Radio One still talking to creditors as a deadline passes


Strictly speaking, Radio One is now in technical default under its 6 3/8% Senior Subordinated Notes due 2013, but the company is still negotiating with its lenders and bond holders over its financial restructuring. Radio One says progress is being made.

“Over the last several weeks, the Company believes that it has made significant progress in reaching an agreement with the members of the ad hoc group of holders of a significant portion of its Existing Notes relating to certain amendments to the terms of the exchange offer and the related exchange notes, including the conditions to the exchange offer, and with its lenders under its existing senior secured credit facility relating to an amendment thereto,” Radio One said Thursday in its latest statement on the talks.

As those talks continue, the company has once again extended the exchange offers for the 6 3/8% Senior Subordinated Notes due 2013 and its 8 7/8% Senior Subordinated Notes due 2011. The new deadline is September 30th. As of the previous deadline of September 15th the company said approximately 92% of the notes had been tendered – but the exchange offers can’t close until all of the pieces of this financial puzzle are in place.

The default on the 2013 notes came about because the agent for Radio One’s senior lenders delivered a payment blockage notice to the trustee under the indenture relating to the 2013 Notes on August 5, 2010. “As a result, neither the Company nor any of its guaranteeing subsidiaries was permitted to make the scheduled interest payment on such notes due on August 16, 2010.  The 30-day grace period provided in the indenture expired on September 15, 2010.  As a result, there currently exists an event of default under the indenture relating to the 2013 Notes.  In addition, the Company’s forbearance agreement with its lenders relating to certain defaults and events of defaults under the existing senior secured credit facility expired in accordance with its terms on September 10, 2010,” Radio One explained.

But no one is pulling the trigger, at least for now.

“Based on its constructive dialogue with the members of the ad hoc group [of note holders] and its existing lenders, the Company does not expect such members of the ad hoc group or its existing lenders to exercise any remedies under such indenture or senior secured credit facility, as applicable, in the near term,” Radio One said, adding that there is no assurance it will be able to reach a deal with the various parties concerning its financial structure.