By Angela McDaniels
Tacoma, Wash., April 27 - Westwood One, Inc. revealed more information about the refinancing of its outstanding long-term debt and the recapitalization of its equity in an 8-K report with the Securities and Exchange Commission on Monday.
As reported on Thursday, Westwood One's lenders exchanged all $241 million principal amount of their outstanding debt for $25 million in cash, $117.5 million principal amount of new senior secured notes due July 15, 2012 and 34,962 shares of 8% series B convertible preferred stock representing about 25% of Westwood One's equity.
The $241 million of debt included $50 million principal amount of 4.64% series A senior guaranteed notes due Nov. 30, 2009, $150 million of series B 5.26% senior guaranteed notes due Nov. 30, 2012, $9 million of revolving credit loans and $32 million of term loans, according to the SEC filing.
The new notes bear interest at 15%, payable 10% in cash and 5% in kind. Interest is payable at maturity.
The new notes can be prepaid at any time without penalty or premium and are guaranteed by the company' domestic subsidiaries.
Preferreds
As part of the recapitalization, Gores Radio Holdings, LLC exchanged all of its 7.5% series A convertible preferreds for 75,000 shares of 7.5% series A-1 convertible preferreds.
Gores also purchased 25,000 shares of 8% series B convertible preferreds for $25 million in cash.
The liquidation preference is initially $1,065 per share for the series A-1 preferreds and $1,000 per share for the series B preferreds.
For both series, dividends will be compounded quarterly and added to the liquidation preference. If the preferreds remain outstanding after June 19, 2013, the dividend rate will increase to 15%.
The preferreds are convertible into shares of common stock at any time. The conversion price is $0.03443 for the series A-1 preferreds and $0.03601 for the series B preferreds.
The company said both series of preferreds will be automatically converted on the first date on which there are enough authorized and unissued shares of common stock under the company's restated charter to allow conversion of all preferreds then outstanding.
After March 19, 2013, the company can call the series A-1 preferreds if it concurrently redeems the same proportion of the series B preferreds on the same terms and at the same time.
If the series A-1 preferreds remain outstanding after Dec. 19, 2013, the liquidation preference per share will increase by 50%.
Gores is an entity managed by Gores Group, LLC, Westwood One's largest stockholder. It held all of company's 7.5% series A convertible preferreds.
As a result of the recapitalization, Gores owns about 74.8% of Westwood One's equity with respect to its preferred stock, and existing common stockholders own about 2.5% of Westwood One's outstanding equity.
As part of the closing, Gores assumed control of Westwood One's board of directors and named three designees to the board.
Credit facility
Westwood One also obtained a new credit facility due July 15, 2012 with Wells Fargo Foothill, LLC comprised of a $15 million senior unsecured revolving line of credit and a $20 million subordinated unsecured term loan.
The revolver includes a $1.5 million letter-of-credit subfacility.
Interest is Libor plus 450 basis points, with a Libor floor of 2.5%.
The company said it borrowed the entire amount of the term loan on the closing date. The proceeds will be used to complete the restructuring.
Gore has provided a guarantee of the term loan and revolver.
No-shop period
The company said it has a 35-day "no shop"/market check period that will end on May 28.
During this time, Westwood One can, subject to some limitations, enter into a definitive agreement with a party other than Gores providing for the acquisition of 100% of all classes of the company's equity securities or 100% of the company's assets.
If the company chooses an alternative proposal, it would pay a fee to Gores that would include $90 million, representing the liquidation preference the series A-1 preferreds, and a make-whole premium of $15 million; $25 million, representing the liquidation preference of the series B preferreds; and $3 million, representing the fee for providing the Gores credit guarantee.
The company will hold a stockholder meeting to seek approval to issue enough stock to convert the preferreds.
New York-based Westwood One is an independent provider of network radio programming.
Notes
| Issue: | Senior secured notes
|
| Amount: | $117.5 million
|
| Maturity: | July 15, 2012
|
| Coupon: | 15%, 10% in cash and 5% in kind; payable at maturity
|
| Price: | Par
|
|
|
| Series A preferreds
|
| Issue: | Series A-1 convertible preferred stock
|
| Shares: | 75,000
|
| Dividends: | 7.5%, with step up to 15% on June 19, 2013
|
| Liquidation preference: | $1,065
|
| Conversion price: | $0.03443
|
| Call option: | After March 19, 2013
|
|
|
| Series B preferreds
|
| Issue: | Series B convertible preferred stock
|
| Shares: | 25,000
|
| Dividends: | 8%, with step up to 15% on June 19, 2013
|
| Liquidation preference: | $1,000
|
| Conversion price: | $0.03601
|
| Call option: | After March 19, 2013
|
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