Posted by chicagomedia.org on April 02, 2009 at 18:28:53:
In Reply to: ABC Radio Networks Becomes Citadel Media posted by chicagomedia.org on April 02, 2009 at 18:28:13:
Citadel Reworks Credit Agreement
April 2, 2009
Citadel Broadcasting has reworked some of its impending credit to give the company more flexibility in 2009, though shareholders could still face trouble in 2010. In a filing with the SEC, Citadel noted it had amended its credit agreement and is now required to have $150 million in cash available as of January 15, 2010. Also, Radio And Television Business Reports notes that if the company has over $30 million in cash available, it must be put aside in a collateral account for its lenders.
In the SEC filing, Citadel notes that "Based on the current economic and capital markets and the continuing decline in radio revenues, it will be difficult for the Company to meet these requirements in 2010, especially those commencing on January 15, 2010. If we fail to do so, we will be in default under our Senior Credit and Term Facility and would also be in default under the terms of our convertible subordinated notes. Should we default, our indebtedness may be accelerated, we will likely not be able to satisfy these obligations, and we may need to either obtain an additional amendment or waiver from lenders or reorganize our capital structure."
"In the event we default on our Senior Credit and Term Facility, the Company may be required to reorganize its debt and equity structure, which could result in the interests of our public shareholders and debt holders being diluted or eliminated."
Additionally, the SEC filing notes the importance of Chairman/CEO Farid Suleman's involvement in the company's fiscal standing. Suleman is up for re-election this year on the Board of Directors, according to RBR/TVBR, which also reports that shareholders could withold votes from him as a commentary on his performance running the company.
In the filing, Citadel writes that "our business depends upon the continued efforts, abilities and expertise of our executive officers, primarily our chairman and chief executive officer, Farid Suleman. We believe that the unique combination of skills and experience possessed by Mr. Suleman would be difficult to replace, and his loss could have a material adverse effect on the Company, including impairing our ability to execute our business strategy. Mr. Suleman does not have a formal employment agreement with the Company and is not contractually bound to provide his services to the Company for any specific period of time."
(FMQB)