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Radio giant Citadel files for bankruptcy
by Ishita Sood - December 21, 2009 - comments
Radio giant, Citadel, filed for bankruptcy Sunday. It’s total assets come to $1.4 billion, while liabilities to $2.5 billion
New York, December 21 -- Nation's largest radio broadcasters, Citadel Broadcasting Corporation, filed for bankruptcy Sunday, due to decline in advertising revenues and debt problems.
The woes of radio industry continue as Citadel, which owns 224 stations across the nation, handed control to its creditors.
Last month the company reported a 14 percent drop in revenue and a 16 percent drop in operating income.
Consent of all creditors for bankruptcy
Citadel had the consent of all its creditors for the bankruptcy filing.
“We are pleased with the support from the majority of our senior lenders, and we look forward to working with the remaining senior lenders and other stakeholders to ensure a complete and expeditious restructuring,” said Farid Suleman, Citadel’s chief executive.
“I feel totally relieved now that it's over and we can move on to the next chapter,” said Suleman.
Citadel’s board also said that the bankruptcy was “desirable and in the best interests of the corporation”.
Terms of agreement
The agreement includes reduction of $2.1 billion loans to $762.5 million. The company’s lenders will thus own 90 percent of the equity while 10 percent will go to its bondholders.
Citadel had hired investment banking firm Lazard, and law firm Kirkland & Ellis, to negotiate with the company’s creditors earlier this year.
Citadel’s total assets after bankruptcy come to $1.4 billion, while liabilities to $2.5 billion.
The company owns WABC in New York and WLS in Chicago. It will be operating the same way as it did before filing for bankruptcy.
“We're going to continue to expand, we're going to hold onto all of our radio stations,” said Suleman.
Citadel’s list of creditors
Citadel’s list of unsecured creditors includes big names like JPMorgan Chase, Wilmington Trust Company, GE Capital and Walt Disney.
The company’s largest stakeholder Forstmann Little, which owns a huge 28.7 percent stake.
The Las Vegas based firm took billion of dollars in 2006 to finance the purchase of ABC Radio Stations, which was then owned by Disney.
It is reported that one of the reasons for Citadel’s bankruptcy is the purchase of ABC Radio. The company’s cash balance was only $27.8 million as on June 30.
Citadel’s case is being taken up at the U.S. Bankruptcy Court (Southern District of New York) in Manhattan.
The company’s shares closed Friday at 1.6 cents.