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Radio station operator Pacifica plans to pay a $1.8 million legal judgment owed to its Empire State Building landlord with a loan.
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Radio station operator Pacifica Foundation said it has settled its dispute with its Empire State Building landlord, relieving it of a $1.8 million court judgment that had brought the nonprofit to the brink of bankruptcy. The settlement with Empire State Realty Trust will also allow Pacifica’s WBAI station to terminate its Empire State Building lease next month, two years early. The deal, announced Thursday, also includes rent that has gone unpaid and penalties that have accrued since the New York State Supreme Court last year ruled in favor of the landlord over missed lease payments. Terms of the settlement weren’t disclosed, but a source familiar with the discussions said it was about $3 million. Pacifica said funding for the settlement was provided through nonprofit lender New York-based FJC, a foundation of philanthropic funds whose programs include providing secured loans to charities, including public radio and television stations. Pacifica also said supporters of Los Angeles station KPFK provided part of the loan. Pacifica owns five radio stations around the country. No payments will be due on the loan for the first 18 months, and then only interest payments will be due for another 18 months. At the end of the interest-only period, the loan must be paid in full. “That will give Pacifica three years to get back up to speed,” said Tom Livingston, an executive search professional who is serving as Pacifica’s interim executive director. “The judgment was a big weight hanging over us.” Pacifica still has financial challenges. Earlier this year Pacifica’s previous interim executive director said the foundation had about $8 million in debt. Since 2015, for example, Pacifica has failed to fund its employee retirement plan, which it now owes $750,000. Pacifica’s chief financial officer recently said he planned to quit next month. The foundation is behind on its deadline for audits. Pacifica had been looking for ways to deal with the $1.8 million judgment, worried that Empire State Realty could soon seize its assets. The foundation had considered chapter 11 bankruptcy as an option to deal with the missed lease payments, but most board members were in favor of seeking loans. Bill Crosier, a Pacifica board member affiliated with the foundation’s KPFT station in Houston, was in the bankruptcy camp, saying he is not sure how Pacifica will be able to repay a loan. Mr. Crosier is also a former interim executive director for Pacifica Foundation. The foundation also said Thursday it is in the final stages of completing an agreement to move its WBAI transmission facility to Four Times Square, a Durst Organization property. The signal strength in the new building will be about the same, Mr. Livingston said. The Pacifica board is also looking for a permanent executive director in a search that Mr. Livingston estimates will take about six months. His Baltimore-based firm, Livingston Associates, specializes in searches for public media stations. “These steps—getting a loan to resolve the judgment, release from the remainder of the lease, moving to our new site, and launching our search for a permanent executive director, are steps we are taking to give us the time to recover and improve our operations,” Nancy Sorden, Pacifica Foundation board chair, said in a statement. Ms. Sorden is with Pacifica’s WPFW in Washington, D.C. Pacifica’s being in default on the Empire State Realty judgment raises questions about whether it is also in immediate default on its new loan. But the foundation said that, with its new FJC loan, it has gotten a six-month waiver on meeting certain requirements. Pacifica’s shaky finances could force it to do a signal swap, in which another operator gets a chance to trade licenses with Pacifica in exchange for paying the foundation for a bigger coverage area. Pacifica said it was represented in its negotiations with Empire State by law firm Garvey Schubert Barer PC and Public Media Co., a consulting firm that advises public stations. Write to Becky Yerak at becky.yerak@wsj.com WSJ Pro Bankruptcy also covers distressed companies. Inclusion of a company in this category is not intended to suggest that it will file for bankruptcy protection, default on its debt or suffer any other financial failure. |
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