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Obstacle to KOCE Sale May Be Gone

The buyer says it can get a loan without the PBS affiliate's owner, a community college district, being at risk in case of a default.

March 16, 2004|Kimi Yoshino | Times Staff Writer

In a last-minute effort to appease Orange County community college trustees and save a deal to preserve the local PBS station, KOCE-TV Foundation officials said Monday they could secure a bank loan to buy the station without exposing the district to financial risk.

"The obstacles as we understand them have been removed," said foundation President Bob Brown. "[The deal] should be approved. I'm hoping and praying it's going to happen."

Trustees are scheduled to vote Wednesday on whether to accept the foundation's offer to buy the district's public television station. Three trustees -- enough for majority approval -- said Monday they would OK the deal if the details were in order.

"I'm feeling pretty good," Trustee Jerry Patterson said. "I think it's finally going to happen."

Unresolved, though, is a lawsuit filed by a religious broadcaster based in Texas, angry over the rejection of its cash-rich bid to buy the station.

The Coast Community College District has been trying for two years to save the station in the face of state budget cuts.

Trustees agreed in October to sell KOCE-TV to a foundation controlled and supported by some of Orange County's wealthiest business executives, who promised to keep the Public Broadcasting Service affiliation.

The foundation's $32-million deal called for an $8-million down payment with no payments during the first five years and the remainder paid over 30 years with no interest. Some experts have said the deal is worth less than $20 million to the college district in current dollars.

That deal grew precarious last week when trustees discovered the foundation needed a $10-million bank loan to cover the down payment and operating expenses. To qualify for the loan, foundation officials said, the bank wanted first claim in seizing the station's assets in the event of default.

Trustees called the condition a deal breaker and said they had no intention of exposing the district to that kind of risk.

But Monday, foundation officials said they had talked to more banks and would be able to secure the loan without pledging the station assets.

"We've been talking to lenders, and it appears that based on where we are with raising pledges and guarantees that we would be able to get financing," said Brown, a retired president of Toshiba America. The foundation has raised about $4 million toward the acquisition.

Daystar Television Network, the nation's second-largest Christian broadcaster, had offered to buy the station in a $25.1-million cash deal. When its offer was rejected, Daystar sued.

Last week, Daystar said that if it were allowed to buy Channel 50, it would drop its lawsuit and set aside part of its digital signal for public broadcasting.

Given signs increasingly pointing toward approval of the foundation bid, Daystar attorney Richard Sherman said the televangelist organization would continue with the lawsuit. Trustees are scheduled for depositions next week.

"Our legal point is that we are the highest responsible bidder and it should be given to us," said Sherman, who accused the district of having its "head in the sand" and naively accepting the foundation's offer when it had not demonstrated the ability to come up with the money to cover the sale.

"We're not going to default on the loan," Brown said. "We expect to have guarantees. We're confident we've covered the issues."

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