America’s third largest radio group may apply for “pre-arranged” Chapter 11 bankruptcy protection before the end of the year, according to the Wall Street Journal. Citadel Broadcasting own over 200 radio stations across the US, and are third behind Clear Channel and Cumulus Media in the American radio sector.
The WSJ says that Citadel’s financial advisors are trying to save the firm from collapse by engineering a rescue plan that would see the company’s creditors write off about $2 billion in debt in return for collective ownership of the radio network. The deal would all but cut the firm’s existing shareholders out of the party, giving the creditors 99.5% of the company.
Some of Citadel’s biggest creditors, including JP Morgan Chase & Co and General Electric’s investment business have OK-ed the arrangement, while other creditors are still considering the proposal. The radio firm has been severely hit by the advertising recession in recent years, and arguably over-expanded prior to the economic downturn, leaving it with overly large debts when the credit crunch crunched.
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