Westwood One lenders agree in principle to refinance long-term debt

By Caroline Salls

Pittsburgh, March 3 - Westwood One, Inc. has agreed in principle with its existing lenders to refinance all of its outstanding long-term debt, according to a company news release.

Specifically, the company said it will exchange the roughly $241 million of existing debt for $25 million in cash, a series of new senior secured notes due July 15, 2012 in an expected principal amount of $117.5 million and 25% of the equity in Westwood One.

As part of the refinancing, entities managed by Westwood One's largest stockholder The Gores Group, LLC are expected to purchase $25 million of new preferred stock and guarantee or otherwise provide credit support for a $20 million subordinated term loan and a $15 million unsecured revolving line of credit.

The term loan and line of credit are expected to be provided by a new institutional lender and to be used to finance working capital and other general corporate purposes.

Gores will own 72.5% of Westwood One's equity with the new preferred stock it purchases and acquire control of the company. Existing common stockholders would own 2.5% of Westwood One's outstanding equity.

According to the release, the refinancing and infusion of additional capital will be significant milestones in Westwood One's turnaround initiative, which includes actions to reduce debt, drive revenue initiatives, improve operating efficiency, increase financial flexibility and acquire new properties to further enhance the company's traffic reporting, news, sports and entertainment leadership positions.

"The refinancing is an essential part of our turnaround plan," Westwood One president and chief financial officer Rod Sherwood said in the release.

"We appreciate that our lenders, Gores and our other investors continue to value our business and recognize the opportunity for long-term growth."

The transaction is subject to the negotiation of definitive documentation and customary closing conditions, including antitrust regulatory approvals.

The refinancing and the Gores investment are expected to occur in the second quarter of 2009, the release said.

Moelis & Co. is serving as Westwood One's financial adviser, and Chanin Capital Partners is serving as financial adviser to The Gores Group.

New York-based Westwood One supplies radio and television stations with information services and programming.

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