Citadel Broadcasting secures loan forbearance, doesn't expect to meet 2010 requirements

By Caroline Salls

Pittsburgh, May 8 - Citadel Broadcasting Corp. said it entered into a fourth amendment to its senior credit and term facility after an expected continuing decline in radio revenues and a projected decline in operating profits created uncertainty about its ability to continue to comply with debt covenants through 2009, according to a 10-Q filed Friday with the Securities and Exchange Commission.

Citadel said the amended forbearance agreement suspends specified financial covenants through 2009 while imposing new monthly covenants.

In addition, the company is required to have at least $150 million of available cash as of Jan. 15, 2010 and the maturity date of its remaining convertible subordinated notes must be amended by that date to at least Sept. 30, 2014.

Additionally, as of the quarter ended March 31, 2010, the company will be required to comply with the financial leverage covenant required under the amendment at a rate of 7.75 to 1.0, reducing to 7.25 to 1.0 on June 30, 2010 and further reducing to 6.75 to 1.0 on Dec. 31, 2010.

If Citadel's cash exceeds $30 million at any time, it must put the excess amount into a cash collateral account for the benefit of its lenders, and the company will not have access to the cash collateral account to operate its business, fulfill its obligations, or to otherwise meet its liquidity needs without the consent of the lenders.

Based on the current economic situation and capital markets and the continuing decline in radio revenues, the company said it expects that it will be difficult to meet these requirements in 2010, especially those beginning on Jan. 15, 2010.

If Citadel fails to meet the amendment requirements, it will be in default under the facility and the convertible subordinated notes.

The company said it would probably not be able to satisfy the payment obligations if the debt is accelerated, and it may need to either obtain an additional amendment or waiver from lenders or reorganize its capital structure and debt.

According to the filing, Citadel has substantial debt that could limit its ability to grow, compete and obtain additional financing.

As of March 31, the company had $2.06 billion in debt, consisting of $2.012 billion under the senior credit and term facility and $48.3 million under its convertible subordinated notes.

The company said its primary sources of liquidity are cash and cash equivalents and cash provided by the operations of its radio markets and radio network.

Citadel is a Las Vegas-based radio broadcasting company.

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