What is Radio One going to do with the cash from its 137.5 million bucks sale of KRBV-FM Los Angeles to Bonneville International? CEO Alfred Liggins already has plans. “We expect to use the proceeds from this transaction to reduce our leverage, accelerate our Internet strategy and re-commence a limited buy-back of our securities,” he announced.
That “limited buy-back” could still be pretty substantial. Radio One’s board of directors has authorized a stock repurchase program for up to 150 million bucks worth of Radio One’s Class A (voting) and Class D (non-voting) stock. “The amount and timing of repurchases will be based on pricing, general economic and market conditions, certain restrictions contained in agreements governing Radio One’s bank credit facilities and subordinated debt and certain other factors. The repurchase program does not obligate Radio One to repurchase any of its common stock and may be discontinued or suspended at any time,” the company said.
Radio One noted that Rothschild Inc. acted as its financial advisor in connection with the LA transaction.
RBR/TVBR observation: This transaction will certainly improve the balance sheet for Radio One. Just a few days ago Moody’s put the company under review for a possible downgrade, in part because it was at risk of tripping over loan covenants with its leverage (3/14/08 RBR #52). This should help persuade those Moody’s analysts that Radio One’s ratings can be left as they are. You may note that we asked in that previous article, “Just what is a full-coverage LA stick worth these days?” Now we know – 137.5 million bucks. With its troubled Los Angeles operation going away, Radio One will be able to focus on its core radio stations, growing Internet operations and its cable venture, TV One, which is also growing.