Citadel Broadcasting files bankruptcy amid deal to reduce debt

By Caroline Salls

Pittsburgh, Dec. 21 - Citadel Broadcasting Corp. made a pre-packaged Chapter 11 bankruptcy filing Sunday in the U.S. Bankruptcy Court for the Southern District of New York after reaching an agreement with more than 60% of its senior secured lenders on the terms of a pre-negotiated financial restructuring that would extinguish $1.4 billion of debt, according to a company news release.

The company said it only solicited support for the restructuring proposal from private-side lenders, but it still received support from more than 60% of its total secured lenders.

Under the restructuring:

• Citadel's $2.1 billion secured credit facility will be converted into a $762.5 million new term loan;

• Holders of senior secured claims will receive a share of the new term loan and 90% of the new common stock in reorganized Citadel;

•Holders of unsecured claims, including the secured lenders' $900 million deficiency claim, unsecured notes and general unsecured claims will have the option to receive either a share of cash equal to 5% of the unsecured claim, capped at $2 million, or 10% of the new common stock.

"We are pleased with the support from the majority of our senior lenders, and we look forward to working with the remaining senior lenders and other stakeholders to ensure a complete and expeditious restructuring," chief executive officer Farid Suleman said in the release.

"Our business will continue as usual, and the company will work to emerge from the restructuring process as quickly as possible."

To fund its restructuring, Citadel has reached an agreement with its secured lenders to access more than $36 million of cash on hand, as well as all cash flow from operations, which it said will be more than sufficient to fund operations during the restructuring process.

Debt details

According to court documents, Citadel had $1.401 billion in assets and $2.464 billion in debt at Oct. 30.

The company's largest unsecured creditors include:

• JPMorgan Chase Bank, NA of New York with a claim in an unknown amount;

• Wilmington Trust Co. of Minneapolis, with a $49.16 million claim;

• The Walt Disney Co. of Burbank, Calif., with an $11.2 million claim;

• American Society of Composers, Authors and Publishers, based in New York, with a $1.11 million claim; and

• Broadcast Music, Inc. of Nashville, Tenn., with a $1.11 million claim.

Lazard Freres & Co. LLC is the company's financial adviser for the restructuring.

Citadel is a Las Vegas-based radio broadcasting company. Its Chapter 11 case number is 09-17442.

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