Note 8 - Commitments and Contingencies

9 Months Ended

Sep. 30, 2018

Notes to Financial Statements

Commitments and Contingencies Disclosure [Text Block]

8

.

Commitments and Contingencies

From time to time, we are or

may

become subject to legal proceedings and claims that arise in the normal course of our business. In our opinion, the amount of ultimate liability, if any, with respect to known actions, will

not

materially affect our financial position. However, the outcome of any

one

or more matters cannot be predicted with certainty, and the unfavorable resolution of any matter could have a material adverse effect on us.

Pending Acquisition – Sioux Falls

On

May 1, 2018,

we entered into an agreement to acquire KDLT-TV (NBC), a television station serving the Sioux Falls, South Dakota market (DMA

110

), for

$32.5

million. The transaction is subject to regulatory approvals and other customary closing conditions. We expect that this transaction will close in late

2018

or early

2019,

using cash on hand.

Pending Merger with Raycom Media

On

June 

23,

2018,

we entered into an Agreement and Plan of Merger (the “Merger Agreement”) with, among others, Raycom, pursuant to which Raycom will become our wholly owned subsidiary. The aggregate consideration consists of

11,500,000

shares of our common stock,

$2.85

 billion in cash (subject to certain adjustments as set forth in the Merger Agreement) and

650,000

shares of a new series of perpetual preferred stock of the Company, with a stated face value of

$1,000

per share (the “New Preferred Stock”).

We have agreed to file a registration statement, following the effective time of the Raycom Merger, covering the resale of the shares of the common stock issuable in the Raycom Merger. 

Shares of the New Preferred Stock will be issuable to holders of warrants to purchase shares of Raycom capital stock outstanding immediately prior to the effective time of the Merger. The New Preferred Stock will accrue dividends at

8%

per annum payable in cash or

8.5%

per annum payable in the form of additional New Preferred Stock, at the election of Gray. The holders of the New Preferred Stock will

not

be entitled to vote on any matter submitted to the stockholders of the Company for a vote, except as required by Georgia law. Upon a liquidation of the Company, holders of the New Preferred Stock will be entitled to receive a liquidation preference equal to

$1,000

per share plus all accrued and unpaid dividends.

In connection with the Raycom Merger, we expect to (

1

) replace our existing

$100

revolving credit facility under our senior credit facility with a new

five

year revolving credit facility, the terms of which will provide for up to

$200

million in available borrowings and a maturity date extended until the

fifth

anniversary of the closing of the Raycom Merger, and (

2

) incur the

2018

Term Loan, which is expected to have a maturity date until the

seventh

anniversary of the closing of the Raycom Merger, subject to market conditions at the time of financing and pursuant to our financing commitment letter. In addition, Escrow Issuer expects to issue the

2027

Notes which Gray intends to assume upon consummation of the Raycom Merger. The proceeds of the

2018

Term Loan and the

2027

Notes would be used to fund a portion of the cash consideration payable in the Raycom Merger.

The consummation of the Raycom Merger is subject to the satisfaction or waiver of certain customary closing conditions, including the receipt of approval from the Federal Communications Commission and the expiration or early termination of the waiting period applicable to the Raycom Merger under the Hart-Scott-Rodino Antitrust Improvements Act. Either party

may

terminate the Raycom Merger if it is

not

consummated on or before

June 

30,

2019,

with an automatic extension to

September 

30,

2019

if necessary to obtain regulatory approval under the circumstances specified in the Merger Agreement.