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NHRadio said:They may sell off some dogs to reduce debt.
They could start by shedding their Presque Isle cluster
That could well happen. They need $150-million as a debt covenant to lenders on Jan. 15, but say they won't make it. They could sell some small market clusters but -- money remains tight. Depends on who will buy, not if Citadel will sell. And they won't sell at giveaway prices.
They are interested in selling debt and few want to buy debt plus equity right now. It would be like throwing money away for a new investor, plus, the debt must be sold to satisfy the covenants of the lenders.The debt remains and Citadel will have lots of added debt to pay.
A pre-packaged bankruptcy is probable - and a Chapter 11 is possible if new terms aren't met by both lenders and the corporation.
Chapter 11 is "maybe" - not a given. The lenders don't want to lose a dime (why should they?) and Citadel needs the most it can get for any sale of any cluster.
Presque Isle won't be a priority sale. Look for one or more of the mediums or large markets to go on the block first, such as Washington, DC and others.
There are potential buyers -- Bonneville being the most frequently mentioned. No deals yet.
It will be a while before Presque Isle gets a notice of sale -- unless the entire company is sold.
The Citadel Media side of the ABC Radio Networks, with the losses of Paul Harvey and Sean Hannity, plus the drop in ad revenue, puts the company in jeopardy -- and a greater potential for sale, along with some underperforming clusters. ABC will be first to go, in my opinion.
The company, as a whole, came in better in the 3rd quarter than other groups (a touch less than 10%) but even with things on the rise, that "technical default" on Jan. 15th will be a big blow unless deals are made -- and pretty quickly.
As for "impact" -- who knows? If they go into bankruptcy, no one will notice, as the company will keep running. The stations will still function as they are now. Fears (or hopes) of them going dark won't happen, but more cutbacks are quite possible.
They are interested in selling debt and few want to buy debt plus equity right now. It would be like throwing money away for a new investor, plus, the debt must be sold to satisfy the covenants of the lenders.The debt remains and Citadel will have lots of added debt to pay.
A pre-packaged bankruptcy is probable - and a Chapter 11 is possible if new terms aren't met by both lenders and the corporation.
Chapter 11 is "maybe" - not a given. The lenders don't want to lose a dime (why should they?) and Citadel needs the most it can get for any sale of any cluster.
Presque Isle won't be a priority sale. Look for one or more of the mediums or large markets to go on the block first, such as Washington, DC and others.
There are potential buyers -- Bonneville being the most frequently mentioned. No deals yet.
It will be a while before Presque Isle gets a notice of sale -- unless the entire company is sold.
The Citadel Media side of the ABC Radio Networks, with the losses of Paul Harvey and Sean Hannity, plus the drop in ad revenue, puts the company in jeopardy -- and a greater potential for sale, along with some underperforming clusters. ABC will be first to go, in my opinion.
The company, as a whole, came in better in the 3rd quarter than other groups (a touch less than 10%) but even with things on the rise, that "technical default" on Jan. 15th will be a big blow unless deals are made -- and pretty quickly.
As for "impact" -- who knows? If they go into bankruptcy, no one will notice, as the company will keep running. The stations will still function as they are now. Fears (or hopes) of them going dark won't happen, but more cutbacks are quite possible.
Any pre-packaged bankruptcy would be under Chapter 11. You may be thinking of a liquidation a la Circuit City under Chapter 7. I'd be shocked if that was even entertained as an option. The lenders would never agree.
oaktree said:A pre-packaged bankruptcy is probable - and a Chapter 11 is possible if new terms aren't met by both lenders and the corporation.
O
OldPort
Guest
Well, they could start by cutting complimentary parking... what's that? Oh nevermind...
Cheers,
OldPort Wino
Cheers,
OldPort Wino
NHRadio is correct. Thank you for clarifying. A pre-packaged bankruptcy is a Chapter 11, just fill in the blanks. It is easier to do for the convenience of bankers who all know what the bottom line is, rather than complicated and drawn out court hearings and testimony, if I'm not mistaken. A Chapter 7 is definitely not in the cards.
W
WCWalker
Guest
Would it not make more sense for Citadel to try to sell stations in small or medium sized markets that are not doing well as opposed to trying to sell the stations in large markets that are making profits? They probably stand to lose less money by shedding the dogs and at the same time reduce debt load if they sell small and medium sized market stations. Selling the profitable large market stations in this economy and era of declining license and property values could probably lead to being an even weaker player in the market. It is doubtful that they will be able to get a decent price for the large market stations regardless of the sales figures simply due to the state of the economy and market for existing stations.
But which cluster(s) does it sell? And with two months remaining before a $150-million covenant is due, selling to a cash-rich group like Bonneville in, say, Washington, D.C. is a better deal because of the asset value of the properties (not the Citadel stock) than poking around with what may be four or five smaller clusters and, potentially, different owners of each.
A D.C. sale, alone, could bring $200-million plus and include some "goodwill" pricing, rather than an economy depressed small cluster like Presque Isle or several in Pennsylvania.
I would think they'd not like to sell a heritage, marquee type station (WMAL or a WLS, a KABC, etc) to keep it in the family, so to speak, but buyers are looking for nearly sure bets in this economy, and a smaller cluster such as in Maine may not be, for now, the cup of tea to jump on. A group cluster in, say, Providence, R.I. -- maybe. The stations there are so well known and have deeply successful track records in sales, facilities and market heritage.
I still believe a pre-packaged Chapter 11 bankruptcy to "buy more time" - while Citadel decides on what to do in selling certain assets, while giving a debt-for-equity control to the bankers is in the works. A straight bankruptcy will hurt any return on debt the banks already have and they don't want that. The value of the stock is minimal and a lot of people have been hurt by Citadel's doings.
All that's left is cash-flowing radio stations with heritage, goodwill and asset value and the need to continue to dance (as Clear Channel has been doing for two years) to avoid creditors (including those nasty interest payments to investment banks,) or declare a full-on Chapter 11 and keep everyone at bay, which means major write-downs to the lenders -- which they don't want.
Citadel wants to get the most out of what it can, obviously, as does the investment banks -- and it's easier to match a group with a history of working well in an economy such as this, than on speculative owners who may not in a cluster like Presque Isle, do any better than what Citadel did. There is no magic wand.
The key will be to satisfy the debt, which is mandatory, while keeping the flow of money not available from Citadel to a minimum for now -- with the same people running the company because banks don't run radio stations (nor want to,) and yet, provide an out for the investment banks, as well. The stockholders have already taken a bath. The banks can't afford to do so.
The way to do so -- Citadel holds off the creditors and those interest payments (unless they redo the loans first,) while the banks hold control and can flip the switch to selling properties at any time to recoup the $150-million. There's no where near that in the Main properties. It will have to be an attractive part of Citadel to attract that attention.
I'd not be surprised to see a merger for the ABC Radio Networks and its syndication arm(s) first. Pricey, but the one division that has bankrupted Citadel since the beginning.
The stations, as a whole (more than in part,) hold considerable asset value and are worth more than fire sale prices. Same thing happened with Clear Channel where some clusters went for more money in this economy than what they were purchased for -- all the while still losing money. It just depends on who's got the deepest pockets.
A D.C. sale, alone, could bring $200-million plus and include some "goodwill" pricing, rather than an economy depressed small cluster like Presque Isle or several in Pennsylvania.
I would think they'd not like to sell a heritage, marquee type station (WMAL or a WLS, a KABC, etc) to keep it in the family, so to speak, but buyers are looking for nearly sure bets in this economy, and a smaller cluster such as in Maine may not be, for now, the cup of tea to jump on. A group cluster in, say, Providence, R.I. -- maybe. The stations there are so well known and have deeply successful track records in sales, facilities and market heritage.
I still believe a pre-packaged Chapter 11 bankruptcy to "buy more time" - while Citadel decides on what to do in selling certain assets, while giving a debt-for-equity control to the bankers is in the works. A straight bankruptcy will hurt any return on debt the banks already have and they don't want that. The value of the stock is minimal and a lot of people have been hurt by Citadel's doings.
All that's left is cash-flowing radio stations with heritage, goodwill and asset value and the need to continue to dance (as Clear Channel has been doing for two years) to avoid creditors (including those nasty interest payments to investment banks,) or declare a full-on Chapter 11 and keep everyone at bay, which means major write-downs to the lenders -- which they don't want.
Citadel wants to get the most out of what it can, obviously, as does the investment banks -- and it's easier to match a group with a history of working well in an economy such as this, than on speculative owners who may not in a cluster like Presque Isle, do any better than what Citadel did. There is no magic wand.
The key will be to satisfy the debt, which is mandatory, while keeping the flow of money not available from Citadel to a minimum for now -- with the same people running the company because banks don't run radio stations (nor want to,) and yet, provide an out for the investment banks, as well. The stockholders have already taken a bath. The banks can't afford to do so.
The way to do so -- Citadel holds off the creditors and those interest payments (unless they redo the loans first,) while the banks hold control and can flip the switch to selling properties at any time to recoup the $150-million. There's no where near that in the Main properties. It will have to be an attractive part of Citadel to attract that attention.
I'd not be surprised to see a merger for the ABC Radio Networks and its syndication arm(s) first. Pricey, but the one division that has bankrupted Citadel since the beginning.
The stations, as a whole (more than in part,) hold considerable asset value and are worth more than fire sale prices. Same thing happened with Clear Channel where some clusters went for more money in this economy than what they were purchased for -- all the while still losing money. It just depends on who's got the deepest pockets.
S
splicer38
Guest
Are there any covenants beyond the $150M in January? I'm sure there are. Might this be a "stay of execution" if they divest a cluster just to make one covenant? A complete re structuring of debt and probably a transfer of equity is most likley ahead of bankruptcy. Once they restructure a condition might be to identify and sell certain assets to make debtors partically whole. Look for non-performing clusters and stations being sold at fire sale prices. Get them off the books now and maximize the good ones. NH seacoast, Worcester MA., Portland ME., are stronger than most I think. Prequile and some smaller markets are likely to be sold sooner than later IMO. Forget them selling NYC or DC stations... unless they are a package to a Bonneville that makes sense.
Banks are writing down all kinds of debt now. This is "just another" write down that was anticipated by their lenders. They are not happy about it but they did get federal funds to keep them afloat!
Does anyone really think that Goldman Sachs is getting fair value for their partial debt for equity swap with Nassau? Does 85% of Nassau equal $80M? Closer to $35-$40M. AND they still hold some debt.
Banks are writing down all kinds of debt now. This is "just another" write down that was anticipated by their lenders. They are not happy about it but they did get federal funds to keep them afloat!
Does anyone really think that Goldman Sachs is getting fair value for their partial debt for equity swap with Nassau? Does 85% of Nassau equal $80M? Closer to $35-$40M. AND they still hold some debt.
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