Paxson Communications Corporation Announces Delaware Court Ruling on Series B Preferred Stock Held By NBC.WEST PALM BEACH, Fla. -- Paxson Communications Corporation (AMEX AMEX See: American Stock Exchange :PAX) (the "Company" or "Paxson"), the owner and operator of the nation's largest broadcast television station group reaching 87% of U.S. households (approximately 95 million homes), announced today that on Friday, April 29, 2005, after the close of the financial markets, it received the memorandum opinion of the court in the suit filed against the Company in the Delaware Court of Chancery court of chancery n. pl. courts of chancery A court with jurisdiction in equity. Noun 1. court of chancery - a court with jurisdiction in equity chancery by NBC Universal, Inc. ("NBC NBC in full National Broadcasting Co. Major U.S. commercial broadcasting company. It was formed in 1926 by RCA Corp., General Electric Co. (GE), and Westinghouse and was the first U.S. company to operate a broadcast network. "), a subsidiary of General Electric Company. As previously disclosed, in August 2004, NBC filed a complaint against Paxson seeking a declaratory ruling as to the meaning of the terms "Cost of Capital Dividend Rate" and "independent" investment bank as used in the certificate of designation of Paxson's Series B preferred stock Stock shares that have preferential rights to dividends or to amounts distributable on liquidation, or to both, ahead of common shareholders. Preferred stock is given preference over common stock. Holders of preferred stock receive dividends at a fixed annual rate. held by NBC. Paxson engaged CIBC World Markets CIBC World Markets is the investment banking division of the Canadian Imperial Bank of Commerce. It helps governments, large companies, and other large institutions obtain capital and credit and is a primary dealer in U.S. Treasury securities. Corp. to determine the adjusted dividend rate of the Series B preferred stock as of September 15, 2004, the fifth anniversary of the original issue date of the Series B preferred stock. On September 15, 2004, the annual rate at which dividends accrue on the Series B preferred stock was reset from 8% to 16.2%. In October 2004, Paxson filed a counterclaim A claim by a defendant opposing the claim of the plaintiff and seeking some relief from the plaintiff for the defendant. A counterclaim contains assertions that the defendant could have made by starting a lawsuit if the plaintiff had not already begun the action. seeking a declaratory ruling that it was not obligated ob·li·gate tr.v. ob·li·gat·ed, ob·li·gat·ing, ob·li·gates 1. To bind, compel, or constrain by a social, legal, or moral tie. See Synonyms at force. 2. To cause to be grateful or indebted; oblige. to redeem, and would not be in default under the terms of the agreement under which NBC made its initial $415 million investment in Paxson if it did not redeem, the Series B preferred stock on or before November 13, 2004, the one year anniversary of the date on which NBC delivered a notice of demand for redemption of the Series B preferred stock. Paxson and NBC each moved for summary judgment or judgment on the pleadings Noun 1. judgment on the pleadings - a judgment rendered by the court prior to a verdict because no material issue of fact exists and one party or the other is entitled to a judgment as a matter of law on all issues, and the court heard oral argument on the parties' motions on February 14, 2005. The court held that the dividend rate on Paxson's Series B preferred stock should be reset to 28.3% per annum Per annum Yearly. as of September 15, 2004. The adjusted dividend rate continues to apply only to the original issue price of $415 million of the Series B preferred stock, and not to accumulated and unpaid dividends, the amount of which as of December 31, 2004, would increase from $185.7 million to $200.5 million. The court ruled in Paxson's favor as to the independence of CIBC World Markets Corp. and certain interpretive issues relating to the dividend rate reset, and denied the motions by both NBC and Paxson for judgment on the pleadings and NBC's alternative motion for summary judgment motion for summary judgment n. a written request for a judgment in the moving party's favor before a lawsuit goes to trial and based on recorded (testimony outside court) affidavits (or declarations under penalty of perjury), depositions, admissions of fact, answers as to whether Paxson has an obligation to redeem the Series B preferred stock held by NBC based on NBC's demand for redemption. Paxson has been advised by its legal counsel that because the litigation An action brought in court to enforce a particular right. The act or process of bringing a lawsuit in and of itself; a judicial contest; any dispute. When a person begins a civil lawsuit, the person enters into a process called litigation. regarding whether Paxson has an obligation to redeem the Series B preferred stock held by NBC is still pending, absent certain certifications by the court, the court's decision regarding the dividend rate reset is not final. Paxson is evaluating the court's memorandum opinion and the alternatives which may be available to the Company, including its rights of appeal. Additional information as to the background of these matters is contained in Paxson's Annual Report on Form 10-K/A for the fiscal year ended December 31, 2004, as filed with the Securities and Exchange Commission, under "Item 1. Business - NBC Relationship" and elsewhere therein. Forward Looking Statements This press release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. These statements include statements regarding the intentions, beliefs or current expectations of Paxson and its management. Actual results may differ materially from those predicted in Paxson's forward-looking statements, and are subject to risks and uncertainties, including the uncertainties inherent in litigation. There can be no assurance that the results, events or developments referred to in this release will occur or be realized. About Paxson Communications Corporation Paxson Communications Corporation owns and operates the nation's largest broadcast television distribution system. Paxson reaches 87% of U.S. television households via nationwide broadcast television, cable and satellite distribution systems. For more information, visit Paxson's website at http://www.pax.tv. Note: Paxson distribution data provided by Nielsen Media Research. |
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