” Michaels said. “Some business deals work out, and some don’t. We tried really hard to make this one work. ...”

Cinalli and county attorney Chuck Shields said the county has refrained from taking legal action against Spectrum, and officials hope that a resolution can be reached civilly between the two parties.

“We try to get things taken care of before we actually start suing people,” Shields said. “That doesn’t mean we won’t. If we don’t get some satisfaction from (Spectrum), then we’ll take all of the necessary legal action that’s available to us.”

Although the county is contemplating taking legal action against Spectrum, Michaels said the company can’t pay back the loan.

“It’s a bad loan,” Michaels said. “They have certain rights and remedies, but from a realistic standpoint, if they try to sue us for the money, then there’s still no money left available. It would be a waste of time and legal fees.”

Michaels said Spectrum owes money to other lenders besides the MCDA, all of which are subordinate to a senior debt to the Small Business Administration. To pay off the senior debt, Michaels said Spectrum must sell the radio station but can’t do so until the MCDA releases its lien on the business.

“It’s my understanding that there was a meeting and that the commission voted, reluctantly, in favor of providing the release,” Michaels said. “I understand that (a) county commissioner has spoken with the county attorney not allowing the release to take place.”

However, Cinalli said that was not the case and that the County Commission isn’t planning on releasing the lien anytime soon.

“They do have a request in to release that, but at this time we have no plans to do so,” Cinalli said. “They had a motion to pass it contingent upon ... certain pieces. When that information came in, it didn’t meet that criteria.”

The guidelines for the loan program state that the MCDA can grant a loan up to $50,000, although the Marion County Commission can approve additional funding up to an aggregate of $100,000. At $75,000, Spectrum Radio’s loan was the largest listed.

Shields said the county started working with Spectrum sometime this year in hopes of avoiding legal action.

Tom Taggart
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Re: Spectrum Radio Group financing issues

Post by Tom Taggart » Thu Apr 20, 2017 12:24 pm

Approval to transfer the four stations to LHTC of Latrobe Pa. granted by the FCC in December, but apparently the deal has not been closed yet.

JKF18
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Re: Spectrum Radio Group financing issues

Post by JKF18 » Thu Apr 20, 2017 8:24 pm

If the deal falls through with the group from PA, there is always a chance the Spectrum media stations could be bought out by AJG. Of course it would be AJG Broadcasting of Fairmont, In Trust, LLC. But not in anyway, shape or form, a division of WV Radio Corp. :D

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Re: Spectrum Radio Group financing issues

Post by unchoopfan » Wed May 17, 2017 11:57 am

MCDA, WVJIT, Spectrum continue stalemate over delinquent loan
Fantasia: '...if this thing unwinds, it all comes back to me ... and I’ll end up putting the thing back together and paying it off'

John Mark Shaver/Fairmont News STAFF WRITER

More than one-third of the money used to purchase or operate four Fairmont-based radio stations in 2013 came from government entities, The Fairmont News has learned through open records requests and research of government documents.

The stations were sold by Fantasia Broadcasting Inc. to Spectrum Radio Group for a reported $1.25 million.

The new owners borrowed money from the Marion County Development Authority (MCDA) and the West Virginia Jobs Investment Trust (WVJIT) and have yet to pay back much, if any, of the money owed, records show. They also received money from the WVJIT as an investment, making the state about one-quarter owner in the operation.

According to filings by the Federal Communications Commission, the sale took place in March 2013, one month before Spectrum approached the Marion County Development Authority for a $75,000 loan.

The filing states that in the $1.25 million sale, $750,000 would be paid by wire transfer to Fantasia Broadcasting owner Nick Fantasia, with another $450,000 to be delivered in the form of a promissory note.

According to audio recordings of MCDA Executive Committee meetings, obtained by the Fairmont News via an open records request, Fantasia Broadcasting Inc. owner (Fantasia), who at the time sat on the MCDA Executive Committee, appeared to make an oral agreement to pay Spectrum’s loan if the loan fell through.

“The other side of this, too, is, if this thing unwinds, it all comes back to me,” Fantasia said during the committee’s April 3, 2013, meeting. “So, without signing a formal, personal guarantee, it’s all going to come back to me and I’ll end up putting the thing back together and paying it off. If you want a second better than me telling you if they DQ, I’ll take it. I’m taking it back, and I’ll pay it off. You got that. Nobody is going to get left, here.”

The loan indeed turned sour, and in the four years since, Spectrum has made little progress in paying off what Spectrum co-managing member Alan Michaels called a “bad loan.”

During the MCDA Executive Committee’s Jan. 8 meeting, from which Fantasia was absent, Marion County Commission President Ernie VanGilder brought up the oral agreement Fantasia made four years prior.

“This loan was made, and I want pretense and I want pretense only,” VanGilder said in the meeting. “I expect it to be paid back in that fashion. I don’t think we can take any other action, but I will ask (Nick) directly if that’s his intentions, and if not, I think we should look into filing some type of legal immediately. This time, I don’t want to take six months. I want to be a damn shark in the water and get it resolved.”

One month later, during the MCDA Executive Committee’s Feb. 8 meeting, Fantasia acknowledged he made an oral agreement in 2013, but said he would help solve the problem – not pay the loan off himself.

“What I said in the meeting was if this thing unwinds, I would make sure the county got paid,” Fantasia said during the meeting. “That didn’t say it would fall back on me. What I said in the meeting was if this thing unwinds, I would make sure the county got paid.”

VanGilder and Fantasia had a lengthy discussion during the Feb. 8 meeting, with VanGilder saying he wouldn’t have agreed to the loan if not for Fantasia’s verbal agreement, and Fantasia offering to give up his position on Spectrum’s accounts receivable, allowing for the county to obtain money that would have otherwise gone to Fantasia himself.

VanGilder condemned the MCDA’s way of handling the Spectrum loan during the Feb. 8 meeting and requested a change in the process for the future.

“I wouldn’t have made the loan unless it was personally guaranteed,” VanGilder said. “I’ll tell you, our paperwork has been so bad on all of these freaking loans. I would make a suggestion to this board right now that we never handle any paperwork internally and we hire an outside attorney to do it from this point on.”

Also in the Feb. 8 meeting, Fantasia pushed for the MCDA to allow for a loan modification so Spectrum could sell the station, which in turn, Fantasia said, would allow the county to collect at least partial money from Spectrum’s accounts receivable.

However, both the MCDA and the WVJIT, to which Spectrum owes $165,000 from a 2015 loan, are not interested in such a deal, and have stated their intentions to hold onto the station as collateral until their respective loans are paid in full.

The WVJIT denied The Fairmont News’s open records request for documentation regarding Spectrum Radio Group, and said in a letter that “such material consists of trade secrets or commercial or financial information regarding the financial position or business operation of such business, shall not be considered public record, shall be exempt from disclosure,” according to West Virginia Code.

However, the WVJIT did provide information regarding its investment and loan to Spectrum, saying that the WVJIT’s initial investment of $285,000 can reach up to $400,000 and the $165,000 loan can reach up to $200,000, although further investments or loans have not occurred.

With both Spectrum and the MCDA holding their positions strong, the stalemate continues, and an end to the issue remains out of reach.

Nick Fantasia could not be reached for additional comment.

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Re: Spectrum Radio Group financing issues

Post by JKF18 » Wed May 17, 2017 7:36 pm

Yes, let's not forget WMMN is doing so poorly they have fired up their FM transmitter on 95.7.

The "new" buyer did not plan and develop this overnight. I smell something rotten.

Tom Taggart
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Re: Spectrum Radio Group financing issues

Post by Tom Taggart » Thu May 18, 2017 8:16 am

The translator is a 250 mile waiver move-in under last year's window. LHTC--the buyer of WMMN--bought the translator from a Kentucky group, and proposed to modify the license to cover Morgantown as a translator for WMMN.
So this is an LHTC project--not Spectrum. The Spectrum owners have had little connection with the Fairmont stations for more than a year, the principal creditor has had Fantasia run the stations while a sale was arranged.

Note that Spectrum (nor LHTC when the sale closes) owns much beyond the licenses, & some equipment, Fantasia owns the studio building and WMMN tower site, the 100.9 site is leased from a volunteer fire department. The county will probably get paid of when the sale closes, the state may get something. You can't have a lien on a broadcast license, so both entities essentially have a lien on the equipment.

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