Moody's Raises The Possibility Of Citadel's Default
June 29, 2009 at 6:01 AM (PT)
MOODY'S INVESTORS SERVICE has downgraded CITADEL BROADCASTING CORPORATION's Corporate Family Rating to Caa3 from Caa2 and Probability of Default Rating to Ca from Caa3. In addition, MOODY's downgraded CITADEL's senior secured credit facility to Caa3 from Caa2.
The downgrades of CITADEL's ratings, and in particular its PDR, incorporate the elevated risk of default following the company's recent announcement that it engaged LAZARD FRERES & CO. LLC to provide financial and advisory services in evaluating financial options, including a possible restructuring of its capital structure.
CITADEL's Caa3 CFR as compared to its lower Ca PDR, reflects MOODY's expectation of an above average recovery for the debt. The rating outlook is stable as all ratings now reflect MOODY's estimate of ultimate recovery levels for creditors upon emergence from an anticipated near-term restructuring, with the exception of the PDR which would revert to a "D" rating in the event of a bankruptcy filing or some other form of wholesale default on the company's obligations due to a restructuring.
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