Citadel Broadcasting completed an amendment and waiver to its bank credit agreement, giving the company some wiggle-room on its leverage covenants. Even so, Moody’s Investors Service is sticking with its negative outlook for the company.
“While the elimination of the step-down to its total leverage covenant in the fourth quarter of 2008 will provide additional cushion and delay a possible covenant violation, Moody’s believes that Citadel will remain challenged in its ability to comply with its financial maintenance covenant through fiscal year 2009, given the current economic environment and our expectations for 2009 broadcast advertising, and that the company will likely need to seek an additional amendment/waiver. Moody’s anticipates that Citadel’s operating performance will continue to face increasing pressure as a result of the slowdown in consumer spending, its impact on corporate profits, and the resulting cutbacks in advertising and marketing budgets by several important advertising industries. Consequently, our rating outlook remains negative,” the ratings agency said.