Westwood amends covenants, agrees to use tax refund to pay down notes

By Caroline Salls

Pittsburgh, March 31 - Westwood One, Inc. has entered into amendments to the securities purchase agreement that governs its senior notes and its senior credit facility from Wells Fargo Capital Finance, LLC, according to an 8-K filed with the Securities and Exchange Commission.

As part of these amendments, the company is permitted a limited adjustment to its calculation of EBITDA and has agreed to use the first $12 million, and any amount in excess of $17 million, of the gross proceeds of the tax refund it expects to receive in the second or third quarter of 2010 to pay down the senior notes.

Specifically, Westwood One has agreed to pay down at least $10 million principal amount of senior notes upon the earlier of the fifth business day following the receipt of at least $10 million in proceeds from the tax refund and Aug. 16.

Under each agreement, the company's debt leverage covenants were amended to be measured on a trailing four-quarter basis, beginning with the quarter ended March 31.

As part of the securities purchase agreement amendment, the quarterly debt leverage covenants for 2010 have been eased to levels of 8.0, 7.5, 7.0 and 6.5, respectively, and the original quarterly leverage covenants for 2010 now apply to 2011. The original quarterly covenants for 2012 remain unchanged.

The quarterly debt leverage covenants that appear in the senior credit facility have also been amended to maintain the 15% cushion that exists between the debt leverage covenant applicable to the facility and the corresponding covenant in the securities purchase agreement.

Additionally, if the company's senior debt leverage covenant is greater than 4.5 to 1.0 as of the last day of the fiscal quarter ending Dec. 31, 2010, the company will pay a fee equal to 2% of the outstanding principal amount of the senior notes on the maturity date to each noteholder.

Wells Fargo will also be paid a fee equal to one-quarter of the amount of the senior leverage amendment fee times the sum of the outstanding principal amount of the term loan plus the maximum amount of the revolving credit facility, each as of Dec. 31, 2010, divided by the outstanding principal amount of the senior notes.

If the company's revolving credit facility has been terminated as of Dec. 31, 2010, Wells Fargo will instead receive a fee that will be calculated using the sum of the principal amount of the outstanding advances and letters of credit used as of that date.

New York-based Westwood One is an independent provider of network radio programming.

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