Citadel Broadcasting buys back $55 million of its 1.875% convertibles

By Susanna Moon

Chicago, June 6 - Citadel Broadcasting Corp. said it completed its offer to buy up to $55 million of its 1.875% convertible subordinated notes due 2011

The company said it would pay $900 per $1,000 principal amount of the notes and to exchange all notes in excess of $55 million for its newly authorized amended convertible subordinated notes due 2011.

Investors tendered $329.47 million principal amount of the convertibles, of which $330 million were outstanding.

Citadel said it accepted all of the tendered notes. As a result, $526,000 principal amount of notes remains outstanding and $274.47 million of amended notes will be issued.

The cash tender and exchange offer for its $330 million of the convertibles began on May 7. The offer expired at 5 p.m. ET on June 5.

Holders of notes that are accepted in the tender offer will also receive accrued interest to the settlement date.

The company previously said that restated notes will initially have an interest rate of 4% per year, effective retroactively from Jan. 1.

If more than $165 million of amended notes are outstanding on Dec. 31, 2008, the interest rate will be raised to 6% retroactively from Jan. 1, and the annual rate from Jan. 1, 2009 forward will be amended to make holders whole for any discount at which the notes are then trading.

If no more than $165 million of amended notes are outstanding on Dec. 31, 2008, the interest rate will be raised to 8% from Jan. 1, 2009 to Dec. 31, 2009, and the annual rate from Jan. 1, 2010 forward will be amended to make holders whole for any discount at which the notes are then trading.

The amended notes will be callable at 90% of par plus accrued interest during 2008 and at 95% of par plus accrued interest during the first half of 2009. During the second half of 2009, they will be callable at 95% of par plus accrued interest if no more than $165 million of notes are outstanding or at par plus accrued interest otherwise.

Citadel will be required to redeem the amended notes in certain circumstances, depending on asset sales.

Settlement of the offer depends on conditions, including the receipt of tenders for a majority of the notes.

As previously reported, the company agreed in February to hold a tender offer as part of a preliminary agreement between Citadel and holders of a majority of the notes to settle litigation in the Supreme Court for the State of New York related to the notes.

In the lawsuit, some holders said the company's acquisition of the ABC Radio Network and radio station businesses from Walt Disney Co. represented a fundamental change under the note indenture and that Citadel was in default under the notes.

Under the preliminary agreement, the holders agreed to waive any claims relating to the acquisition.

Finalization of the settlement and of the timeframe for the tender offer depended on the receipt of consent from Disney and on confirmation that the noteholders who brought forth the suit are indeed holders of a majority of the notes. The former was received on March 13, the latter was confirmed on April 9 and the court dismissing the litigation on Apri1 10.

Citadel is a Las Vegas-based radio company.

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