R2 Investments turning up the heat on Citadel Broadcasting


Citadel Broadcasting hasn’t yet set the date for its first post-Chapter 11 shareholders meeting, but dissident shareholder R2 Investments has already served notice that it will be putting up candidates of its own choosing to try to oust a couple of the current directors.

R2 – sometimes referred to as R-Squared – is a Cayman Islands-based hedge fund linked to Texas investor Geoffrey Raynor. He has been pushing for the board at Citadel to start negotiating with Cumulus Media to sell the company. He’d previously battled with the board over stock grants, which were withdrawn and replaced by options, and has repeatedly accused the directors of acting in their own self interest rather than the interests of shareholders.

According to an SEC filing made when Citadel emerged from Chapter 11 last year, an R2 affiliate owns 6.9% of Citadel’s public equity. As one of the largest shareholders, R2 now says it intends to nominate two directors to Citadel’s board at the 2011 annual meeting. R2 says it has requested the necessary documents to do so under Citadel’s bylaws. The potential nominees have not yet been publicly identified. Citadel has a staggered board election structure, so only a third of the seats will be up for election this year.

“R2 continues to be frustrated by the lack of meaningful response by the company to numerous shareholder requests regarding a potential business combination with Cumulus and expects the replacement of two board members at this year’s annual meeting to help provide the board with necessary direction,” the dissident investor said in a public statement.

Click here for a look at the six current members of the Citadel board of directors. Note that Paul Saleh subsequently resigned to become CFO of Gannett and has not yet been replaced, so one of seven seats is currently vacant.

RBR-TVBR observation: This was expected, of course. With staggered terms for the Citadel board members it would take two years for the dissidents to gain voting control. However, if R2 is successful in electing two members this year it will certainly make the rest of the board stand up and take notice.