Citadel Broadcasting exits Chapter 11


Citadel Broadcasting is no longer under federal bankruptcy court protection and its former shareholders are holding worthless shares. The company emerged from Chapter 11 on Thursday. Just a day earlier RBR-TVBR had reported that there was no longer any threat of a further legal challenge to the company’s reorganization plan by Aurelius Capital Partners, which had thrown in the towel and sold its shares.

The announcement from the radio company was brief: “Citadel Broadcasting Corporation (“Citadel”) today announced that it has successfully completed its financial restructuring and emerged from Chapter 11. Citadel’s Plan of Reorganization was confirmed by the United States Bankruptcy Court for the Southern District of New York on May 19, 2010.”

With that, Citadel completed its financial reorganization a little more than five months after filing with the bankruptcy court in late December.

CEO Farid Suleman remains at the helm, but Forstmann Little & Co., the private equity firm that brought him onboard in 2003 has seen its remaining 29% equity stake wiped out along with other shareholders. Forstmann Little had taken the company private for $2 billion and then took it public again, but it recouped a good bit of that investment in stock sales before Citadel’s downhill slide on Wall Street. 

The new owners are led by JPMorgan Chase Bank and include a large group of investment funds, most of whom acquired chunks of Citadel’s debt which were sold off by the original lenders. The Chapter 11 plan was structured with the expectation that the new owners would be able to sell shares of the new stock. What’s not yet clear is when and how that stock trading will take place. Wells Fargo Securities analyst Marci Ryvicker recently told clients that there appeared to be investor interest in stock of the new Citadel.

Like other broadcasters, Citadel is seeing its business rebound as the US economy improves and advertisers increase spending. The company reported that Q1 revenues rose 3.8% to $165 million.

According to documents filed with the bankruptcy court, Citadel’s management is projecting that revenues will total $737.2 million in 2010, up from $723.6 million in 2009. By 2014 the company’s revenues are projected to grow to $801.2 million. As noted by RBR-TVBR, that 2014 figure is still below the $836.1 million of revenues that Citadel booked in 2008.

RBR-TVBR observation: Even with the reorg, Citadel is still carrying $762.5 million of debt. That’s slashed from the former $2.1 billion secured debt load, but still substantial. Management will have to be on top of its game going forward. Now that he’s been given a second chance, we’ll see if Farid Suleman has learned anything from failure.