Investor Aurelius Objects To Citadel Reorganization Plan
April 21, 2010 at 4:35 PM (PT)
The investors whose purchase of stock in CITADEL BROADCASTING drew the bankrupt company's objection have filed a preliminary objection to confirmation of CITADEL's reorganization plan.
AURELIUS CAPITAL PARTNERS, LP, AURELIUS CAPITAL MASTER, LTD., AND AURELIUS CONVERGENCE MASTER, LTD. contend in the objection that the plan "violates the absolute priority rule by overpaying senior creditors and providing no distribution to shareholders"; gives the prepetition lenders over 90% of the equity in the reorganized company and management would receive options for up to 10% of New Common Stock worth more than $100 million, leaving holders of old equity interests with nothing; and undervalues the company.
"These infirmities may represent only the tip of the iceberg," the petition states, asking for discovery pending a more detailed objection to be filed later.
CITADEL filed an emergency motion with the court to void the purchase of 16.7 million of its shares by AURELIUS and its affiliates and force the resale of the shares, with proceeds going to charity.
Michigan Objects, Too
In addition, the MICHIGAN Department of Treasury has objected to the reorganization plan, claiming that CITADEL subsidiary ALPHABET ACQUISITION COMPANY owes MICHIGAN business taxes and has not filed nor paid its 2008 state taxes.