Report: Citadel preparing Chapter 11


Citadel Broadcasting had stated publicly that a Chapter 11 bankruptcy filing was under consideration. Now the Wall Street Journal reports that a pre-packaged Chapter 11 plan is being circulated to creditors and, if backed by enough creditors, would be filed before the end of this month.

According to the WSJ, lenders have until Tuesday, December 15, to decide whether to sign on to the pre-packaged reorganization plan. Under the plan, creditors would swap most of the $2 billion in debt that they hold for 99.5% of the equity of Citadel, post reorg. The deal would cut the radio company’s debt to $760 million. Current shareholders would be left with nothing.

The story said lenders holding about 40% of the debt, including JP Morgan Chase and GE Capital, have already signed onto the proposed reorg plan.

The WSJ’s sources said CEO Farid Suleman would remain in place to manage the company after emerging from Chapter 11.

RBR-TVBR observation: We heard not too long ago from a broadcaster who had dealings with Citadel that it really wouldn’t help if the creditors cut the $2 billion debt load in half because “nobody is home” at company HQ. As we’ve noted repeatedly, this company has been in decline since Farid Suleman was named CEO, well before the entire radio industry went into decline.

Will even cutting the debt load to three quarters of a billion get this hapless company back on track, or would it be headed for “Chapter 22” – Chapter 11 twice?

Watching Suleman and what has been inflicted on this company is like watching a train wreck in slow motion. You know it is going to happen but the pain of when in slow motion is plain hell.