Salem Communications needs to refinance 2010 maturities or face default

By Angela McDaniels

Tacoma, Wash., May 11 - Salem Communications Corp. warned that it may be difficult for it to refinance its pending debt maturities in 2010 because of the current conditions of the economy and capital markets and the continuing decline in radio revenues.

If the company is unable to refinance this debt, it will be in default under its credit facility and 7¾% senior subordinated notes due December 2010.

Should the company default, it may need to either obtain additional amendments or waivers from lenders or reorganize its capital structure, according to its 10-Q report for the first quarter filed with the Securities and Exchange Commission on Monday.

Salem Communications has $74.64 million of principal repayments due in 2010 and $249.88 million in 2011.

The company said it usually funds expenditures for debt service, operations, administrative expenses and capital expenditures from operating cash flow and, if necessary, proceeds from the sale of selected assets or radio stations.

Salem Communications is a Camarillo, Calif.-based commercial radio broadcasting company.

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