Citadel Broadcasting Wins Court Approval of Reorganization Plan

story by Bloomberg Businessweek
written by Don Jeffrey


May 18 (Bloomberg) -- Citadel Broadcasting Corp., the third-largest radio station owner in the U.S., won court approval to exit bankruptcy over the objections of shareholders who said the company is worth more than executives and bankers assert.

U.S. Bankruptcy Judge Burton Lifland in Manhattan said yesterday he will sign a confirmation order approving Citadel’s reorganization plan. He overruled objections by the shareholders.

“The debtor has met the burden of confirmation,” Lifland said at the close of a nine-hour hearing in New York that centered around the subject of the valuation of the company’s worth.

Shareholders led by Aurelius Capital Partners LP opposed the plan, saying that bankers valued the company too low, thus denying owners of stock any recovery on their investment. Lazard Ltd., Citadel’s banker, used the company’s earnings projections to arrive at a valuation showing the company is worth less than its debt.

Citadel, based in Las Vegas, filed for Chapter 11 protection from creditors in December, saying the recession “put a chokehold on advertising spending,” its main source of revenue.

The reorganization plan will give holders of $2.14 billion of secured debt a new $762.5 million loan and 90 percent of the shares of the reorganized company. Holders of unsecured claims will receive the remaining 10 percent of the stock and $36 million in cash. Equity holders will receive nothing...

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