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December 22, 2009

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Citadel in filing for bankruptcy protection

CITADEL Broadcasting Corp, the United States' third-largest radio broadcasting company, filed for bankruptcy protection on Sunday in a bid to restructure its hefty debt as it continues to face declining advertising revenue.

Citadel owns and operates 224 radio stations in all major markets and produces news and talk radio programing for 4,000 station affiliates and 8,500 program affiliates. Citadel's WABC is home to several syndicated hosts, including Don Imus, Rush Limbaugh, Joe Scarborough and Mark Levin.

In documents filed in the US Bankruptcy Court for the Southern District of New York, Las Vegas-based Citadel listed total assets at October 30 of US$1.4 billion and total debt of US$2.46 billion. The company said it had reached an agreement with more than 60 percent of its lenders on a deal that would erase about US$1.4 billion of debt in exchange for control of the company.

"Our business will continue as usual and the company will work to emerge from the restructuring process as quickly as possible," CEO Farid Suleman said.

Such deals usually wipe out shareholders completely. That hits private equity firm Forstmann Little & Co - which holds a near 29 percent stake - the hardest. The company's largest shareholder acquired a US$2 billion stake in Citadel in January 2001 through a leveraged buyout. Documents show New York-based Forstmann Little currently owns about 76 million shares of Citadel's 265.8 million shares outstanding.

Much of the Citadel's debt burden stems from its US$2.7 billion purchase of ABC Radio from Walt Disney Co in 2007. Citadel has also been hurt over the past couple of years by declines in advertising revenue in nearly all major markets.

In May, Citadel hired a financial adviser to help assess its options including refinancing or restructuring its debt.


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