Cumbre Communications, which hopes to buy the Spanish-language radio station, says the filing is in response to learning that the station towers are on land with potential environmental problems.

01:00 AM EST on Thursday, February 19, 2004

BY TATIANA PINA
Journal Staff Writer

PROVIDENCE -- Cumbre Communications Corp., the company that runs Spanish-language station WALE Super Max (990-AM) has filed for protection under Chapter 11 of the federal bankruptcy code while it works out an arrangement to cover the cost of a possible hazardous waste cleanup on station property.

Cumbre filed the petition in U.S. Bankruptcy Court on Jan. 9, eight months after the station went on the air.

Last May, Cumbre submitted the high bid of $2.35 million in a bankruptcy auction in Arizona for the station, then owned by North American Broadcasting Co., a Massachusetts corporation whose owner, Francis Battaglia, lives in Scottsdale, Ariz.

Craig Rapoza, Cumbre's vice president, said Cumbre filed for Chapter 11 to avoid its Jan. 9 closing deadline with North American Broadcasting Co., after learning of potential environmental problems on the 60 acres in North Smithfield and Burrillville where the station's towers are.

"Filing Chapter 11 gave us time to work out a deal," Rapoza said.

Last week, Cumbre and North American Broadcasting reached a settlement in which Cumbre agreed to pay $975,000 to North American Broadcasting toward the $2.3-million purchase of the 50,000-watt station. North American Broadcasting agreed to set aside $400,000 in case Oba Technology, the company Cumbre hired to inspect the site where the radio towers are, finds environmental problems.

"North American hid environmental issues from us," Rapoza said.

During a title search, Cumbre discovered that the state Department of Environmental Management had ordered North American Broadcasting to clean up PCBs on its Burrillville property in 1991, Rapoza said.

According to a DEM press release from 1995, the DEM fined North American Broadcasting $15,000 after finding improper storage of hazardous waste at the site of the station's radio tower in Burrillville. The DEM determined that North American Broadcasting had left 30 cubic yards of contaminated soil it had cleared from the property in a roll-off container on the site for more than three years.

Cumbre's lawyer, Peter D'Amico, and the lawyers for North American Broadcasting, Alan & Sala PLC of Phoenix, met in Boston last week before bankruptcy Judge William C. Hillman and came to an agreement during an emergency session.

According to a document filed during the emergency bankruptcy hearing with Hillman, Cumbre paid North American Broadcasting $975,000 to be placed in escrow until the settlement of the purchase agreement.

North American Broadcasting agreed to a $400,000 holdback on the balance due, to be held in an Arizona escrow account to be used for potential remediation costs.

Before Cumbre can withdraw from Chapter 11, a bankruptcy court in Arizona will have to approve Cumbre's latest agreement with North American Broadcasting, Rapoza said.

Papers filed in bankruptcy court show that the radio station owes $935,866 to creditors. Of that amount, $405,000 is listed as being owed to Craig Rapoza, the vice president of the organization and $419,000 is owed to Jaime Aguayo, the former president and chief executive officer of Cumbre.

According to Manolo Pazos, the general manager of Cumbre's Super Max station, Aguayo left because the purchase of the station was taking too long. Rapoza said Aguayo would still be around in some capacity.

Aguayo, who touted the station as the conservative alternative to other local Spanish-speaking stations, transferred the 79 percent of shares he had in the company to Peter Arpin, now the president of the station, Pazos said.

Rapoza owns 10 percent of the company shares, and Pazos owns the other 10 percent.

Arpin, the son of moving mogul Paul Arpin, already owns a couple of radio stations, Rapoza said. Arpin and Rapoza put up the money to pay North American Broadcasting the $975,000, Rapoza said.

Rapoza said the station is worth it. With its 50,000-watt power, the 24-hour station can reach beyond Rhode Island to parts of Massachusetts and Connecticut and can sell ads where other stations cannot, he said. The company has entered an agreement with The 700 Club, which will run its programing from 11 p.m. to 6 a.m., Pazos said.

Cumbre plans to change its call letters from WALE to WMAX, Rapoza said. The company is operating under a $25,000 a month lease from North American Broadcasting.

"The neighborhood needs this station. The community doesn't have a station that does what we do . . . [The other Spanish-language stations] have the shock-jock talk. We want to do like Salty Brine," Rapoza said.

The station is in transition at a time when Spanish-language radio stations are gearing up for the political season with politicians clamoring for ads to reach the growing Latino voting community.

When Aguayo entered the competitive world of Spanish radio last May, he boasted that he would bury them in a few months. So when news got out of the Chapter 11 filing, the local Spanish-language airwaves were jammed with a see-you-later talk.

Reynaldo Almonte, who along with Tony Mendez of El Poder WPMZ (1011-AM) pursued the purchase of WALE, said the Super 990 Chapter 11 is a ploy to gain time to pay for the station.

"Everybody knew about the problems with that station. Why didn't they do their homework," he said.