Westwood One has filed notice with the SEC that its 10-K annual report will be delayed. The reason: The company is deep in negotiations with bondholders to amend the terms of its 15% senior secured notes due July 15, 2012.
Unless the leverage covenants of that bond issue are modified Westwood One is in danger of a technical default, which would give the bondholders the right to demand immediate repayment of the $100 million face value. Should that happen, the company warned, “there will be substantial doubt about our ability to continue as a going concern.”
While Westwood One has not yet reported its Q4 results, company officials indicated in November, when they reported Q3 results, that they were “cautiously optimistic” that the Q3 growth would continue through Q4.
The 10-K was due March 31st, but getting an extension is not a big deal. Westwood One’s notice filed with the SEC states that the annual report will be filed “as promptly as practicable” and certainly by the extension deadline of April 15th.
“The Company is presently in discussions with its lenders to amend the terms of its debt agreements to ease its debt leverage covenants with the holders of the Company’s 15.0% Senior Secured Notes due July 15, 2012 (the “Senior Notes”), the outcome of which could have an impact on certain 10-K disclosure and analyses. Additionally, the Company is in the process of completing the annual assessment of goodwill and intangible assets to quantify the amount of the impairment, if any, for the year ended December 31, 2010. We currently anticipate such amount to be in the range of $15.0 million to $25.0 million,” said the latest filing.
“The aforementioned amendment remains subject to the negotiation of a definitive agreement with the Company’s lenders and no assurance can be made that such will be entered into. If we are unable to enter into a new amendment with our lenders or otherwise provide sufficient documentation regarding our lenders’ agreement to certain adjustments we have made to our calculation of Adjusted EBITDA, we will fail to comply with our debt leverage covenants. Such would result in a default under our Senior Notes, which, if we were unable to obtain a waiver from the holders thereof, could accelerate repayment under the Senior Notes and thereby have a material adverse effect on our business. Unless we enter into a definitive agreement with our lenders, there will be substantial doubt about our ability to continue as a going concern,” Westwood One stated.
RBR-TVBR observation: Having just invested another $10 million into Westwood One, it seems highly unlikely that The Gores Group will allow a default to occur. But it sounds like the bondholders are playing hardball. Stay tuned for the final score to be posted.