Shareholders of Westwood One vote today on approving the financial restructuring that saved the company from having to file for bankruptcy protection. Once the measures are approved that gave the Gores Group overwhelming financial control of the company, WW1 is set to sell some more stock.
Five items will be voted on today as amendments to Westwood One’s Certificate of Incorporation.
#1 will increase the number of authorized shares from 300 million to five billion. That is necessary to cover the common shares that the Gores Group could convert other securities to under the refinancing and recapitalization that closed in April. Absent that agreement which increased the Gores Group stake in WW1, the company almost certainly faced a bankruptcy filing.
#2 will authorize a reverse split of one new share for each 200 currently held. That will boost the stock price, currently just pennies, to make it more attractive to Wall Street investors. Westwood One has already filed to offer $50 million of stock to the public, some from the company and some from the Gores Group, after the reverse split takes place.
The other three items are mainly housekeeping issues.
#3 is to define the term “Continuing Directors” that is used but not currently defined in the Certificate of Incorporation;
#4 is to delete Article Sixteenth of the Certificate of Incorporation that sets forth higher approval thresholds than those required under the Delaware General Corporation Law with respect to certain amendments of the Certificate of Incorporation; and
#5 to delete the provision in Article Seventeenth relating to Article Sixteenth should the proposal to delete Article Sixteenth as set forth in Proposal 4 be approved.
There is no known opposition to any of the measures.
With its financial restructuring behind it, WW1 management will be able to focus exclusively on its business. Its network radio and local/regional traffic operations have both been hard-hit by the advertising recession.
Rod Sherwood is President of Westwood One. Founder Norm Pattiz recently signed a deal to stay two more years as Chairman of the Board.
RBR/TVBR observation: This should be a slam-dunk. Not that anyone likes dilution or reverse splits, but at least the recapitalization preserved some equity value for Westwood One shareholders, which they likely would have lost if the company had gone to bankruptcy court.
