Leslie Turk

WSJ: Citadel filing ‘prearranged' Ch. 11 bankruptcy

by Leslie Turk

Citadel Broadcasting Corp., which owns four local stations, 94.5 KSMB, 99.1 KXKC, 104.7 KNEK and 95.5 KRRQ, among its more than 120 across the U.S., is preparing to file for bankruptcy by the end of the year, The Wall Street Journal reported this morning, citing sources familiar with the matter.
Citadel’s long-expected move is yet another reminder of the travails facing media companies, which are up against stiff competition and shifts in consumer habits. Advertising revenues have plunged for newspapers, radio broadcasters and television stations.
For radio companies, overall ad revenue is expected to drop 19% this year, according to research firm BIA/Kelsey.
Under the deal presented to lenders this week, Citadel would file a “prearranged” Chapter 11 bankruptcy plan supported by many creditors. Lenders owed $2 billion would swap a substantial amount of that debt for around 99.5% of the equity in a reorganized company, these people said.
The restructuring would give the group of some 90 lenders control of Citadel. Current shareholders, as in most bankruptcies, would be wiped out.
The lenders have until Tuesday to sign the deal, which would cut Citadel’s debt load to about $760 million, these people said. A group of lenders holding about 40% of the debt —including J.P. Morgan Chase & Co. and General Electric Co.’s GE Capital—have indicated they support the reorganization, the people said.
The WSJ noted that Las Vegas-based Citadel's representatives didn’t respond to requests for comment on restructuring negotiations, and the company's chief executive, Farid Suleman, declined to comment on any bankruptcy talks. Chuck Wood, who took over as general manager of Citadel's local operations in July, could not be reached for comment this morning. Read the rest of the WSJ story here.