Radio One: debt repayment top priority, repurchased $145 million of bonds in fourth quarter

By Jennifer Lanning Drey

Portland, Ore., Feb. 19 - Radio One Inc.'s top priority in 2009 will continue to be bank covenant and balance sheet management, including bond buybacks and other debt repayment, Alfred C. Liggins III, chief executive officer of Radio One, said Thursday during the company's fourth-quarter earnings conference call.

During the fourth quarter, Radio One retired $145 million of its 8 7/8% senior subordinated notes due 2011, bringing the full-year total of bonds retired to $196 million.

"The balance sheet right now has priority over everything," Liggins said.

However, Radio One's ability to repurchase the remaining $104 million of the 8 7/8% senior subordinated notes is limited to $40 million under a carve out in its credit facility, which will influence how much the company is willing to pay in the future to repurchase the notes, he said.

"We're stuck in a corner as to what we can pay, and we have to stick to our knitting on that," Liggins said.

The repurchases in 2008 were made at an average discount of 47%.

After debt reduction, the company will look to use excess cash for stock buybacks.

Radio One ended the fourth quarter with cash and cash equivalents of $22.3 million. Net debt at Dec. 31 was $653 million, compared to $791 million at the end of 2007, Peter Thompson, Radio One's chief financial officer, said during the call.

The company's total leverage ratio at quarter end was 6.14 times against a limit of 7.25 times allowed under its debt covenants, while the interest cover was 1.92 times compared to a limit of 1.75 times. The senior leverage ratio was 3.38 times against a limit of 4.0 times.

Radio One's core radio revenues were down more than 7% in the fourth quarter, despite a strong showing from political advertising. Net revenue was $74.3 million, down from $74.8 million in the same period in 2007.

Fourth-quarter EBITDA increased by almost 20% driven mainly by savings in corporate expenses and reduced losses in the internet division, the company said.

Radio One is a Washington, D.C.-based broadcasting company.

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