WSJ: Radio's Asking Its Lenders To Help
September 2, 2009 at 4:38 AM (PT)
The ongoing economic downturn which has pushed broadcasters finances down, now has lenders "breathing down the necks of some debt-burdened broadcasters," reports THE WALL STREET JOURNAL, which writes "weak revenue is triggering loan clauses about their debt-to-earnings ratios. Crossing those limits forces companies to renegotiate terms, often resulting in higher interest or other penalties."
CITADEL BROADCASTING has renegotiated its deals with creditors twice in the last year, and now reportedly got a waiver for its leverage requirements through the end of 2009. THE JOURNAL writes the company skipped a $2 million interest payment on its subordinated debt due AUGUST 15th and is currently negotiating with debtholders about "what the next step should be," says CITADEL CEO FARID SULEMAN.
All options are on the table.
SULEMAN told THE JOURNAL that the company might not be able to meet conditions that are scheduled to take effect in the beginning of next year. "All options are on the table," including prepackage bankruptcy debt restructuring, and another amendment to the company's credit agreement.
CITADEL, which has $27.8 million in cash and more than $2 billion in debt, has the option of making its payment by SEPTEMBER 15th without triggering a default.
Elsewhere Around The Business
"This decline has been so much greater," said EMMIS CEO JEFF SMULYAN. "In a normal recession, if you're down 5%-6%, that's a lot." EMMIS has had to renegotiate agreements with lenders because of declining revenue.
CUMULUS MEDIA renegotiated their deals with lenders at the end of JUNE, receiving suspended leverage ratios in exchange for tighter restrictions such as prepaying excess cash to their borrowers.
CLEAR CHANNEL COMMUNICATIONS continues to struggle with about $20 billion of debt following last years leveraged buyout, and has just completed a tender offer for debt totaling $412 million. THE JOURNAL expects CLEAR CHANNEL "will just squeak by its covenant requirements this year."