Radio One in discussions to amend credit facility financial covenants

By Toni Weeks

San Luis Obispo, Calif., Jan. 13 – Radio One, Inc. said it is in discussions for a proposal to change some of the financial covenants under its credit agreement dated March 31, 2011 beginning with the quarter ending March 31, according to an 8-K filing with the Securities and Exchange Commission.

The company wants to revise the provisions of the call premium to extend the call protection from April 1 until maturity. The amendment would also provide a call premium of 101.5 if the credit agreement is refinanced with the proceeds from a notes offering and 100.5 if the credit agreement is refinanced with proceeds from any other repayment, including those from a new term loan. The call premium would be payable at the earlier of any refinancing or final maturity.

In addition, the proposed amendment would exclude any going concern or qualified audit opinion solely as a result of the upcoming revolver or term loan maturities from the event of default provisions of the credit agreement. It would also allow the company to amend and extend both the term loan and revolving credit facility and add a $2 million lien basket for letters of credit not issued under the credit agreement.

Further changes include the interest coverage ratio, which would be revised such that the borrower may not permit the interest expense coverage ratio for any test period ending on the last day of any fiscal quarter to be less than 1.25:1.

Also, the total leverage ratio would be revised so that the borrower may not permit the total leverage ratio to be greater than 8:1 on the last day of any fiscal quarter of the borrower.

And finally, the senior secured leverage ratio would be revised so that the borrower may not permit the senior secured leverage ratio to be greater than 4.25:1 through the quarter ending June 30, 2015 and 4.0:1 for the quarter ending Sept. 30, 2015 and the last day of each fiscal quarter of the borrower thereafter.

The proposed amendment requires the approval of greater than 50% of all credit facility lenders.

Credit Suisse is the administrative agent and collateral agent.

The radio broadcaster is based in Lanham, Md.

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