Citadel warrants begin trading



There’s still no exchange trading of the new shares of post-Chapter 11 Citadel Broadcasting, but the warrants have begun trading on the so-called “pink sheets.” The price so far is pretty much in line with RBR-TVBR’s prediction.

The new directors of Citadel have filed initial reports with the SEC, following official designation of the ticker symbol CDDGW for the warrants. Trading thus far has been miniscule, but there were a few thousand shares traded Friday and Monday at prices ranging from $24 to $28.

RBR-TVBR, using the official valuation accepted by the federal bankruptcy court, had calculated a theoretical value of about $28, but also cautioned that the stock might trade below that, especially with limited market liquidity.

The warrants now trading are essentially a proxy for Citadel’s common stock. 25.4 million warrants were issued to creditors who chose to take them, rather than stock, for attribution reasons (or any other reason they would not want to own the stock outright). The warrants are convertible one-for-one into common shares at an exercise price of zero. Only three million shares of regular Class A stock with regular voting rights were issued when the Chapter 11 reorganization plan became effective. There are also 16.6 million shares of Class B stock, with limited voting rights. That’s effectively 45 million shares in total. An additional 5.1 million Class A shares have been reserved for future issuance to employees under Citadel’s Equity Incentive Program.

RBR-TVBR observation: Although the Chapter 11 reorganization plan called for Citadel to list its stock for trading as soon as possible on either the NYSE or Nasdaq, we heard from a Wall Street insider that the company was encountering difficulties lining up market makers and clearing all of the hurdles for exchange trading. Now, at least, the distressed debt investors who want to cash out of their successful bet on Citadel’s insolvency will be able to do so.