Gregory Communications is getting an AM station that serves its city of license Elizabeth City NC and the nearby Outer Banks in a deal with Max Radio. The compensation package is heavily back-loaded.
The station is WGAI-AM. It’s a Class D on 560 kHZ with 1 kW-D, 500 W-N, DA2. It’s located in unrated territory south of Norfolk and north of Greenville-New Bern. Elizabeth-Nags Head was once rated by Arbitron but is no longer.
VP/CFO David Wilhelm signed off on the deal for Max, which retains several stations in the area, including WCXL-FM Kill Devil Hills NC, WCMS-FM Hatteras NC, WQDK-FM Gatesville NC, WZPR-FM Nags Head NC, WVOD-FM Manteo NC and WFMZ-FM Herford NC.
The buyer is headed by George A. Gregory.
The price is $100K, and it will be covered entirely by a promissory note, less payments made by Gregory to Max under an LMA that will go in to effect prior to closing.
RBR-TVBR observation: The LMA portion of this transaction is the classic LMA until closing, but with a twist.
Typically, this type of LMA is designed to allow the buyer to begin operating certain aspects of station operations prior to closing.
But in this case, the LMA actually functions as a head start of paying off the promissory note. There will be a one-time $5K fee that is sort of like a down payment, and the $1,583.33 monthly LMA fee is the exact same price Gregory will pay under terms of the note once the transaction closes. And all of the money spent in conjunction with the LMA counts toward the purchase price.
In other words, if there was no LMA, the fact that the entire value of the deal is covered by the note, the deal would be completely back-loaded. But since Gregory will in fact start paying off the note as soon as the LMA begins, it really isn’t entirely back-loaded.
