Mediaco Holding Inc. — Form 8-K Summary
Business Context and Reporting Period
MediaCo Holding Inc. filed a Form 8-K dated April 22, 2020, reporting entry into a material agreement with Emmis Operating Company related to proceeds from Emmis’s Paycheck Protection Program loan under the CARES Act. The filing is not a periodic financial report and does not provide quarterly or annual operating results.
Material Agreement and Financial Obligations
- Under the Loan Proceeds Participation Agreement, Emmis agreed to use certain PPP Loan proceeds to pay wages of employees leased to MediaCo under the existing Employee Leasing Agreement.
- Emmis agreed to waive up to $1.5 million of MediaCo’s reimbursement obligations under the Employee Leasing Agreement, to the extent the PPP Loan is forgiven.
- MediaCo agreed to promptly pay Emmis 31.56% of any PPP Loan amount that Emmis is required to repay, limited to the amount of reimbursement obligations waived by Emmis.
- Standard General L.P., on behalf of the funds for which it serves as investment adviser, agreed to guarantee MediaCo’s obligations under the agreement.
Changes, Outlook, and Risks
The agreement creates a potential direct financial obligation for MediaCo. The ultimate obligation depends on the amount of the PPP Loan, the portion forgiven, and the amount Emmis is required to repay. The filing does not state the PPP Loan principal amount, the amount expected to be forgiven, or any payment currently due.
MediaCo included customary forward-looking statement warnings, noting that actual results may differ materially because of risks described in its SEC filings. No specific operating guidance, revenue outlook, liquidity forecast, cash-flow forecast, or management performance commentary is provided.
Important Facts to Verify
- Verify the total PPP Loan proceeds received by Emmis and the portion eligible for or receiving forgiveness.
- Verify the amount of MediaCo reimbursement obligations waived under the Employee Leasing Agreement.
- Verify whether MediaCo has made, or expects to make, any payments under the LPPA.
- Review Exhibit 10.1 for the complete allocation, guarantee, payment, and default provisions.
- Note that the filing text refers to the agreement in Item 2.03 but incorporates the Item 1.01 disclosure; the filing should be reviewed for the operative disclosure and exhibit language.