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Washington, D.C. 20549
Form S-4
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
CUMULUS MEDIA INC.
Delaware | 4832 | 36-4159663 | ||
(State of Incorporation) | (Primary Standard Industrial Classification Code Number) | (I.R.S. Employer Identification No.) |
Suite 2300
Atlanta, Georgia 30305
(404) 949-0700
Chairman, President and Chief Executive Officer
Cumulus Media Inc.
3280 Peachtree Road, N.W.
Suite 2300
Atlanta, Georgia 30305
(404) 949-0700
Mark L. Hanson, Esq. Jones Day 1420 Peachtree Street, N.E. Suite 800 Atlanta, Georgia 30309 (404) 521-3939 | Hilary Glassman, Esq. Citadel Broadcasting Corporation 261 Madison Avenue 3rd Floor New York, NY 10016 (212) 297-5860 | Howard Chatzinoff, Esq. Raymond O. Gietz, Esq. Weil, Gotshal & Manges LLP 767 Fifth Avenue New York, NY 10153 (212) 310-8000 |
Large accelerated filer o | Accelerated filer o | Non-accelerated filer o | Smaller reporting company þ |
Proposed Maximum | Proposed Maximum | Amount of | ||||||||||
Title of Class of | Amount | Offering | Aggregate | Registration | ||||||||
Securities to be Registered | to be Registered† | Price per Unit | Offering Price | Fee | ||||||||
Class A common stock, par value $.01 per share | 180,362,411(1) | N/A | $431,124,121(2) | $50,054(3) | ||||||||
Class B common stock, par value $.01 per share(4) | 180,362,411(5) | N/A | $431,124,121(2) | (6) | ||||||||
Warrants to purchase common stock(7) | 180,362,411(8) | N/A | $431,124,121(2) | (9) | ||||||||
† | Pursuant to Rule 416, this registration statement also covers an indeterminate number of additional securities of Cumulus Media as may be issuable as a result of stock splits, stock dividends or similar transactions. | |
(1) | Represents the maximum number of shares of Cumulus Media Class A common stock, par value $0.01 per share, issuable to holders of Citadel Class A common stock, par value $0.001 per share, Citadel Class B common stock, par value $0.001 per share (together, “Citadel common stock”) and warrants to purchase Citadel common stock, in the merger. | |
(2) | Estimated solely for the purpose of calculating the registration fee pursuant to Rules 457(c), 457(f)(1) and 457(f)(3) promulgated under the Securities Act of 1933 (the “Securities Act”). The proposed maximum aggregate offering price is calculated based on the market value of 13,346,131 shares of Citadel Class A common stock (which includes an estimated 8,951,373 shares issuable upon the deemed exercise of all potentially outstanding options to purchase shares of Citadel Class A common stock and 652,561 restricted shares of Citadel Class A common stock) and 42,278,864 shares of Citadel Class B common stock (which includes warrants to purchase 23,219,455 shares of Citadel Class B common stock) to be exchanged in the merger, as established by the last sale reported on July 7, 2011 with respect to the Citadel Class A common stock, and July 7, 2011 with respect to the Citadel Class B common stock, in each case on the OTC Link on the OTCQB tier, which sale price was $33.00 per share of Citadel Class A common stock and $33.10 per share of Citadel Class B common stock, less $1,408,728,600, which is the maximum amount of cash payable by Cumulus Media in exchange for such shares of Citadel common stock pursuant to the merger agreement. | |
(3) | Determined in accordance with Section 6(b) of the Securities Act at a rate equal to $116.10 per $1,000,000 of the proposed maximum aggregate offering price. | |
(4) | The Cumulus Media Class B common stock being registered hereby and issuable in the merger as provided for herein will be created pursuant to an amended and restated certificate of incorporation to be filed with the Secretary of State of the State of Delaware in connection with the completion of the merger and described in more detail herein. | |
(5) | Represents the maximum number of shares of Cumulus Media Class B common stock, par value $0.01 per share, issuable to holders of Citadel common stock and warrants to purchase Citadel common stock in the merger. | |
(6) | The maximum number of all classes of securities issuable in the merger is 180,362,411. If and to the extent any shares of Cumulus Media Class B common stock are issued in the merger, there would be aone-for-one reduction in the number of shares of Cumulus Media Class A common stock issued in the merger and, consequently, the registration fee payable thereunder should be reduced accordingly. Because the registration fee set out above contemplates the issuance of the maximum number of securities issuable in the merger all in the form of Class A common stock, no additional registration fee is payable in connection with the registration of the Cumulus Media Class B common stock. | |
(7) | If Cumulus Media reasonably determines that the issuance of its Class A common stock or Class B common stock to a Citadel stockholder or warrant holder in the merger would result in a violation of the Communications Act or FCC rules and policies, it may issue to such stockholder or warrant holder warrants to purchase shares of its Class A common stock or Class B common stock. | |
(8) | Represents the maximum number of warrants to purchase shares of Cumulus Media common stock issuable to holders of Citadel common stock and warrants to purchase common stock in the merger. The number of shares of Class A common stock set out above includes any number of shares which may underlie any warrants issued in the merger. | |
(9) | If and to the extent any warrants to purchase shares of Cumulus Media common stock are issued in the merger, there would be aone-for-one reduction in the number of shares of Cumulus Media Class A common stock and/or Class B common stock issued in the merger and, consequently, the registration fee payable thereunder should be reduced accordingly. Because the registration fee set out above contemplates the issuance of the maximum number of securities issuable in the merger, no additional registration fee is payable in connection with the registration of the warrants. |
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The information in this document is not complete and may be changed. Cumulus Media Inc. may not issue these securities until the registration statement filed with the Securities and Exchange Commission is effective. This document is not an offer to sell these securities and Cumulus Media Inc. is not soliciting an offer to buy these securities in any jurisdiction where the offer or sale is not permitted. |
Lewis W. Dickey, Jr. Chairman, President and Chief Executive Officer Cumulus Media Inc. | Farid Suleman President and Chief Executive Officer Citadel Broadcasting Corporation |
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7690 W. Cheyenne Avenue, Suite 220
Las Vegas, Nevada 89129
(702) 804-5200
President and Chief Executive Officer
Citadel Broadcasting Corporation
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7690 W. Cheyenne Avenue, Suite 220
Las Vegas, Nevada 89129
(702) 804-5200
TO BE HELD ON , 2011
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3280 Peachtree Road, N.W.
Suite 2300
Atlanta, Georgia 30305
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For information about Cumulus Media Inc.: | For information about Citadel Broadcasting Corporation: | |||||
By Mail: | Cumulus Media Inc. 3280 Peachtree Road, NW Suite 2300 Atlanta, Georgia 30305 Attention: Joseph P. Hannan, SVP, Treasurer and CFO | By Mail: | Citadel Broadcasting Corporation 7690 W. Cheyenne Avenue, Suite 220 Las Vegas, Nevada 89129 Attention: Randy L. Taylor, CFO | |||
By Telephone: | (404) 260-6600 | By Telephone: | (702) 804-5200 | |||
By Internet: | www.cumulus.com | By Internet: | www.citadelbroadcasting.com |
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EX-99.7 |
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• | Cumulus Media Class A common stock and Cumulus Media Class B common stock, together as “Cumulus Media common stock”; | |
• | Cumulus Media Inc., a Delaware corporation, as “Cumulus Media”; | |
• | Cumulus Media Holdings Inc. (f/k/a Cadet Holding Corporation), a Delaware corporation and wholly-owned subsidiary of Cumulus Media, as “Holdco”; | |
• | Cadet Merger Corporation, a Delaware corporation and a wholly-owned subsidiary of Holdco, as “Merger Sub”; | |
• | Citadel Broadcasting Corporation, a Delaware corporation, and its consolidated subsidiaries, together as “Citadel”; | |
• | Citadel Class A common stock and Citadel Class B common stock, together as “Citadel common stock”; | |
• | Cumulus Media Partners, LLC and its consolidated subsidiaries, collectively as “CMP”; | |
• | the merger of Merger Sub into Citadel and the conversion of shares of, and adjustment of warrants to purchase, Citadel common stock into the right to receive cash and/or shares of Cumulus Media Class A common stock (or in certain instances, shares of Cumulus Media Class B common stock or warrants in lieu thereof), as the “merger”; | |
• | the Agreement and Plan of Merger, dated March 9, 2011 (as it may be amended from time to time), among Cumulus Media, Holdco, Merger Sub, and Citadel, as the “merger agreement”; | |
• | the Investment Agreement, dated as of March 9, 2011, and as amended and restated as of April 22, 2011 (as it may be further amended from time to time) pursuant to which (i) Crestview Radio Investors, LLC (“Crestview”), an affiliate of Crestview Partners II, L.P., (ii) an affiliate of Macquarie Capital (USA) Inc. (“Macquarie”) and (iii) UBS Securities LLC (“UBS Securities” and together with Crestview and Macquarie, the “Investors”), have agreed to invest up to an aggregate of $500.0 million in Cumulus Media’s equity securities described below or warrants to purchase the same, the proceeds of which will be used to pay a part of the cash portion of the purchase price for, and which investment is conditioned on, among other things, the closing of the merger, as the “Investment Agreement”; | |
• | the commitment the Investors have pursuant to the Investment Agreement to purchase for cash up to an aggregate of $500.0 million in shares of Cumulus Media common stock, preferred stock or warrants to purchase common stock, at a purchase price per share (or warrant) of $4.34, as the “Equity Investment”; | |
• | the Federal Communications Commission, as the “FCC”; |
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• | applications that have been or will be filed with the FCC to obtain FCC Approval (defined below) for the transfers of control or assignment of the FCC Authorizations held by Cumulus Media and Citadel required for the consummation of the merger agreement, as the “FCC Applications”; | |
• | any action by the FCC (including action duly taken by the FCC’s staff pursuant to delegated authority) granting its consent to the transfer of control or assignment to Merger Sub, Holdco or Cumulus Media (or any affiliate of Merger Sub, Holdco or Cumulus Media) of the FCC Authorizations (as defined below) as proposed in the FCC Applications, as the “FCC Approval”; | |
• | all licenses, permits, approvals, construction permits, and other authorizations issued or granted by the FCC to Citadel or any Citadel subsidiary or Cumulus Media or any Cumulus Media subsidiary, as applicable, including any and all auxiliaryand/or supportive transmittingand/or receiving facilities, boosters, and repeaters, together with any and all renewals, extensions, or modifications thereof and additions thereto between the date of the merger agreement and the effective time of the merger, as the “FCC Authorizations”; | |
• | the Communications Act of 1934, as amended, as the “Communications Act”; | |
• | theHart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, as the “HSR Act” or the“Hart-Scott-Rodino Act”; and | |
• | the General Corporation Law of the State of Delaware, as the “DGCL.” |
Q: | Why have I received this information statement/proxy statement/prospectus? | |
A: | This document is being delivered to you as both a proxy statement of Citadel and a prospectus of Cumulus Media. It is a proxy statement because Citadel’s board of directors is soliciting proxies from its stockholders to vote on the adoption of the merger agreement at Citadel’s 2011 annual meeting of stockholders as well as the other matters set forth in the notice of the meeting and described in this information statement/proxy statement/prospectus, and your proxy will be used at the meeting or at any adjournment or postponement of the meeting. It is a prospectus because Cumulus Media will issue Cumulus Media common stock and/or warrants to the Citadel common stockholders and warrant holders in the merger. On or about , 2011 Citadel intends to mail to its stockholders of record as of the close of business on , 2011 printed versions of these materials. | |
Your vote is important. Citadel encourages you to vote as soon as possible. | ||
Q: | What matters are to be voted on at the Citadel annual meeting? | |
A: | At the Citadel annual meeting, holders of Citadel Class A common stock as of the close of business on , 2011 (the “record date”) will be asked to: | |
1. consider and vote upon the adoption of the merger agreement; | ||
2. consider and vote upon the approval of the adjournment of the annual meeting, if necessary, to solicit additional proxies if there are not sufficient votes to adopt the merger agreement at the time of the annual meeting; | ||
3. consider and vote upon the election of each of the two class I director nominees to Citadel’s board of directors; | ||
4. consider and vote on a non-binding, advisory basis to approve compensation that may be paid or become payable to Citadel’s named executive officers that is based on or otherwise relates to the merger; | ||
5. consider and vote upon the ratification of the appointment of Deloitte & Touche LLP to serve as Citadel’s independent registered public accountants for the year ending December 31, 2011; and | ||
6. consider and act upon such other business as may properly come before the annual meeting or any adjournment or postponement thereof. |
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In addition, at the Citadel annual meeting, holders of Citadel Class B common stock as of the record date will be asked to consider and vote, together with holders of Citadel Class A common stock as of the record date as a single class, upon Proposals 1 and 5 described above. | ||
Q: | What is the recommendation of Citadel’s board of directors with respect to each Proposal? | |
A: | Citadel’s board of directors unanimously recommends a vote: | |
1. FORthe adoption of the merger agreement; | ||
2. FORthe approval of the adjournment of the annual meeting, if necessary, to solicit additional proxies if there are not sufficient votes to adopt the merger agreement at the time of the annual meeting; | ||
3. FORthe election of each of the class I director nominees to Citadel’s board of directors; | ||
4. FORthe approval on a non-binding, advisory basis of compensation that may be paid or become payable to Citadel’s named executive officers that is based on or otherwise relates to the merger; and | ||
5. FORthe ratification of the appointment of Deloitte & Touche LLP as Citadel’s independent registered public accountants for the year ending December 31, 2011. | ||
Q: | Will any other matters be presented for a vote at the Citadel annual meeting? | |
A: | At this time, Citadel is not aware of any other matters that will be presented for a vote at the Citadel annual meeting. However, if any other matters properly come before the annual meeting, the proxies will have the discretion to vote upon such matters in accordance with their best judgment. | |
Q: | When and where is the Citadel annual meeting? | |
A: | The Citadel annual meeting will be held at , local time, on , 2011, at . | |
Q: | Who can attend the Citadel annual meeting? | |
A: | You are entitled to attend the Citadel annual meeting only if you are a Citadel stockholder of record or a beneficial owner as of the record date, or you hold a valid proxy for the annual meeting. |
If you are a Citadel stockholder of record and wish to attend the annual meeting, please so indicate on the appropriate proxy card or as prompted by the telephone or Internet voting system. Your name will be verified against the list of Citadel stockholders of record prior to your being admitted to the annual meeting. | ||
If a bank, broker or other nominee is the record owner of your Citadel shares, you will need to have proof that you are the beneficial owner to be admitted to the annual meeting. A recent statement or letter from your bank or broker confirming your ownership as of the record date, or presentation of a valid proxy from a bank, broker or other nominee that is the record owner of your Citadel shares, would be acceptable proof of your beneficial ownership. | ||
You should be prepared to present photo identification for admittance. If you do not provide photo identification or comply with the other procedures outlined above upon request, you may not be admitted to the annual meeting. |
Q: | Who can vote at the Citadel annual meeting? | |
A: | Holders of record at the close of business as of the record date of Citadel Class A common stock will be entitled to notice of and to vote at the Citadel annual meeting with regard toProposals 1-5 described above. Holders of Citadel Class B common stock as of the record date will be entitled to notice of and to vote at the Citadel annual meeting, together with holders of Citadel Class A common stock as of the record date as a single class, with regard to Proposals 1 and 5 described above. With respect to Proposal 3, each holder of Citadel Class A common stock as of the record date is entitled to one vote per share with respect to each individual director nominee, and need not cast a vote considering both individual director nominees together as a group. Except as described in the previous sentence, each of the shares of Citadel Class A common stock issued and outstanding on the record date is entitled to one vote at the Citadel annual meeting with regard to each ofProposals 1-5 described above, and each of the shares of Citadel Class B |
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common stock issued and outstanding on the record date is entitled to one vote at the Citadel annual meeting with regard to each of Proposals 1 and 5 described above. | ||
Q: | What is a quorum? | |
A: | In order for business to be conducted at the Citadel annual meeting, a quorum must be present. A majority of the aggregate outstanding shares of Citadel Class A common stock and Class B common stock must be represented, either in person or by proxy, to constitute a quorum at the Citadel annual meeting. Citadel shares represented by valid proxies will be treated as present at the Citadel annual meeting for purposes of determining a quorum, without regard to whether the proxy is noted as casting a vote or abstaining. Citadel shares represented by broker non-votes will be treated as present for purposes of determining a quorum. Citadel shares voted by a broker on any issue other than a procedural motion will be considered present for all quorum purposes, even if the shares are not voted on every matter. | |
Q: | How do I vote my shares? | |
A: | You may vote your Citadel shares by proxy electronically via the Internet, by telephone, by sending in the appropriate paper proxy card or in person at the Citadel annual meeting. You can specify how you want your Citadel shares voted on each Proposal by marking the appropriate boxes on the appropriate proxy card or indicating your vote on each Proposal via the telephone or Internet. Please review the voting instructions on the proxy card and read the entire text concerning the Proposals in this information statement/proxy statement/prospectus prior to voting. |
Whether you vote your proxy electronically over the Internet, by telephone or by mail, Citadel will treat your proxy the same way. The individuals appointed as proxy holders will be Farid Suleman, Randy Taylor and Hilary Glassman. The Citadel shares represented by valid proxies that Citadel receives in time for the Citadel annual meeting will be voted as specified in such proxies. Valid proxies include all properly executed, written paper proxy cards received pursuant to this solicitation that are not later revoked. Executed but unvoted proxies will be voted in accordance with the recommendations of Citadel’s board of directors. |
Q: | Why are there two different proxy cards attached to this information statement/proxy statement/prospectus? | |
A: | There are two different proxy cards attached to this information statement/proxy statement/prospectus because holders of Citadel Class A common stock and holders of Citadel Class B common stock who wish to complete a proxy card must complete a card which relates to the class of stock that they hold. Thus, one of the attached proxy cards relates to Citadel Class A common stock, and the other to Citadel Class B common stock. It is important that each stockholder use only the correct proxy card(s) to record his or her votes. Use of the wrong proxy card could invalidate your vote, so please be careful to use the right card when you cast your vote. If you have any questions about the voting procedures, please read the information statement/proxy statement/prospectus carefully, as it explains these matters more fully. You may also call Georgeson Inc. (the “Proxy Solicitor”) directly with any particular questions you may have. The telephone number of the Proxy Solicitor is888-624-7035. | |
Q: | How do I vote if I am a beneficial stockholder? | |
A: | If you are a beneficial stockholder, meaning you hold your Citadel shares in street name, you have the right to direct your bank or nominee on how to vote the shares. You should complete a voting instruction card provided to you by your bank, broker or nominee or provide your voting instructions by Internet or telephone, if made available by your bank, broker or other nominee. If you wish to vote in person at the meeting, you must first obtain from the holder of record a proxy issued in your name. | |
Q: | Can I change my vote after I have delivered my proxy? | |
A: | Yes. You can change your vote at any time before your proxy is voted at the Citadel annual meeting. If you are a holder of record you can do so by: |
• | filing a written notice of revocation with the Secretary, Citadel Broadcasting Corporation, 7690 W. Cheyenne Avenue, Suite 220, Las Vegas, Nevada 89129; |
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• | submitting a new proxy before the Citadel annual meeting; | |
• | by voting by telephone or via Internet at a later date (in which case only the last vote is counted); or | |
• | attending the Citadel annual meeting and voting in person. Attendance at the Citadel annual meeting will not in and of itself constitute a revocation of a proxy. |
For shares held beneficially by you, you may change your vote only by submitting new voting instructions to your broker or nominee. If the Citadel annual meeting is postponed or adjourned, it will not affect the ability of stockholders of record as of the record date to exercise their voting rights or to revoke any previously granted proxy using the methods described above. |
Q: | What is “householding” and how does it affect me? | |
A: | Some banks and brokers may be participating in the practice of “householding” proxy statements and annual reports. This means that only one copy of this information statement/proxy statement/prospectus may have been sent to multiple stockholders in your household. Citadel will promptly deliver a separate copy of either or both documents to you if you write or call Citadel at the following address or phone number: Georgeson Inc., Attention: , phone:888-624-7035. | |
Q: | What if I receive more than one set of proxy cards or more than onee-mail instructing me to vote? | |
A: | If you receive more than one set of proxy cards or more than onee-mail instructing you to vote, your shares are registered in more than one name or are registered in different accounts. Please complete, date, sign and return each appropriate proxy card, and respond to eache-mail, to ensure that all your shares are voted. | |
Q: | Who is the inspector of election? | |
A: | Citadel’s board of directors has appointed a representative of The Bank of New York Mellon to act as Inspector of Election at the Citadel annual meeting. | |
Q: | What are the costs for soliciting proxies for the Citadel annual meeting? | |
A: | Cumulus Media and Citadel will each pay one-half of the costs and expenses incurred in connection with the filing, printing and mailing of this document. Citadel will reimburse brokers, banks, institutions and others holding common stock of Citadel as nominees for their expenses in sending proxy solicitation material to the beneficial owners of such common stock of Citadel and obtaining their proxies. Management has retained Georgeson Inc. to assist in soliciting proxies for a fee of up to $7,500, plus reasonableout-of-pocket expenses. Solicitation of proxies by mail may be supplemented by telephone and other electronic means, advertisements and personal solicitation by the directors, officers or employees of Citadel. No additional compensation will be paid to Citadel’s directors, officers or employees for solicitation. | |
Q: | As a Citadel stockholder, why am I electing Citadel directors, ratifying the appointment of an independent registered public accounting firm for Citadel and considering other proposals when I am being asked to adopt the merger agreement? | |
A: | Delaware law requires Citadel to hold a meeting of its stockholders each year. Citadel is observing this requirement by holding the meeting to elect directors to Citadel’s board of directors, ratify the appointment of Deloitte & Touche LLP as Citadel’s independent registered public accounting firm for 2011 and consider certain other proposals. The Citadel directors elected at the Citadel annual meeting will serve as directors of Citadel following the meeting through the earliest of the effective time of the merger, Citadel’s 2014 annual meeting of stockholders, or his or her death, removal, retirement or resignation. At the effective time of the merger, the individuals serving as Citadel directors immediately prior to the effective time of the merger will no longer be Citadel directors. Deloitte & Touche LLP will not continue to conduct an independent audit of Citadel following the merger. The election of the nominees for director, the ratification of the selection of Deloitte & Touche LLP as Citadel’s independent registered public accounting firm and the other proposals are not conditions to completion of the merger. |
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Q: | What is the merger transaction upon which I am being asked to vote? | |
A: | Holders of Citadel Class A common stock and Citadel Class B common stock as of the record date are being asked to vote, as a single class, to adopt the merger agreement, pursuant to which Citadel will merge with Merger Sub, with Citadel surviving as an indirect wholly-owned subsidiary of Cumulus Media. | |
Q: | Why is Citadel proposing the merger? | |
A: | In the course of reaching its decision to approve the merger agreement and the transactions contemplated thereby, Citadel’s board of directors considered a number of factors in its deliberations. For detail on these, please see “The Merger — Recommendation of Citadel’s Board of Directors and Citadel’s Reasons for the Merger” on page . | |
Q: | What stockholder approvals are needed for Citadel? | |
A: | Proposal 1 requires the affirmative vote of a majority of the outstanding shares of Citadel Class A common stock and Citadel Class B common stock as of the record date, voting together as a single class, to be approved. Proposal 5 requires the affirmative vote of a majority of the votes cast at the Citadel annual meeting by holders of Citadel Class A common stock and Citadel Class B common stock as of the record date, voting together as a single class, to be approved. |
Proposals 2 and 4 require the affirmative vote of a majority of the votes cast at the annual meeting by holders of Citadel Class A common stock as of the record date to be approved. Proposal 3 requires the affirmative vote of a plurality of the votes at the annual meeting by holders of Citadel Class A common stock as of the record date for each director nominee to be approved. | ||
As of , 2011, the record date for determining stockholders of Citadel entitled to vote at the Citadel annual meeting, there were outstanding shares of Citadel Class A common stock and outstanding shares of Citadel Class B common stock. On that date, there were total shares of Citadel common stock outstanding and entitled to vote at the Citadel annual meeting, held by approximately holders of record. |
Q: | What will I receive for my Citadel shares in the proposed merger? | |
A: | Citadel stockholders may make one of the following elections regarding the type of merger consideration they wish to receive in exchange for their shares of Citadel common stock in the merger: |
• | a cash election to receive $37.00 in cash for each share of Citadel common stock, subject to proration; or | |
• | a share election to receive 8.525 shares of Cumulus Media Class A common stock, subject to proration, and also subject to the right of Cumulus Media, in the exercise of its reasonable determination, to issue shares of Cumulus Media Class B common stock or warrants to acquire Cumulus Media Class A common stock or Cumulus Media Class B common stock if it reasonably determines that the issuance of Cumulus Media Class A common stock or Cumulus Media Class B common stock would cause Cumulus Media to be in violation of the Communications Act or FCC rules and policies. |
The form of merger consideration that Citadel stockholders actually receive may be adjusted as a result of the proration procedures pursuant to the merger agreement as described in this information statement/proxy statement/prospectus under “The Merger — Citadel Stockholders and Warrant Holders Making Cash and Stock Elections — Proration Procedures” on page . These proration procedures are designed to ensure that Cumulus Media does not (i) pay cash in excess of (a) $1,408,728,600,plus(b) the product of (1) the number of shares of Citadel Class A common stock issued upon the exercise of Citadel stock options prior to closing and (2) $30.00,minus(c) the cash value of dissenting shares (the “Cash Consideration Cap”), or (ii) issue in excess of 151,485,282 shares of Cumulus Media common stock,plus(b) the product of (1) the number of shares of Citadel Class A common stock issued upon exercise of Citadel stock options prior to closing and (2) 3.226 (the “Stock Consideration Cap”). |
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Q: | What will I receive for my Citadel warrants in the proposed merger? | |
A: | Citadel warrant holders will have the right to elect to have their warrants adjusted to become the right to receive upon exercise: |
• | $37.00 in cash for each share of Citadel common stock underlying such warrant, subject to proration; or | |
• | 8.525 shares of Cumulus Media Class A common stock, subject to proration, and also subject to the right of Cumulus Media, in the exercise of its reasonable determination, to issue shares of Cumulus Media Class B common stock or warrants to acquire Cumulus Media Class A common stock or Cumulus Media Class B common stock if it determines that the issuance of its Class A common stock or Cumulus Media Class B common stock would cause Cumulus Media to be in violation of the Communications Act or FCC rules and policies. |
The form of merger consideration that Citadel warrant holders actually receive may be adjusted as a result of the proration procedures pursuant to the merger agreement as described in this information statement/proxy statement/prospectus under “The Merger — Citadel Stockholders and Warrant Holders Making Cash and Stock Elections — Proration Procedures” on page . These proration procedures are designed to ensure that Cumulus Media does not pay cash in excess of the Cash Consideration Cap or issue shares of Cumulus Media common stock in excess of the Stock Consideration Cap. |
Q: | How will Cumulus Media determine if a Citadel stockholder or warrant holder will receive Cumulus Media Class A common stock or Cumulus Media Class B common stock (or warrants to purchase shares of Cumulus Media Class A common stock or Cumulus Media Class B common stock) in the merger? | |
A: | Shares of Cumulus Media Class B common stock (or warrants to purchase shares of Cumulus Media Class A common stock or Cumulus Media Class B common stock) will be issued by Cumulus Media to a Citadel stockholder or warrant holder if Cumulus Media reasonably determines that the issuance of its Class A common stock to such stockholder would result in the violation of the Communications Act or FCC rules and policies. |
To assist Cumulus Media in determining whether it can issue shares of Cumulus Media Class A common stock without violating the Communications Act or FCC rules and policies in connection with an election to receive cash or stock consideration in the merger, each Citadel stockholder and warrant holder will be required to complete an ownership certification and a related FCC worksheet. |
Q: | What are the principal differences between Class A common stock and Class B common stock? | |
A: | Cumulus Media Class A common stock and Class B common stock are generally equivalent in all respects, except that shares of Cumulus Media Class B common stock generally are not entitled to vote on matters put to a vote of Cumulus Media stockholders. | |
Q: | How and when do I make a cash election or a stock election? | |
A: | You should carefully review and follow the instructions accompanying the form of election provided together with this information statement/proxy statement/prospectus. To make a cash election or a stock election, Citadel stockholders and warrant holders of record must properly complete, sign and send the form of election and stock certificates (or evidence of shares in book-entry form) representing their Citadel shares to , the exchange agent, at the following address: |
By mail: | By overnight courier: | By hand: | By facsimile transmission: (for eligible institutions only) | |||
(Tel.) | ||||||
To confirm facsimile only: (Tel.) |
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Questions regarding the cash or share elections should be directed to , the exchange agent, at . | ||
The exchange agent must receive the form of election and any stock certificates (or evidence of shares in book-entry form) representing Citadel common stock or a guarantee of delivery as described in the instructions accompanying the form of election, by the election deadline.Unless otherwise designated on the election form, the election deadline will be 5:00 p.m., New York City time, (i) ten business days preceding the anticipated merger closing date, or (ii) on such other date as Citadel and Cumulus Media mutually agree. Citadel and Cumulus Media will publicly announce the anticipated election deadline at least five business days prior to the election deadline. | ||
If you hold Citadel shares in “street name” through a bank, broker or other nominee and you wish to make an election, you should seek instructions from the financial institution holding your shares concerning how to make your election. |
Q: | If I beneficially own Citadel shares held pursuant to the Citadel Broadcasting Corporation 2010 Equity Incentive Plan as of the record date, will I be able to vote on the adoption of the merger agreement and elect whether to receive cash or stock consideration? | |
A: | Yes. Holders who beneficially own Citadel shares held pursuant to the Citadel Broadcasting Corporation 2010 Equity Incentive Plan (as it may be amended, supplemented or modified) (the “Citadel Plan”) as of the record date may vote on the adoption of the merger agreement and may elect whether to receive cash or stock consideration by following the instructions accompanying the form of election provided together with this information statement/proxy statement/prospectus. | |
Q: | Can I change my election after the form of election has been submitted? | |
A: | Yes, you may revoke your election prior to the election deadline by submitting a written notice of revocation to the exchange agent or by submitting new election materials. Revocations must specify the name in which your shares are registered on the stock transfer books of Citadel and such other information as the exchange agent may request. If you wish to submit a new election, you must do so in accordance with the election procedures described in this information statement/proxy statement/prospectus and the form of election. If you instructed a broker to submit an election for your shares, you must follow your broker’s directions for changing those instructions.Whether you revoke your election by submitting a written notice of revocation or by submitting new election materials, the notice or materials must be received by the exchange agent by the election deadline in order for the revocation to be valid. | |
Q: | May I transfer Citadel shares and/or warrants after I make my election? | |
A: | No. Citadel stockholders and warrant holders who have made elections will be unable to sell or otherwise transfer their shares after making the election, unless the election is properly revoked before the election deadline or unless the merger agreement is terminated. | |
Q: | What if I do not send a form of election or it is not received? | |
A: | If the exchange agent does not receive a properly completed form of election from you before the election deadline, together with any stock certificates (or evidence of shares in book-entry form) representing the shares you wish to exchange for cash or shares of Cumulus Media common stock, properly endorsed for transfer, book-entry transfer shares or a guarantee of delivery and any additional documents required by the procedures set forth in the form of election, then you will have no control over the type of merger consideration you receive. Citadel stockholders or warrant holders not making an election will receive the consideration choice selected for the majority of Citadel shares and warrants for which an election was properly made (or deemed made) and, as a result, your Citadel shares may be exchanged for cash consideration or stock consideration consistent with the proration procedures contained in the merger agreement and described under “The Merger — Citadel Stockholders and Warrant Holders Making Cash and Stock Elections — Proration Procedures” on page .You bear the risk of delivery and should send any form of election by courier or by hand to the appropriate addresses shown in the form of election. |
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If you do not make a valid election with respect to the Citadel shares or warrants you own of record, after completion of the merger, you will receive written instructions from the exchange agent on how to exchange your Citadel shares or warrants for the shares of Cumulus Media common stock and/or cash that you are entitled to receive in the merger as a non-electing Citadel stockholder or warrant holder. |
Q: | May I submit a form of election even if I do not vote to adopt the merger agreement? | |
A: | Yes. You may submit a form of election even if you vote against the adoption of the merger agreement or abstain with respect to the adoption of the merger agreement. | |
Q: | What do I need to do now? | |
A: | After carefully reading and considering the information contained in this information statement/proxy statement/prospectus, please respond by completing, signing and dating the appropriate proxy card or voting instruction card and returning in the enclosed postage-paid envelope, or, if available, by submitting your voting instruction by telephone or through the Internet, as soon as possible so that your shares may be represented and voted at the Citadel annual meeting. If you hold shares registered in the name of a broker, bank or other nominee, that broker, bank or other nominee has enclosed, or will provide, a voting instruction for use in directing your broker, bank or other nominee how to vote those shares. | |
Q: | Should I send in my stock certificates (or evidence of shares in book-entry form) with my proxy card or my form of election? | |
A: | Please do NOT send your Citadel stock certificates (or evidence of shares in book-entry form) with your proxy card. You should send in your Citadel stock certificates (or evidence of shares in book-entry form) to the exchange agent with your form of election. |
If you wish to make an election with respect to your Citadel shares, prior to the election deadline, you should send your completed, signed form of election together with your Citadel stock certificates (or evidence of shares in book-entry form), if any, properly endorsed for transfer, or a guarantee of delivery to the exchange agent as described in the form of election. If your shares are held in “street name,” you should follow your broker’s instructions for making an election with respect to your shares. |
Q: | Why am I being asked to consider and approve on a non-binding, advisory basis compensation that may be paid or become payable to Citadel’s named executive officers that is based on or otherwise relates to the merger? | |
A: | The SEC recently has adopted new rules that require Citadel to seek a non-binding, advisory vote with respect to certain compensation that may be paid or become payable to Citadel’s named executive officers that is based on or otherwise relates to the merger (also known as “golden parachute” compensation). | |
Q: | What will happen if Citadel stockholders do not approve the compensation that may be paid or become payable to Citadel’s named executive officers that is based on or otherwise relates to the merger? | |
A: | Approval of the compensation that may be paid or become payable to Citadel’s named executive officers in connection with the merger is not a condition to completion of the merger. The vote with respect to the compensation that may be received by the named executive officers that is based on or otherwise relates to the merger is an advisory vote and will not be binding on Citadel. Therefore, if the merger is approved by the stockholders and completed, this “golden parachute” compensation will still be payable, if triggered, to the named executive officers, whether or not this vote on compensation is approved by the stockholders. | |
Q: | If my shares are held in “street name” by a broker, bank or other nominee, will my broker, bank or other nominee vote my shares for me? | |
A: | If you hold your shares in “street name” and do not provide voting instructions to your broker, your shares will not be voted onProposals 1-4 (to the extent you would otherwise be entitled to vote on such proposals) because your broker does not have discretionary authority to vote on these Proposals. You should follow the directions your broker, bank or other nominee provides. Citadel shares that are not voted because |
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you do not properly instruct your broker, bank or other nominee will have the effect of a vote against Proposal 1. Citadel shares that are not voted because you do not properly instruct your broker, bank or other nominee will have no effect on the outcome of Proposals 2, 3 or 4. Proposal 5, the ratification of the selection of Deloitte & Touche LLP as Citadel’s independent registered public accountants for the year ending December 31, 2011, is a discretionary matter and brokers will be permitted to vote uninstructed shares as to such matter. | ||
Q: | What if I do not vote? | |
A: | If you fail to respond with a vote on Proposal 1, or if you respond and indicate that you are abstaining from voting on such Proposal, it will have the same effect as a vote against Proposal 1. To the extent you are entitled to vote on any ofProposals 2-5, if you fail to respond with a vote on any of such proposals, or if you respond and indicate that you are abstaining from voting on any of such proposals, it will have no effect on the outcome ofProposals 2-5. | |
Q: | Am I entitled to appraisal rights under the DGCL instead of receiving cash consideration for my shares of Citadel common stock? | |
A: | Yes. As a holder of Citadel common stock, you are entitled to exercise appraisal rights under Section 262 of the DGCL in connection with the merger if you take certain actions and meet certain conditions. See “The Merger — Appraisal Rights” on page . In addition, a copy of Section 262 of the DGCL is attached to this information statement/proxy statement/prospectus asAnnex G. | |
Q: | What are the tax consequences to Citadel stockholders of the merger? | |
A: | The receipt of the merger consideration in exchange for Citadel common stock in the merger will be a fully taxable transaction. Please review carefully the information under “The Merger — Material U.S. Federal Income Tax Consequences of the Merger” on page , for a description of the material U.S. federal income tax consequences of the merger. The tax consequences to you will depend on your own situation. Please consult your tax advisors as to the specific tax consequences to you of the merger, including the applicability and effect of U.S. federal, state, local and foreign income and other tax laws in light of your particular circumstances. | |
Q: | When is the merger expected to be completed? | |
A: | Citadel expects the merger to be completed by the end of 2011. However, Citadel cannot be certain when, or if, the conditions to the merger will be satisfied or waived, or that the merger will be completed. |
As more fully described in this information statement/proxy statement/prospectus and in the merger agreement, the completion of the merger depends on a number of conditions being satisfied or, where legally permissible, waived. These conditions include, among others, receipt of the requisite approval of Citadel stockholders, the expiration or termination of the waiting period under the HSR Act, the receipt of the FCC Approval, the approval for listing on the Nasdaq Stock Market of the Cumulus Media Class A common stock to be issued as stock consideration in the merger, the absence of any law or order prohibiting the merger or having certain material adverse effects on one or more of the parties to the merger, the correctness of all representations and warranties made by the parties in the merger agreement and performance by the parties of their obligations under the merger agreement (subject in each case to certain materiality standards). |
Q: | Are there risks associated with the merger that I should consider in deciding how to vote? | |
A: | Yes. There are a number of risks related to the merger and the other transactions contemplated by the merger agreement that are discussed in this information statement/proxy statement/prospectus and in the documents incorporated by reference or referred to in this information statement/proxy statement/prospectus. Please read with particular care the detailed description of the risks described in “Risk Factors” beginning on page and in Citadel and Cumulus Media SEC filings referred to in “Where You Can Find More Information” on page . |
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Q: | Where can I find the voting results of the Citadel annual meeting? | |
A: | The preliminary voting results will be announced at the Citadel annual meeting. In addition, within four business days following the Citadel annual meeting, Citadel intends to file the final voting results with the SEC onForm 8-K. If the final voting results have not been certified within thatfour-day period, Citadel will report the preliminary voting results onForm 8-K at that time and will file an amendment to theForm 8-K to report the final voting results within four days of the date that the final results are certified. | |
Q: | Who can help answer my questions? | |
A: | If you have any questions about the Citadel annual meeting, the matters to be voted upon, including the merger, or questions about how to submit your proxy or make an election, or if you need additional copies of this information statement/proxy statement/prospectus, the form of election or the enclosed proxy card or voting instruction card, you should contact . |
Q: | Why have I received this information statement/proxy statement/prospectus? | |
A: | You have received this document because Cumulus Media’s board of directors is required to provide you a notice of certain stockholder approvals that have been received, and of certain actions to be taken, by Cumulus Media. | |
Q: | What actions are going to be taken by Cumulus Media? | |
A: | Assuming the merger agreement is approved and adopted by Citadel’s stockholders, and the merger is thereafter completed, Cumulus Media will pay cash and issue shares of Cumulus Media’s Class A common stock (or in certain instances, shares of Cumulus Media Class B common stock or warrants in lieu of Cumulus Media common stock) in the merger, issue its equity securities pursuant to the Investment Agreement, be able to issue equity awards under a new equity incentive plan and amend and restate its certificate of incorporation. | |
Q: | Are Cumulus Media stockholders being asked to vote on any of these matters? | |
A: | No. Certain stockholders of Cumulus Media, including Lewis W. Dickey, Jr., Cumulus Media’s Chairman, President and Chief Executive Officer and John W. Dickey, Jr., Cumulus Media’s Executive Vice President and Co-Chief Operating Officer, and the brother of Lewis W. Dickey, Jr., who, at all relevant times, collectively held a majority of the voting power of Cumulus Media’s outstanding common stock, have previously executed written stockholder consents approving each of these actions. Pursuant to the rules of the Nasdaq Stock Market and the DGCL, as applicable, no further action by Cumulus Media stockholders is required to effectuate these transactions. | |
Q: | How many shares of Cumulus Media Class A common stock are going to be issued in the merger? | |
A: | Pursuant to the merger agreement, Cumulus Media has agreed to issue up to 151,485,282 shares of Cumulus Media Class A common stock (plus an additional number of shares based on the number of shares of Citadel common stock that are issued upon the exercise of stock options to acquire Citadel common stock prior to the closing date of the merger), with the exact number of shares of Cumulus Media Class A common stock to be issued dependent upon elections to be made by the holders of Citadel common stock (and warrants to purchase Citadel common stock). | |
Q: | In what instances would Cumulus Media issue shares of its Class B common stock or warrants in lieu of shares of Cumulus Media Class A common stock in the merger? | |
A: | If Cumulus Media reasonably determines that the issuance of Cumulus Media Class A common stock to any Citadel stockholders would result or would be likely to result in the violation of the Communications Act or FCC rules and policies, Cumulus Media will issue an equal number of shares of Cumulus Media Class B common stock (or, in its discretion, warrants to purchase shares of Cumulus Media Class A common stock or shares of Cumulus Media Class B common stock) to those stockholders. |
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Q: | What are the principal differences between Cumulus Media Class A common stock and Cumulus Media Class B common stock? | |
A: | Cumulus Media Class A common stock and Class B common stock are generally equivalent in all respects, except that shares of Cumulus Media Class B common stock generally are not entitled to vote on matters put to a vote of Cumulus Media stockholders. | |
Q: | Why is Cumulus Media issuing shares of its stock pursuant to the Investment Agreement? | |
A: | Cumulus Media is issuing shares of its stock pursuant to the Investment Agreement in order to obtain cash to pay a portion of the cash purchase price to complete the merger. | |
Q: | How many shares of Cumulus Media stock are going to be issued under the Investment Agreement? | |
A: | Pursuant to the Investment Agreement, the Investors have committed to purchase for cash up to an aggregate of $500.0 million in shares of Cumulus Media common stock, preferred stock, or warrants to purchase common stock, at a purchase price per common share (or warrant) of $4.34. As a result, Cumulus Media may issue up to 115,207,373 shares of Cumulus Media common stock, or warrants to purchase shares of Cumulus Media common stock pursuant to the Investment Agreement. Depending on the amount of cash elected to be received by Citadel stockholders in the merger, the Investors’ commitments may be reduced in accordance with the Investment Agreement, subject to a minimum aggregate investment of $395.0 million. In addition, under certain circumstances where Cumulus Media does not require Macquarie’s full investment to consummate the merger, Macquarie may elect to reduce its investment to the extent not so required. | |
Q: | What class of Cumulus Media stock is going to be issued pursuant to the Investment Agreement? | |
A: | Crestview has agreed to purchase up to $250.0 million in shares of Cumulus Media Class A common stock, and Macquarie and UBS Securities each have agreed to purchase up to $125.0 million in warrants, which will be immediately exercisable by U.S. persons, subject to the Communications Act and FCC rules and policies, at an exercise price of $0.01 per share, for shares of Cumulus Media Class B common stock. Macquarie may, at its option, elect to receive up to the full amount of its investment in shares of a newly created class of perpetual redeemable, non-convertible preferred stock, and will also be permitted to syndicate up to $45.0 million of its commitment to one or more third parties, subject to certain limitations set forth in the Investment Agreement. UBS Securities may syndicate all or any portion of its commitment to one or more third parties, subject to the same limitations set forth in the Investment Agreement. Third parties who are U.S. persons to whom Macquarie or UBS Securities syndicate a portion of their respective commitments may purchase shares of Cumulus Media Class A common stock instead of warrants. | |
Q: | What other rights do the Investors have under the Investment Agreement? | |
A: | Cumulus Media has agreed to enter into a registration rights agreement with the Investors pursuant to which Cumulus Media has agreed under certain circumstances and at certain times to file one or more registration statements with the SEC relating to the shares of Cumulus Media Class A common stock and Cumulus Media Class B common stock that the Investors, or third parties to whom Macquarie or UBS Securities may syndicate such shares, may acquire pursuant to the Investment Agreement, or upon the conversion of Cumulus Media Class B common stock or exercise of warrants for shares of Cumulus Media common stock. Cumulus Media has also agreed to enter into a stockholders agreement (the “Stockholders Agreement”) with the Investors and certain other stockholders, which will provide for certain rights and obligations of the parties relating to the nomination and election of directors and limitations on the acquisition and disposition of shares of Cumulus Media common stock, among other things. | |
Q: | Why is Cumulus Media adopting a new equity incentive plan? | |
A: | Pursuant to the terms and conditions of the Investment Agreement, Cumulus Media was required to approve and adopt a new equity incentive plan, and agreed that, in connection therewith, the remaining authorizations for equity awards under Cumulus Media’s existing equity incentive plans would be cancelled. |
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Q: | Why is Cumulus Media amending and restating its certificate of incorporation? | |
A: | Cumulus Media is amending and restating its certificate of incorporation primarily to, among other things, provide for and set out the rights and limitations of various classes of securities which may be issuable in the merger and pursuant to the Investment Agreement, to increase the number of shares of stock Cumulus Media is authorized to issue in order to maintain flexibility for future business developments, to reclassify the current Cumulus Media Class D common stock as Cumulus Media Class B common stock, and to set out therein certain provisions regarding the governance of Cumulus Media. | |
Q: | Are there risks associated with these matters that I should be aware of? | |
A: | Yes. You should consider the risk factors set out in the section entitled “Risk Factors” beginning on page of this document. | |
Q: | Does Cumulus Media have any other significant transactions pending of which I should be aware? | |
A: | On January 31, 2011, Cumulus Media entered into a share exchange agreement pursuant to which it agreed to acquire the 75% of the equity interests in CMP that it does not currently own. Cumulus Media has managed CMP’s business pursuant to a management agreement since 2006. This transaction is expected to be completed in August 2011. |
For the three months ended March 31, 2011 and the year ended December 31, 2010, CMP had net revenues of $39.1 million and $188.7 million, respectively. |
Q: | Do I have dissenter’s rights or appraisal rights in connection with any of these transactions? | |
A: | Holders of shares of Cumulus Media common stock are not entitled to any dissenter’s rights or appraisal rights under the DGCL in connection with the merger or the related transactions. | |
Q: | Who can help answer my questions? | |
A: | If you have any questions about any of these matters, including the merger, or if you need additional copies of this document, you should contact: |
3280 Peachtree Road, N.W.
Suite 2300
Atlanta, Georgia 30305
Telephone: (404) 260-6600 or email jp.hannan@cumulus.com
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• | the adoption by the Citadel stockholders of the merger agreement; | |
• | the authorization of the shares of Cumulus Media Class A common stock for listing on the Nasdaq Stock Market; | |
• | the expiration or termination of any applicable waiting periods under the HSR Act; | |
• | the granting of FCC Approval without any conditions which would have a material adverse effect on Cumulus Media and Citadel on a combined basis after the merger is completed; |
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• | the effectiveness of the registration statement for the issuance of Cumulus Media’s securities in the merger; | |
• | the passing of 20 business days from the time this document was mailed to Cumulus Media stockholders; and | |
• | the absence of any legal injunction, restraint or prohibition on the consummation of the merger. |
• | the accuracy of the representations and warranties of Citadel, subject to certain materiality standards as described under “The Merger Agreement,” on page , and receipt of a certificate signed on behalf of Citadel by its Chief Executive Officer or Chief Financial Officer to that effect; | |
• | the performance by Citadel in all material respects of its obligations under the merger agreement and receipt of a certificate signed on behalf of Citadel by its Chief Executive Officer or Chief Financial Officer to that effect; and | |
• | the absence of a material adverse effect on Citadel. |
• | the accuracy of the representations and warranties of Cumulus Media, Holdco and Merger Sub, subject to certain materiality standards as described under “The Merger Agreement,” on page , and receipt of a certificate signed on behalf of Cumulus Media, Holdco and Merger Sub by the Chief Executive Officer or Chief Financial Officer of Cumulus Media to that effect; | |
• | the performance by Cumulus Media, Holdco and Merger Sub in all material respects of their obligations under the merger agreement and receipt of a certificate signed on behalf of Cumulus Media, Holdco and Merger Sub by the Chief Executive Officer or Chief Financial Officer of Cumulus Media to that effect; and | |
• | the absence of a material adverse effect on Cumulus Media, Holdco and Merger Sub. |
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• | by the mutual consent of Citadel and Cumulus Media; | |
• | by either Citadel or Cumulus Media, if: |
• | the merger has not been consummated by March 8, 2012 (or June 8, 2012, if all conditions have been satisfied by March 8, 2012 other than those pertaining to the HSR Act or the FCC Approval); | |
• | a governmental entity has issued a final and non-appealable law or order or taken any other final and non-appealable action enjoining or prohibiting the merger; | |
• | Citadel’s stockholders do not adopt the merger agreement, which includes the merger, payment of the merger consideration and the other transactions contemplated by the merger agreement; or | |
• | the FCC issues a decision which denies the FCC Applications for FCC Approval or designates them for an evidentiary hearing. |
• | by Citadel: |
• | upon a breach of any material covenant or agreement of Cumulus Media, Holdco or Merger Sub, or any failure of any representations or warranties of Cumulus Media, Holdco or Merger Sub to be true and accurate that constitutes, in the aggregate, a material adverse effect on Cumulus Media (ignoring for such purposes any reference to material adverse effect or materiality contained in such representation or warranty), which, in each case, is incapable of being cured or will not have been cured within 30 days of receiving written notice of such breach or failure, to be true and accurate, as applicable; | |
• | prior to Citadel’s stockholders adopting the merger agreement, in order to concurrently enter into an alternative transaction agreement with respect to a superior proposal; or | |
• | if the merger has not been consummated by the termination date. |
• | by Cumulus Media: |
• | upon a breach of any material covenant or agreement of Citadel, or any failure of representations or warranties of Citadel to be true and accurate that constitutes, in the aggregate, a material adverse effect on Citadel (ignoring for such purposes any reference to material adverse effect or materiality contained in such representation or warranty), which, in each case is incapable of being cured or will not have been cured within 30 days of receiving written notice of such breach or failure to be true and accurate, as applicable; or | |
• | if Citadel withdraws or modifies its recommendation to Citadel stockholders, fails to call and conduct a meeting of Citadel stockholders to vote on the adoption of the merger agreement or materially breaches its obligation under the merger agreement not to solicit alternative transaction proposals. |
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• | failure to implement Cumulus Media’s business plan for the combined business; | |
• | unanticipated issues in integrating logistics, information, communications and other systems; | |
• | unanticipated changes in applicable laws and regulations; | |
• | the impact on Cumulus Media’s internal controls and compliance with the regulatory requirements under the Sarbanes-Oxley Act of 2002; and | |
• | unanticipated issues, expenses and liabilities. |
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• | Citadel may be required to pay significant transaction costs related to the merger, including under certain circumstances, a termination fee of up to $80.0 million payable to Cumulus Media, and many of Citadel’s costs relating to the merger (such as legal, accounting, and a portion of Citadel’s financial advisory fees) are payable by Citadel whether or not the merger is completed; | |
• | The current market price of Citadel’s common stock and warrants may reflect a market assumption that the merger will occur, and a failure to complete the merger could result in a negative perception by the market of Citadel generally and a resulting decline in the market price of Citadel common stock and warrants; | |
• | There may be substantial disruption to Citadel’s business and a distraction of its management and employees fromday-to-day operations, because matters related to the merger (including integration planning) may require substantial commitments of time and resources, which could otherwise have been devoted to other opportunities that could have been beneficial; and | |
• | Citadel would continue to face the risks that it currently faces as an independent company, as further described herein. |
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• | the financial performance of Cumulus Media and Citadel through the date of the completion of the merger; | |
• | the inability to satisfy any of the closing conditions set forth in the merger agreement, including the possibility that Cumulus Media and/or Citadel may be unable to obtain stockholder or regulatory approvals required for the merger, or that any regulatory approval is conditioned on factors that could materially adversely affect the expected benefits to be derived from the merger; | |
• | the occurrence of an event, change or other circumstance that could give rise to termination of the merger agreement, including a termination under circumstances that could require payment of a termination fee; | |
• | the failure to obtain the necessary debt financing set forth in the commitment letters received in connection with the merger; | |
• | the failure to obtain the necessary equity financing set forth in the Investment Agreement entered into in connection with the merger; | |
• | the failure of the merger to close for any reason; | |
• | the amount of the actual costs, fees, expenses and charges related to the merger and the final terms of the financings that will be obtained for the merger; | |
• | the possibility that the merger may involve unexpected costs; | |
• | diversion of the attention of management of each of Cumulus Media and Citadel from their respective ongoing business concerns; | |
• | the effect of the announcement of the merger on customer relationships, operating results and the businesses of the companies generally; | |
• | any significant delay in the expected completion of the merger; | |
• | the possibility that problems may arise in successfully integrating the businesses of Cumulus Media and Citadel; | |
• | the possibility that the combined company may be unable to achieve cost-cutting synergies or achieve them within the expected time period; |
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• | the possibility that the combined company may be unable to achieve certain expected revenue results, including as a result of unexpected factors or events; | |
• | the possibility that the respective businesses of Cumulus Media and/or Citadel may suffer as a result of uncertainty surrounding the merger; | |
• | the possibility that the industry may be subject to future regulatory or legislative actions; | |
• | the ability to maintain contracts and leases that are critical to Cumulus Media’sand/or Citadel’s operations; | |
• | the ability to attract, motivateand/or retain key executives and associates; | |
• | the ability to execute Cumulus Media’sand/or Citadel’s business plans and strategy; | |
• | general economic or business conditions affecting the radio broadcasting industry being less favorable than expected, including the impact of decreased spending by advertisers; | |
• | increased competition in the radio broadcasting industry; | |
• | the ability to renew FCC Authorizations and comply with the Communications Act and FCC rules and policies; | |
• | the impact of current or pending legislation and regulations, antitrust considerations, and pending or future litigation or claims; | |
• | the outcome of any legal proceedings that have been or may be instituted against Cumulus Mediaand/or Citadel relating to the merger agreement; | |
• | general economic and business conditions that may affect Cumulus Media and/or Citadel before or the combined company following the merger; | |
• | the impact of Citadel’s chapter 11 proceedings that may affect Citadel before, or the combined company following, the merger; | |
• | changes in government regulations; | |
• | changes in policies or actions or in regulatory bodies; | |
• | changes in uncertain tax positions and tax rates; | |
• | changes in the financial markets; | |
• | changes in capital expenditure requirements; | |
• | changes in market conditions that could impair Cumulus Media’s or Citadel’s goodwill or intangible assets; | |
• | changes in interest rates; and | |
• | other risks and uncertainties. |
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• | the merger and the related assumption of outstanding debt, which will be refinanced as part of the Global Refinancing (defined herein); | |
• | the CMP Acquisition (defined herein), pursuant to which Cumulus Media agreed to acquire the remaining 75% of the equity interests of CMP that it does not currently own in exchange for the issuance of shares of Cumulus Media common stock; | |
• | the Equity Investment; and | |
• | the financing transaction necessary to complete the merger, which is referred to herein as the “Global Refinancing,” pursuant to which Cumulus Media intends to refinance an aggregate of $1.4 billion (as of March 31, 2011) in outstanding senior and subordinated indebtedness of each of (i) Cumulus Media (other than Cumulus Media’s recently issued $610.0 million of 7.75% senior notes due 2019 (the “2019 Notes”)), (ii) CMP Susquehanna Corporation, an indirectly wholly-owned subsidiary of CMP (“CMPSC”), and (iii) Citadel, as well as preferred stock of Radio Holdings (defined herein), all pursuant to a debt commitment letter (the “Debt Commitment”) that provides for up to $2.415 billion in senior secured financing pursuant to the Acquisition Credit Facility (defined herein). |
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• | a $2.040 billion term loan facility, with a maturity date that is seven years from the closing of the merger; and | |
• | a $375.0 million revolving credit facility, with a maturity date that is five years from the closing of the merger. |
• | between approximately $1.153 billion and $1.504 billion to fund the cash portion of the purchase price in the merger (depending on exercise of cash or stock elections under the merger agreement); |
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• | approximately $659.9 million (based on amounts outstanding at March 31, 2011) to repay all amounts outstanding under the credit facilities of CMPSC (the “CMPSC Credit Agreement”), the 9.875% Senior Subordinated Notes due 2014 of CMPSC (the “CMP 9.875% Notes”) and the Variable Rate Senior Secured Notes due 2014 of CMPSC (the “CMP 2014 Notes”), and to redeem in accordance with their terms all outstanding shares of preferred stock of Radio Holdings, with an aggregate redemption value of approximately $38.9 million (collectively, the “CMP Refinancing”); | |
• | approximately $787.2 million (based on amounts outstanding at March 31, 2011) to repay all amounts outstanding, including any accrued interest and the premiums thereon, under Citadel’s existing credit agreement (the “Citadel Credit Facilities”) and its senior notes due 2018 (the “Citadel Senior Notes”); and | |
• | approximately $146.7 million to pay estimated fees and expenses related to the merger, the Equity Investment and the Acquisition Credit Facility. |
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Three Months Ended | ||||||||||||||||||||||||||||
March 31, | Year Ended December 31, | |||||||||||||||||||||||||||
2011 | 2010 | 2010 | 2009 | 2008 | 2007 | 2006(4) | ||||||||||||||||||||||
(Unaudited) | ||||||||||||||||||||||||||||
(Dollars in thousands, except per share data) | ||||||||||||||||||||||||||||
Statement of Operations Data: | ||||||||||||||||||||||||||||
Net revenues | $ | 57,858 | $ | 56,358 | $ | 263,333 | $ | 256,048 | $ | 311,538 | $ | 328,327 | $ | 334,321 | ||||||||||||||
Station operating expenses (excluding depreciation, amortization and LMA fees) | 37,555 | 39,926 | 159,807 | 165,676 | 203,222 | 210,640 | 214,089 | |||||||||||||||||||||
Depreciation and amortization | 2,123 | 2,517 | 9,098 | 11,136 | 12,512 | 14,567 | 17,420 | |||||||||||||||||||||
LMA fees | 581 | 529 | 2,054 | 2,332 | 631 | 755 | 963 | |||||||||||||||||||||
Corporate general and administrative (including non-cash stock compensation expense) | 8,129 | 4,066 | 18,519 | 20,699 | 19,325 | 26,057 | 41,012 | |||||||||||||||||||||
Gain on exchange of assets or stations | (15,158 | ) | — | — | (7,204 | ) | — | (5,862 | ) | (2,548 | ) | |||||||||||||||||
Realized loss on derivative instrument | 40 | 584 | 1,957 | 3,640 | — | — | — | |||||||||||||||||||||
Impairment of intangible assets and goodwill(1) | — | — | 671 | 174,950 | 498,897 | 230,609 | 63,424 | |||||||||||||||||||||
Other operating expense | — | — | — | — | 2,041 | 2,639 | — | |||||||||||||||||||||
Operating income (loss) | 24,588 | 8,736 | 71,227 | (115,181 | ) | (425,090 | ) | (151,078 | ) | (39 | ) | |||||||||||||||||
Interest expense, net | (6,318 | ) | (8,829 | ) | (30,307 | ) | (33,989 | ) | (47,262 | ) | (60,425 | ) | (42,360 | ) | ||||||||||||||
Terminated transaction (expense) income | — | — | (7,847 | ) | — | 15,000 | — | — | ||||||||||||||||||||
Losses on early extinguishment of debt | — | — | — | — | — | (986 | ) | (2,284 | ) | |||||||||||||||||||
Other (expense) income, net | (2 | ) | (53 | ) | 108 | (136 | ) | (10 | ) | 117 | (98 | ) | ||||||||||||||||
Income tax (expense) benefit | (2,149 | ) | 2 | (3,779 | ) | 22,604 | 117,945 | 38,000 | 5,800 | |||||||||||||||||||
Equity losses in affiliate | — | — | — | — | (22,252 | ) | (49,432 | ) | (5,200 | ) | ||||||||||||||||||
Net income (loss) | $ | 16,119 | $ | (144 | ) | $ | 29,402 | $ | (126,702 | ) | $ | (361,669 | ) | $ | (223,804 | ) | $ | (44,181 | ) | |||||||||
Basic income (loss) per common share | $ | 0.38 | $ | (0.01 | ) | $ | 0.70 | $ | (3.13 | ) | $ | (8.55 | ) | $ | (5.18 | ) | $ | (0.87 | ) | |||||||||
Diluted income (loss) per common share | $ | 0.37 | $ | (0.01 | ) | $ | 0.69 | $ | (3.13 | ) | $ | (8.55 | ) | $ | (5.18 | ) | $ | (0.87 | ) | |||||||||
Other Data: | ||||||||||||||||||||||||||||
Station Operating Income(2) | $ | 20,303 | $ | 16,432 | $ | 103,526 | $ | 90,372 | $ | 108,316 | $ | 117,687 | $ | 120,232 | ||||||||||||||
Station Operating Income margin(3) | 35.1 | % | 29.2 | % | 39.3 | % | 35.3 | % | 34.8 | % | 35.8 | % | 36.0 | % | ||||||||||||||
Cash flows related to: | ||||||||||||||||||||||||||||
Operating activities | $ | 10,026 | $ | 12,095 | $ | 42,738 | $ | 28,691 | $ | 76,654 | $ | 46,057 | $ | 65,322 | ||||||||||||||
Investing activities | (1,786 | ) | (451 | ) | (2,425 | ) | (3,060 | ) | (6,754 | ) | (29 | ) | (19,217 | ) | ||||||||||||||
Financing activities | (18,619 | ) | (12,918 | ) | (43,723 | ) | (62,410 | ) | (49,183 | ) | (16,134 | ) | (48,834 | ) | ||||||||||||||
Capital expenditures | (502 | ) | (431 | ) | (2,353 | ) | (3,110 | ) | (6,069 | ) | (4,789 | ) | (9,211 | ) |
March 31, | December 31, | |||||||||||||||||||||||
2011 | 2010 | 2009 | 2008 | 2007 | 2006(4) | |||||||||||||||||||
(Unaudited) | ||||||||||||||||||||||||
(Dollars in thousands, except per share data) | ||||||||||||||||||||||||
Balance Sheet Data: | ||||||||||||||||||||||||
Total assets | $ | 318,876 | $ | 319,636 | $ | 334,064 | $ | 543,519 | $ | 1,060,542 | $ | 1,333,147 | ||||||||||||
Long-term debt (including current portion) | 573,269 | 591,008 | 633,508 | 696,000 | 736,300 | 731,250 | ||||||||||||||||||
Total stockholders’ (deficit) equity | $ | (324,403 | ) | $ | (341,309 | ) | $ | (372,512 | ) | $ | (248,147 | ) | $ | 119,278 | $ | 337,007 |
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(1) | Impairment charge recorded in connection with Cumulus Media’s interim and annual impairment testing under Accounting Standards Codification (“ASC”) 350. See Note 4, “Intangible Assets and Goodwill,” in the notes to Cumulus Media’s audited consolidated financial statements incorporated by reference in this information statement/proxy statement/prospectus for further discussion. | |
(2) | Station Operating Income consists of operating income before depreciation and amortization, LMA fees, non-cash stock compensation, other corporate general and administrative expenses excluding non-cash stock compensation expense, any gain on exchange of assets or stations, any realized loss on derivative instrument, impairment of intangible assets and goodwill, costs associated with Cumulus Media’s terminated attempt to purchase radio stationWTKE-FM in Holt, Florida (in 2008 and 2007). Station Operating Income should not be considered in isolation or as a substitute for net (loss) income, operating (loss) income, cash flows from operating activities or any other measure for determining Cumulus Media’s operating performance or liquidity that is calculated in accordance with accounting principles generally accepted in the United States (“GAAP”). Cumulus Media excludes depreciation and amortization due to the insignificant investment in tangible assets required to operate its stations and the relatively insignificant amount of intangible assets subject to amortization. Cumulus Media excludes LMA fees from this measure, even though they require a cash commitment, due to the insignificance and temporary nature of such fees. Corporate expenses, despite representing an additional significant cash commitment, are excluded in an effort to present the operating performance of Cumulus Media’s stations exclusive of the corporate resources employed. Cumulus Media excludes terminated transaction costs due to the temporary nature of such costs. Finally, Cumulus Media excludes non-cash stock compensation, any gain or loss on exchange of assets or stations, any realized gain or loss on derivative instrument, and impairment of intangible assets and goodwill from the measure as they do not represent cash payments for activities related to the operation of the stations. Cumulus Media believes that this is important to investors because it highlights the gross margin generated by Cumulus Media’s station portfolio. | |
Cumulus Media believes that Station Operating Income is the most frequently used financial measure in determining the market value of a radio station or group of stations and to compare the performance of radio station operators. Cumulus Media has observed that Station Operating Income is commonly employed by firms that provide appraisal services to the broadcasting industry in valuing radio stations. Further, in connection with Cumulus Media’s historical acquisitions, it has used Station Operating Income as its primary metric to evaluate and negotiate the purchase price to be paid. Given its relevance to the estimated value of a radio station, Cumulus Media believes, and its experience indicates, that investors consider the measure to be extremely useful in order to determine the value of Cumulus Media’s portfolio of stations. Additionally, Station Operating Income is one of the measures that Cumulus Media’s management uses to evaluate the performance and results of its stations. Cumulus Media’s management uses the measure to assess the performance of its station managers and Cumulus Media’s board of directors uses it to determine the relative performance of Cumulus Media’s executive management. As a result, in disclosing Station Operating Income, Cumulus Media is providing investors with an analysis of its performance that is consistent with that which is utilized by Cumulus Media’s management and Cumulus Media’s board of directors. | ||
Station Operating Income is not a recognized term under GAAP and does not purport to be an alternative to operating income from continuing operations as a measure of operating performance or to cash flows from operating activities as a measure of liquidity. Additionally, Station Operating Income is not intended to be a measure of free cash flow available for dividends, reinvestment in Cumulus Media’s business or other Cumulus Media discretionary use, as it does not consider certain cash requirements such as interest payments, tax payments and debt service requirements. Station Operating Income should be viewed as a supplement to, and not a substitute for, results of operations presented on the basis of GAAP. Cumulus Media compensates for the limitations of using Station Operating Income by using it only to supplement its GAAP results to provide a more complete understanding of the factors and trends affecting Cumulus Media’s business than GAAP results alone. Station Operating Income has its limitations as an analytical tool, and investors should not consider it in isolation or as a substitute for analysis of Cumulus Media’s results as reported under GAAP. Moreover, because not all companies use identical calculations, these |
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presentations of Station Operating Income may not be comparable to other similarly titled measures of other companies. | ||
A reconciliation of Station Operating Income to operating income (loss), net (the most closely comparable measure prepared in accordance with GAAP) is presented below. |
Three Months Ended | ||||||||||||||||||||||||||||
March 31, | Year Ended December 31, | |||||||||||||||||||||||||||
2011 | 2010 | 2010 | 2009 | 2008 | 2007 | 2006(4) | ||||||||||||||||||||||
(Unaudited) | ||||||||||||||||||||||||||||
(Dollars in thousands) | ||||||||||||||||||||||||||||
Operating income (loss) | $ | 24,588 | $ | 8,736 | $ | 71,227 | $ | (115,181 | ) | $ | (425,090 | ) | $ | (151,078 | ) | $ | (39 | ) | ||||||||||
Depreciation and amortization | 2,123 | 2,517 | 9,098 | 11,136 | 12,512 | 14,567 | 17,420 | |||||||||||||||||||||
LMA fees | 581 | 529 | 2,054 | 2,332 | 631 | 755 | 963 | |||||||||||||||||||||
Non-cash stock compensation | 589 | (101 | ) | 2,451 | 2,879 | 4,663 | 9,212 | 24,447 | ||||||||||||||||||||
Corporate general and administrative | 7,540 | 4,167 | 16,068 | 17,820 | 14,662 | 16,845 | 16,565 | |||||||||||||||||||||
Gain on exchange of assets or stations | (15,158 | ) | — | — | (7,204 | ) | — | (5,862 | ) | (2,548 | ) | |||||||||||||||||
Realized loss on derivative instrument | 40 | 584 | 1,957 | 3,640 | — | — | — | |||||||||||||||||||||
Impairment of intangible assets and goodwill | — | — | 671 | 174,950 | 498,897 | 230,609 | 63,424 | |||||||||||||||||||||
Other operating expense | — | — | — | — | 2,041 | 2,639 | — | |||||||||||||||||||||
Station Operating Income | $ | 20,303 | $ | 16,432 | $ | 103,526 | $ | 90,372 | $ | 108,316 | $ | 117,687 | $ | 120,232 | ||||||||||||||
(3) | Station Operating Income margin is defined as Station Operating Income as a percentage of net revenues. | |
(4) | Cumulus Media recorded certain immaterial adjustments to the 2006 consolidated financial data. |
Successor | Predecessor | Successor | Predecessor | |||||||||||||||||||||||||||||
Period | Period | |||||||||||||||||||||||||||||||
from | from | |||||||||||||||||||||||||||||||
Three | Three | June 1, | January 1, | |||||||||||||||||||||||||||||
Months | Months | 2010 | 2010 | |||||||||||||||||||||||||||||
Ended | Ended | through | through | |||||||||||||||||||||||||||||
March 31, | March 31, | December 31, | May 31, | Years Ended December 31, | ||||||||||||||||||||||||||||
2011 | 2010 | 2010 | 2010 | 2009 | 2008 | 2007 | 2006 | |||||||||||||||||||||||||
(Unaudited) | ||||||||||||||||||||||||||||||||
(Dollars in thousands, except per share amounts) | ||||||||||||||||||||||||||||||||
Operating data:(1) | ||||||||||||||||||||||||||||||||
Net revenue | $ | 160,022 | $ | 165,028 | $ | 444,142 | $ | 295,424 | $ | 723,620 | $ | 863,121 | $ | 719,757 | $ | 432,930 | ||||||||||||||||
Operating expenses: | ||||||||||||||||||||||||||||||||
Cost of revenue, exclusive of depreciation and amortization shown separately below | 68,522 | 68,978 | 164,594 | 116,103 | 306,648 | 353,014 | 254,727 | 120,270 | ||||||||||||||||||||||||
Selling, general and administrative | 46,192 | 46,631 | 113,637 | 78,582 | 203,871 | 227,517 | 195,611 | 126,558 | ||||||||||||||||||||||||
Corporate general and administrative expenses | 14,452 | 5,160 | 26,394 | 8,929 | 26,320 | 32,049 | 44,642 | 30,287 | ||||||||||||||||||||||||
Local marketing agreement fees | 99 | 269 | 379 | 455 | 1,027 | 1,334 | 1,326 | 1,268 | ||||||||||||||||||||||||
Asset impairment and disposal charges(2) | — | — | — | — | 985,653 | 1,208,208 | 1,612,443 | 174,049 | ||||||||||||||||||||||||
Depreciation and amortization | 23,043 | 6,855 | 58,564 | 11,365 | 35,599 | 45,264 | 30,678 | 16,740 | ||||||||||||||||||||||||
Non-cash amounts related to contractual obligations(3) | — | — | — | — | — | 21,440 | — | — |
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Successor | Predecessor | Successor | Predecessor | |||||||||||||||||||||||||||||
Period | Period | |||||||||||||||||||||||||||||||
from | from | |||||||||||||||||||||||||||||||
Three | Three | June 1, | January 1, | |||||||||||||||||||||||||||||
Months | Months | 2010 | 2010 | |||||||||||||||||||||||||||||
Ended | Ended | through | through | |||||||||||||||||||||||||||||
March 31, | March 31, | December 31, | May 31, | Years Ended December 31, | ||||||||||||||||||||||||||||
2011 | 2010 | 2010 | 2010 | 2009 | 2008 | 2007 | 2006 | |||||||||||||||||||||||||
(Unaudited) | ||||||||||||||||||||||||||||||||
(Dollars in thousands, except per share amounts) | ||||||||||||||||||||||||||||||||
Other, net(4) | 7,284 | (2 | ) | 7,486 | 854 | 6,841 | (1,688 | ) | (3,900 | ) | (1,026 | ) | ||||||||||||||||||||
Total operating expenses: | 159,592 | 127,891 | 371,054 | 216,288 | 1,565,959 | 1,887,138 | 2,135,527 | 468,146 | ||||||||||||||||||||||||
Operating income (loss) | 430 | 37,137 | 73,088 | 79,136 | (842,339 | ) | (1,024,017 | ) | (1,415,770 | ) | (35,216 | ) | ||||||||||||||||||||
Reorganization items, net(5) | — | 13,480 | — | (1,014,077 | ) | 4,556 | — | — | — | |||||||||||||||||||||||
Interest expense, net | 12,411 | 10,521 | 45,365 | 17,771 | 190,175 | 211,818 | 100,741 | 32,911 | ||||||||||||||||||||||||
Extinguishment of debt(6) | — | — | 20,969 | — | (428 | ) | (114,736 | ) | — | — | ||||||||||||||||||||||
Write-off of deferred financing costs and debt discount upon extinguishment of debt and other debt related fees(6) | — | — | 984 | — | 814 | 11,399 | 555 | — | ||||||||||||||||||||||||
(Loss) income before income taxes | (11,981 | ) | 13,136 | 5,770 | 1,075,442 | (1,037,456 | ) | (1,132,498 | ) | (1,517,066 | ) | (68,127 | ) | |||||||||||||||||||
Income tax (benefit) expense | (5,343 | ) | 1,656 | 7,553 | 5,737 | (254,097 | ) | (162,679 | ) | (231,830 | ) | (20,113 | ) | |||||||||||||||||||
Net (loss) income applicable to common shares | $ | (6,638 | ) | $ | 11,480 | $ | (1,783 | ) | $ | 1,069,705 | $ | (783,359 | ) | $ | (969,819 | ) | $ | (1,285,236 | ) | $ | (48,014 | ) | ||||||||||
Net (loss) income per share: | ||||||||||||||||||||||||||||||||
Basic | $ | (0.15 | ) | $ | 0.04 | $ | (0.04 | ) | $ | 4.02 | $ | (2.97 | ) | $ | (3.69 | ) | $ | (6.61 | ) | $ | (0.43 | ) | ||||||||||
Diluted | $ | (0.15 | ) | $ | 0.04 | $ | (0.04 | ) | $ | 3.99 | $ | (2.97 | ) | $ | (3.69 | ) | $ | (6.61 | ) | $ | (0.43 | ) | ||||||||||
Dividends declared per share | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | $ | 0.18 | $ | 0.54 | ||||||||||||||||
Special distribution declared per share | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | $ | 2.4631 | $ | — | ||||||||||||||||
Weighted average common shares outstanding: | ||||||||||||||||||||||||||||||||
Basic | 45,625 | 266,085 | 45,625 | 266,041 | 263,989 | 262,812 | 194,374 | 111,453 | ||||||||||||||||||||||||
Diluted | 45,625 | 268,005 | 45,625 | 267,961 | 263,989 | 262,812 | 194,374 | 111,453 | ||||||||||||||||||||||||
Other data: | ||||||||||||||||||||||||||||||||
Cash flow provided by (used in): | ||||||||||||||||||||||||||||||||
Operating activities | $ | 36,872 | $ | 48,489 | $ | 93,636 | $ | 44,587 | $ | 65,653 | $ | 130,852 | $ | 171,923 | $ | 136,277 | ||||||||||||||||
Investing activities | 441 | (5,830 | ) | (278 | ) | (11,152 | ) | (10,148 | ) | (9,838 | ) | (1,588 | ) | (41,516 | ) | |||||||||||||||||
Financing activities | (3,680 | ) | (41 | ) | (72,480 | ) | (130 | ) | (16,698 | ) | (302,701 | ) | 26,239 | (95,234 | ) | |||||||||||||||||
Capital expenditures | 1,558 | 2,164 | 6,671 | 3,409 | 7,761 | 8,920 | 12,345 | 11,790 | ||||||||||||||||||||||||
Current tax expense (benefit) | 272 | 280 | 1,496 | 587 | (8,580 | ) | 13,489 | 3,512 | 2,491 | |||||||||||||||||||||||
Deferred tax (benefit) expense | (5,615 | ) | 1,376 | 6,057 | 5,150 | (245,517 | ) | (176,168 | ) | (235,342 | ) | (22,604 | ) |
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Successor | Predecessor | |||||||||||||||||||||||
March 31, | December 31, | December 31, | ||||||||||||||||||||||
2011 | 2010 | 2009 | 2008 | 2007 | 2006 | |||||||||||||||||||
(Unaudited) | ||||||||||||||||||||||||
(Dollars in thousands) | ||||||||||||||||||||||||
Balance sheet data: | ||||||||||||||||||||||||
Cash and cash equivalents | $ | 145,257 | $ | 111,624 | $ | 57,441 | $ | 18,634 | $ | 200,321 | $ | 3,747 | ||||||||||||
Intangible assets, net(2) | 1,858,682 | 1,883,389 | 960,058 | 1,963,973 | 3,211,303 | 1,967,204 | ||||||||||||||||||
Total assets | 2,407,445 | 2,408,114 | 1,417,989 | 2,432,970 | 3,843,435 | 2,173,696 | ||||||||||||||||||
Long-term debt and other liabilities (including current portion) | 803,065 | 808,428 | 2,243,025 | 2,206,918 | 2,532,527 | 751,021 | ||||||||||||||||||
Liabilities subject to compromise(7) | — | — | 2,270,418 | — | — | — | ||||||||||||||||||
Stockholders’ equity (deficit) | 1,280,050 | 1,274,657 | (1,071,858 | ) | (298,948 | ) | 627,239 | 1,124,308 | ||||||||||||||||
Working capital(8) | 249,166 | 227,632 | 201,443 | 106,141 | 324,497 | 50,438 | ||||||||||||||||||
Working capital with liabilities subject to compromise(8) | — | — | (2,068,975 | ) | — | — | — |
(1) | Citadel’s selected consolidated historical financial data includes the operating results, acquired assets and assumed liabilities of Citadel’s consummation of the separation of the ABC Radio Network business and 22 ABC radio stations (collectively, the “ABC Radio Business”) from The Walt Disney Company and its subsidiaries subsequent to June 12, 2007, the closing date of its acquisition by Citadel. | |
(2) | Citadel performed its 2010 annual evaluation of FCC licenses and goodwill as of October 1, the annual testing date. Based on the results of Citadel’s 2010 annual impairment evaluation, the fair values of its FCC Authorizations more likely than not exceeded their carrying values and, therefore, no impairment of these assets had occurred as of the date of the annual test. Citadel conducted impairment tests during the years ended December 31, 2009, 2008, 2007 and 2006, which resulted in non-cash impairment charges of $933.1 million, $1,197.4 million, $1,591.5 million and $174.0 million, respectively, on a pre-tax basis, to reduce the carrying amounts of its FCC Authorizations and goodwill. Asset impairment charges of $42.6 million, on a pre-tax basis, were recognized by Citadel during the year ended December 31, 2009 to reduce the carrying amounts of its customer and affiliate relationships to their estimated fair values. Additionally, Citadel recognized non-cash impairment and disposal charges of $10.0 million, $10.8 million and $20.9 million during the years ended December 31, 2009, 2008 and 2007, respectively, to write down the carrying amounts of certain stations to be divested by it to their estimated fair market values. | |
(3) | Operating income for 2008 reflects a non-cash charge of approximately $21.4 million primarily due to Citadel’s settlement with its previous national representation firm. Under the terms of the settlement, Citadel’s new representation firm settled Citadel’s obligations under the settlement agreement with its previous representation firm and entered into a new long-term contract with Citadel. | |
(4) | Other, net of approximately $7.3 million for the three months ended March 31, 2011 includes approximately $6.5 million in costs related to the merger. For the period from June 1, 2010 through December 31, 2010, other, net of $7.5 million includes approximately $6.0 million of bankruptcy-related expenses incurred by the Successor. Other, net of approximately $6.8 million for 2009 includes $9.0 million of bankruptcy-related costs for financial advisory services and legal expenditures, offset by income due to a contract adjustment related to the ABC Radio Business of approximately $2.4 million. | |
(5) | Reorganization costs associated with the Predecessor’s bankruptcy filing in December 2009 were $13.5 million for the three months ended March 31, 2010. This amount represented $11.4 million in professional fees paid for legal, consulting, and other related services and $2.1 million to adjust the liability related to rejected executory contracts to their estimated allowed claim amounts. Included in |
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reorganization items during the period from January 1, 2010 through May 31, 2010 were (a) adjustments resulting from the application of fresh-start accounting to reflect the revaluation of assets and liabilities upon Citadel’s emergence from bankruptcy, resulting in a net gain of $921.8 million, (b) the restructuring of Citadel’s capital structure and resulting discharge of pre-petition debt in accordance with Citadel’s second modified joint plan of reorganization (the “Emergence Plan”), resulting in a gain of $139.8 million and (c) expenses incurred related to certain emergence-related items, legal, consulting and other professional services, and amounts resulting from the rejection of certain executory contracts of $47.5 million. The reorganization items incurred during the year ended December 31, 2009 represent primarily $4.1 million for the write-off of deferred financing costs and $0.5 million in professional fees incurred by the Predecessor. Beginning on the Fresh-Start Date, continuing expenses related to the remaining bankruptcy matters are recorded in other, net in the Successor’s statement of operations. | ||
(6) | During the period from June 1, 2010 through December 31, 2010, Citadel repaid the principal balance outstanding under a term loan, dated as of June 3, 2010, among Citadel, the several lenders party thereto and JPMorgan Chase Bank, N.A. (the “Emergence Term Loan Facility”) with the proceeds from the issuance of the Citadel Senior Notes and borrowings under a separate term loan agreement, along with cash on hand. Pursuant to the terms of the Emergence Term Loan Facility, a prepayment penalty of $38.0 million was incurred; this was netted against the write off of the unamortized balance of the valuation adjustment of $17.1 million, which resulted in loss on extinguishment of debt of $21.0 million. In connection with this repayment, Citadel also wrote off the unamortized balance of deferred financing costs of $1.0 million. On June 12, 2007, the Predecessor entered into a senior credit and term facility (the “Predecessor Senior Credit and Term Facility”) and used the proceeds to repay the outstanding balance of Citadel’s then-existing senior credit facility. As a result, Citadel wrote off $0.6 million of deferred financing costs. The Predecessor Senior Credit and Term Facility was amended in 2008 and 2009, which, among other things, permitted Citadel to make voluntary prepayments of the Predecessor Senior Credit and Term Facility, subject to certain conditions. In connection with these modifications and the related prepayments, during the years ended December 31, 2009 and 2008, Citadel wrote off $0.2 million and $3.5 million of debt issuance costs, respectively. Additionally, in connection with the fourth amendment to the Predecessor Senior Credit and Term Facility in March 2009, Citadel recognized expense of $0.6 million related to costs paid to third parties, and Citadel wrote off $0.6 million in debt issuance costs related to the third amendment to the Predecessor Senior Credit and Term Facility in November 2008, which permanently reduced the aggregate revolving credit commitments available. In connection with the repurchase of a portion of Citadel’s convertible subordinated notes, Citadel also wrote off approximately $2.3 million of debt issuance costs and $5.0 million of debt discount during the year ended December 31, 2008. Also in 2008, Citadel recognized gains of approximately $58.4 million and $56.3 million, both net of transaction fees, related to the early extinguishment of a portion of its Predecessor Senior Credit and Term Facility and the repurchase of a portion of its convertible subordinated notes, respectively. The repurchase of a portion of the convertible subordinated notes during the year ended December 31, 2009 resulted in a gain of $0.4 million. | |
(7) | Liabilities subject to compromise consist of pre-petition claims that were expected to be restructured or impaired pursuant to the Emergence Plan and include primarily the balance of Citadel’s senior debt as of December 31, 2009. | |
(8) | Working capital is calculated using current assets less current liabilities not subject to compromise. Working capital with liabilities subject to compromise is calculated using current assets less current liabilities and liabilities subject to compromise. |
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• | a “CMP Pro Forma Basis,” giving effect to the 2019 Notes Offering and the CMP Acquisition (including certain developments in CMP’s business); | |
• | a “Citadel Pro Forma Basis,” giving effect to the 2019 Notes Offering, the merger and the Global Refinancing (excluding any portion thereof related to the refinancing of CMP Debt); and | |
• | an “Overall Pro Forma Basis,” giving effect to the 2019 Notes Offering, the CMP Acquisition (including certain developments in CMP’s business), the merger and the Global Refinancing. |
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Three Months Ended | Year Ended | |||||||||||||||||||||||
March 31, 2011 | December 31, 2010 | |||||||||||||||||||||||
CMP Pro | Citadel Pro | Overall Pro | CMP Pro | Citadel Pro | Overall Pro | |||||||||||||||||||
Forma Basis | Forma Basis | Forma Basis | Forma Basis | Forma Basis | Forma Basis | |||||||||||||||||||
(Dollars in thousands) | ||||||||||||||||||||||||
Statement of Operations Data: | ||||||||||||||||||||||||
Net revenues | $ | 94,222 | $ | 217,880 | $ | 254,244 | $ | 441,008 | $ | 1,002,899 | $ | 1,180,574 | ||||||||||||
Station operating expenses (excluding depreciation, amortization and LMA fees) | 59,748 | 152,269 | 174,462 | 256,824 | 632,723 | 729,740 | ||||||||||||||||||
Depreciation and amortization | 3,796 | 25,166 | 26,839 | 15,894 | 99,231 | 106,027 | ||||||||||||||||||
LMA fees | 581 | 680 | 680 | 2,054 | 2,888 | 2,888 | ||||||||||||||||||
Corporate general and administrative (including non-cash stock compensation expense) | 9,150 | 22,581 | 23,602 | 21,778 | 60,342 | 63,601 | ||||||||||||||||||
Gain (loss) on exchange of assets or stations | (15,158 | ) | (14,992 | ) | (14,992 | ) | 29 | 1,130 | 1,159 | |||||||||||||||
Realized loss on derivative instrument | 40 | 40 | 40 | 1,957 | 1,957 | 1,957 | ||||||||||||||||||
Impairment of intangible assets and goodwill(1) | — | — | — | 671 | 671 | 671 | ||||||||||||||||||
Other operating (expense) income | (6 | ) | 7,118 | 7,112 | — | 7,210 | 7,210 | |||||||||||||||||
Operating income | 36,071 | 25,018 | 36,501 | 141,801 | 196,747 | 267,321 | ||||||||||||||||||
Interest expense, net | (16,839 | ) | (31,484 | ) | (38,754 | ) | (70,835 | ) | (124,940 | ) | (154,947 | ) | ||||||||||||
Terminated transaction expense | — | — | — | (7,847 | ) | (7,847 | ) | (7,847 | ) | |||||||||||||||
Other income (expense), net | — | — | — | 107 | 108 | 107 | ||||||||||||||||||
Income tax (expense) benefit | (2,384 | ) | 8,041 | 6,570 | (14,153 | ) | (3,295 | ) | (17,668 | ) | ||||||||||||||
Net income (loss) | $ | 16,848 | $ | 1,575 | $ | 4,317 | $ | 49,073 | $ | 60,773 | $ | 86,966 | ||||||||||||
As of March 31, 2011 | ||||||||||||
CMP | Citadel | Overall | ||||||||||
Pro Forma | Pro Forma | Pro Forma | ||||||||||
Basis | Basis | Basis | ||||||||||
(Dollars in thousands) | ||||||||||||
Balance Sheet Data: | ||||||||||||
Total assets | $ | 1,196,614 | $ | 3,122,457 | $ | 3,938,343 | ||||||
Long-term debt (including current portion) | 1,230,984 | 2,287,161 | 2,908,145 | |||||||||
Total stockholders’ (deficit) equity | (213,896 | ) | 391,096 | 477,943 |
(1) | Impairment charge recorded in connection with Cumulus Media’s interim and annual impairment testing under ASC 350. See Note 4, “Intangible Assets and Goodwill,” in the notes to Cumulus Media’s audited consolidated financial statements incorporated by reference in this information statement/proxy statement/prospectus for further discussion. |
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Citadel Common Stock | Cumulus Media Class A Common Stock | |||||||||||||||
Citadel | Citadel | |||||||||||||||
Pro Forma | Pro Forma | |||||||||||||||
Historical | Basis Equivalent | Historical | Basis Combined | |||||||||||||
(Loss) Income from Continuing Operations Per Share | ||||||||||||||||
Basic | ||||||||||||||||
Three Months Ended March 31, 2011 | $ | (0.15 | ) | $ | 0.09 | $ | 0.38 | $ | 0.01 | |||||||
Year Ended December 31, 2010 | (a | ) | $ | 3.34 | $ | 0.70 | $ | 0.39 | ||||||||
Diluted | ||||||||||||||||
Three Months Ended March 31, 2011 | $ | (0.15 | ) | $ | 0.09 | $ | 0.37 | $ | 0.01 | |||||||
Year Ended December 31, 2010 | (a | ) | $ | 3.32 | $ | 0.69 | $ | 0.39 | ||||||||
Cash Dividends Declared Per Share | ||||||||||||||||
Three Months Ended March 31, 2011 | — | — | — | — | ||||||||||||
Year Ended December 31, 2010 | (a | ) | — | — | — | |||||||||||
Book Value Per Share | ||||||||||||||||
March 31, 2011 | $ | 56.22 | $ | 21.34 | $ | (8.99 | ) | $ | 2.50 | |||||||
December 31, 2010 | $ | 56.22 | N/A | $ | (9.60 | ) | N/A |
(a) | As a result of Citadel’s emergence from Chapter 11 proceedings and its adoption of fresh-start accounting, historical information relating to Citadel common stock during the year ended December 31, 2010 is shown for the Predecessor for the period from January 1, 2010 through May 31, 2010, and for the Successor for the period from June 1, 2010 through December 31, 2010. |
Citadel Common Stock | ||||
Historical | ||||
Loss (Income) from Continuing Operations Per Share | ||||
Basic | ||||
Successor-Period from June 1, 2010 through December 31, 2010 | $ | (0.04 | ) | |
Predecessor-Period from January 1, 2010 through May 31, 2010 | $ | 4.02 | ||
Diluted | ||||
Successor-Period from June 1, 2010 through December 31, 2010 | $ | (0.04 | ) | |
Predecessor-Period from January 1, 2010 through May 31, 2010 | $ | 3.99 | ||
Cash Dividends Declared Per Share | ||||
Successor-Period from June 1, 2010 through December 31, 2010 | $ | — | ||
Predecessor-Period from January 1, 2010 through May 31, 2010 | $ | — |
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Closing Price of | ||||||||||||||||
Cumulus | Closing Price of | Closing Price of | Implied Value of | |||||||||||||
Media Class A | Citadel Class A | Citadel Class B | Merger | |||||||||||||
Common Stock | Common Stock | Common Stock | Consideration | |||||||||||||
As of March 9, 2011 | $ | 5.10 | $ | 34.00 | $ | 34.37 | $ | 43.48 | ||||||||
As of , 2011 | $ | $ | $ | $ |
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• | delivering written notice of revocation to the Secretary, Citadel Broadcasting Corporation, 7690 W. Cheyenne Avenue, Suite 220, Las Vegas, Nevada 89129, in time for the Secretary to receive it before the annual meeting; | |
• | voting again by Internet, telephone or mail (provided that such new vote is received in a timely manner pursuant to the instructions above); or | |
• | voting in person at the annual meeting. |
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Name | Age | Position | ||||
Farid Suleman | 59 | President, Chief Executive Officer and Director | ||||
Judith A. Ellis | 62 | Chief Operating Officer | ||||
Randy L. Taylor | 48 | Senior Vice President and Chief Financial Officer | ||||
Patricia Stratford | 48 | Senior Vice President — Finance and Administration and Assistant Secretary | ||||
Hilary E. Glassman | 49 | Senior Vice President, General Counsel and Corporate Secretary | ||||
John L. Sander | 69 | Chairman of the Board of Directors | ||||
William M. Campbell, III | 51 | Director | ||||
Jonathan Mandel | 59 | Director | ||||
Gregory Mrva | 41 | Director | ||||
Doreen A. Wright | 54 | Director |
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• | each person or group who is known by Citadel to own beneficially more than 5% of Citadel’s Class A common stock; | |
• | each of Citadel’s current directors and nominees for election as a director; | |
• | each current executive officer of Citadel named in the summary compensation table in this information statement/proxy statement/prospectus and each other person who served as an executive officer in 2010; and | |
• | all such directors and all executive officers as a group. |
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Class A and | ||||||||||||
Class B | ||||||||||||
Common Stock | ||||||||||||
Beneficially | ||||||||||||
Owned | ||||||||||||
Percentage of | ||||||||||||
Class A and B | ||||||||||||
Class A Common Stock Beneficially Owned | Common Stock, | |||||||||||
Number of | Percentage of | Voting Together | ||||||||||
Name and Address | Class A Shares | Class A Shares | as a Single Class | |||||||||
Pentwater Capital Management LP(1) | 2,055,319 | 33.29 | % | 4.40 | % | |||||||
Third Point LLC(2) | 312,165 | 7.10 | % | 0.67 | % | |||||||
Farid Suleman(3) | 843,197 | 16.10 | % | 1.77 | % | |||||||
John L. Sander(3) | 21,082 | 0.48 | % | 0.05 | % | |||||||
William M. Campbell, III(3) | 21,082 | 0.48 | % | 0.05 | % | |||||||
Jonathan Mandel(3) | 21,082 | 0.48 | % | 0.05 | % | |||||||
Gregory Mrva(3) | 21,082 | 0.48 | % | 0.05 | % | |||||||
Doreen A. Wright(3) | 21,082 | 0.48 | % | 0.05 | % | |||||||
Judith A. Ellis(3)(4) | 67,355 | 1.52 | % | 0.14 | % | |||||||
Jacquelyn J. Orr(3) | 0 | 0.00 | % | 0.00 | % | |||||||
Randy L. Taylor(3)(4) | 49,484 | 1.12 | % | 0.11 | % | |||||||
Patricia Stratford(3)(4) | 37,950 | 0.86 | % | 0.08 | % | |||||||
Hilary E. Glassman(4) | 10,000 | 0.23 | % | 0.02 | % | |||||||
All board members and executive officers as a group (11 persons) | 1,113,396 | 20.44 | % | 2.33 | % |
(1) | Information obtained solely by reference to the Schedule 13G filings made with the SEC on March 4, 2011 and April 1, 2011 by Pentwater Capital Management LP. The address of Pentwater Capital Management LP is 227 West Monroe Suite 4000, Chicago, IL 60606. The number of shares and the percentages of beneficial ownership of Citadel Class A common stock assume the conversion of all shares of Citadel Class B common stock (including shares underlying Citadel special warrants) into Citadel Class A common stock, and the exercise of all options, warrants and other securities convertible into Citadel Class A common stock currently exercisable or exercisable within 60 days of June 29, 2011. | |
(2) | Information obtained solely by reference to the Schedule 13G filed with the SEC on February 11, 2011 by Third Point LLC, which serves as investment manager or adviser to a variety of hedge funds and managed accounts. Third Point LLC reported that such shares are indirectly beneficially owned by Mr. Daniel S. Loeb, the Chief Executive Officer of Third Point LLC, by virtue of such position. Third Point LLC and |
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Mr. Loeb each disclaims beneficial ownership of such shares. The address of Third Point LLC is 390 Park Avenue, New York, NY 10022. | ||
(3) | In August 2010, Citadel issued nonvested shares of Class A common stock to certain members of its senior management and its board of directors pursuant to the Emergence Plan. In early November 2010, these members of Citadel’s senior management and its board of directors elected to voluntarily forfeit the shares of restricted stock granted by Citadel. On November 19, 2010, Citadel issued stock options, which are governed by the Citadel Plan, to certain members of its senior management and its board of directors as noted above. Each option is exercisable into one share of Class A common stock, and each holder’s options vest in three equal portions annually. The first tranche vested on June 3, 2011, and the remaining two tranches are scheduled to vest equally on each of June 3, 2012 and June 3, 2013. 75% of the options have a strike price of $28.00, 25% of the options have a strike price of $32.00 and all of the options expire on November 19, 2020. | |
(4) | In May 2011, Citadel issued nonvested restricted shares of Class A common stock to certain members of its senior management. The nonvested restricted shares granted to Ms. Glassman vest in three equal installments on each of February 15, 2012, February 15, 2013 and February 15, 2014; provided, that, if the merger is consummated before February 15, 2014, half of the unvested restricted shares of common stock will vest upon the consummation of the merger and the remaining half of the unvested restricted shares of common stock will vest on the date that is six months following the date of the merger, in each case subject to Ms. Glassman’s continued employment on the applicable vesting date. The nonvested restricted shares granted to each of Ms. Ellis, Ms. Stratford and Mr. Taylor vest in full on May 26, 2013; provided, that, if the merger is consummated before May 26, 2013, half of the unvested restricted shares of common stock will vest upon the consummation of the merger and the remaining half of the unvested restricted shares of common stock will vest on the date that is six months following the date of the merger, in each case subject to such individual’s continued employment on the applicable vesting date. |
• | each person or group who is known by Citadel to own beneficially more than 5% of Citadel’s Class B common stock; | |
• | each of Citadel’s current directors and nominees for election as a director; | |
• | each current executive officer of Citadel named in the summary compensation table in this information statement/proxy statement/prospectus and each other person who served as an executive officer in 2010; and | |
• | all such Citadel directors and all executive officers as a group. |
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Class B Common Stock Beneficially Owned | ||||||||
Number of | Percentage of Class B | |||||||
Name and Address: | Class B Shares | Shares | ||||||
Pentwater Capital Management LP(1) | 1,780,000 | 9.34 | % | |||||
Farid Suleman | 0 | 0 | % | |||||
John L. Sander | 0 | 0 | % | |||||
William M. Campbell, III | 0 | 0 | % | |||||
Jonathan Mandel | 0 | 0 | % | |||||
Gregory Mrva | 0 | 0 | % | |||||
Doreen A. Wright | 0 | 0 | % | |||||
Judith A. Ellis | 0 | 0 | % | |||||
Jacquelyn J. Orr | 0 | 0 | % | |||||
Randy L. Taylor | 0 | 0 | % | |||||
Patricia Stratford | 0 | 0 | % | |||||
Hilary E. Glassman | 0 | 0 | % | |||||
All board members and executive officers as a group (11 persons) | 0 | 0 | % |
(1) | Information obtained solely by reference to the Schedule 13G filed with the SEC on March 4, 2011 by Pentwater Capital Management LP. The address of Pentwater Capital Management LP is 227 West Monroe Suite 4000, Chicago, IL 60606. The number of shares and the percentages of beneficial ownership of Citadel Class B common stock assume the exercise of all options, warrants and other securities convertible into Citadel Class B common stock currently exercisable or exercisable within 60 days of June 29, 2011. |
AND DIRECTOR INDEPENDENCE OF CITADEL
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• | adopted governance guidelines for the board of directors; | |
• | adopted procedures for Citadel’s non-management directors to meet in executive sessions; | |
• | adopted a Code of Business Conduct and Ethics that is applicable to all of Citadel’s directors, officers, employees, agents and representatives; |
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• | adopted a Supplemental Code of Ethics for Principal Executives and Senior Financial Officers that is applicable to Citadel’s Chief Executive Officer, President, Chief Operating Officer, Chief Financial Officer, Chief Accounting Officer, Senior Vice President of Finance & Administration, General Counsel and any other senior officers in such similar capacities; | |
• | adopted a policy on reporting of improper financial practices to address accounting or auditing concerns; | |
• | adopted an audit committee charter, incorporating the applicable requirements of the Sarbanes-Oxley Act of 2002, as amended (“Sarbanes-Oxley”), SEC, and the related regulations; | |
• | adopted a compensation committee charter, incorporating the applicable requirements of Sarbanes-Oxley, regulations of any applicable stock exchange, and related regulations; | |
• | adopted a nominating/corporate governance committee charter, incorporating the applicable regulations of any applicable stock exchange, and related regulations; and | |
• | adopted a Securities Trading Policy to ensure that persons subject to the reporting requirements of Section 16 of the Exchange Act will be able to comply with all applicable filing requirements in a timely manner. |
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• | identify criteria for selection of Citadel board members; | |
• | find qualified individuals for membership on Citadel’s board of directors; | |
• | recommend to Citadel’s board of directors nominees for the next annual meeting of Citadel stockholders; | |
• | select and recommend candidates to fill any vacancies on Citadel’s board of directors; | |
• | develop and recommend to the board of directors the Corporate Governance Guidelines for Citadel’s board of directors; | |
• | provide oversight of Citadel’s and Citadel’s board of directors’ corporate governance affairs; and | |
• | provide oversight of the evaluation of Citadel’s board of directors and management. |
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• | experience in corporate or business management, such as serving as an officer or former officer of a publicly-held company; | |
• | experience in the media, communicationand/or radio broadcasting industries; | |
• | experience as a board member of another publicly-held company; | |
• | academic expertise in the media, communicationand/or radio broadcasting industries or in specific areas of Citadel’s operations; and | |
• | financial experience necessary to assist Citadel in meeting its corporate governance requirements. |
• | appoints, retains and replaces Citadel’s independent registered public accountants; | |
• | reviews the compensation of and services performed by Citadel’s independent registered public accountants, including non-audit services (if any); | |
• | reviews and discusses the preparation of quarterly and annual financial reports with Citadel’s management and independent registered public accountants; | |
• | discusses codification requirements with Citadel’s independent registered public accountants and the evaluation of their independence; | |
• | reviews and discusses major issues regarding Citadel’s accounting principles, financial statement presentations, and the adequacy of Citadel’s internal controls with management and the independent registered public accountants; | |
• | reviews and discusses the initial adoption of, and all significant changes to, critical accounting policies and practices used by Citadel with the independent registered public accountants; | |
• | evaluates the qualifications, performance and independence of Citadel’s independent registered public accountants; |
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• | reviews the significant reports to management prepared by the internal auditing department and any management responses; and | |
• | reviews reports and disclosures of insider and affiliated party transactions. |
Submitted by: | Gregory Mrva (Chairperson) William M. Campbell, III Doreen Wright |
• | discussing, reviewing and determining the compensation of Citadel’s chief executive officer and other senior executives; | |
• | reviewing and recommending Citadel’s compensation plans; | |
• | modifying Citadel’s existing compensation plans; | |
• | making awards under Citadel’s compensation plans; and | |
• | performing such other functions as are designated in Citadel’s compensation committee charter or commonly performed by compensation committees. |
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Submitted by: | Doreen A. Wright (Chairperson) Jonathan Mandel John L. Sander |
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• | Farid Suleman, Chief Executive Officer | |
• | Judith A. Ellis, Chief Operating Officer | |
• | Randy L. Taylor, Senior Vice President and Chief Financial Officer | |
• | Patricia Stratford, Senior Vice President — Finance and Administration and Assistant Secretary; and | |
• | Jacquelyn J. Orr, Vice President, General Counsel and Secretary |
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Pre-Emergence Annualized Base | Post-Emergence | |||||||
Salary Level (Reflects Voluntary | Annualized Base Salary | |||||||
Reduction by Executive) | Level | |||||||
F. Suleman — Chief Executive Officer | $ | 1,125,000 | $ | 1,250,000 | ||||
R. Taylor — Chief Financial Officer | $ | 380,000 | $ | 400,000 | ||||
J. Ellis — Chief Operating Officer | $ | 475,000 | $ | 500,000 | ||||
P. Stratford — SVP — Finance and Administration | $ | 190,000 | $ | 200,000 | ||||
J. Orr — General Counsel, VP and Secretary | $ | 332,500 | $ | 350,000 |
Target Bonus | Performance Criteria | |||||
F. Suleman — Chief Executive Officer | $ | 2,000,000 | $232.4 million of consolidated EBITDA | |||
R. Taylor — Chief Financial Officer | $ | 200,000 | (1) | $232.4 million of consolidated EBITDA | ||
J. Ellis — Chief Operating Officer | $ | 200,000 | $232.4 million of consolidated EBITDA | |||
P. Stratford — SVP — Finance and Administration | $ | 125,000 | $232.4 million of consolidated EBITDA | |||
J. Orr — General Counsel, VP and Secretary | $ | 200,000 | (1) | $232.4 million of consolidated EBITDA |
(1) | In addition, the pre-emergence compensation committee agreed to an additional bankruptcy emergence bonus of $150,000 for both Mr. Taylor and Ms. Orr, paid upon Citadel’s emergence from the Chapter 11 Proceedings. |
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Stock | Option | All Other | ||||||||||||||||||||||||||
Bonus | Awards | Awards | Compensation | |||||||||||||||||||||||||
Name and Principal Position | Year | Salary ($) | ($) | ($)(1) | ($)(1) | ($) | Total ($) | |||||||||||||||||||||
Farid Suleman, | 2010 | 1,186,955 | 2,000,000 | — | (2) | 27,446,064 | (3) | 2,554 | (4) | 30,635,573 | (5) | |||||||||||||||||
chief executive officer | 2009 | 1,135,417 | 2,000,000 | (6) | — | — | 90 | (7) | 3,135,507 | |||||||||||||||||||
(principal executive officer) | 2008 | 1,250,000 | — | 4,819,642 | (8) | — | 12,248 | (9) | 6,081,890 | |||||||||||||||||||
Judith A. Ellis, | 2010 | 489,391 | 250,000 | (10) | — | (2) | 1,443,734 | (11) | 2,554 | (4) | 2,185,679 | (5) | ||||||||||||||||
chief operating officer | 2009 | 477,084 | 200,000 | (6) | — | — | 90 | (7) | 677,174 | |||||||||||||||||||
2008 | 500,000 | 100,000 | 152,500 | (12) | — | 2,340 | (13) | 754,840 | ||||||||||||||||||||
Jacquelyn J. Orr,(14) | 2010 | 342,574 | 350,000 | (22) | — | (2) | 1,154,993 | (15) | 550,104 | (16)(14) | 2,397,671 | (5) | ||||||||||||||||
vice president, general | 2009 | 324,948 | 200,000 | (6) | — | — | 90 | (7) | 525,038 | |||||||||||||||||||
counsel and secretary | 2008 | 315,625 | 56,250 | (17) | 42,700 | (18) | — | 2,340 | (13) | 416,915 | ||||||||||||||||||
Patricia Stratford, | 2010 | 195,756 | 150,000 | (10) | — | (2) | 812,102 | (19) | 2,554 | (4) | 1,160,412 | (5) | ||||||||||||||||
senior vice president — | 2009 | 190,833 | 125,000 | (6) | — | — | 90 | (7) | 315,923 | |||||||||||||||||||
finance and administration | 2008 | 193,750 | — | 42,700 | (18) | — | 2,340 | (13) | 238,790 | |||||||||||||||||||
Randy L. Taylor,(20) | 2010 | 385,179 | 400,000 | (10)(22) | — | (2) | 1,154,993 | (15) | 2,554 | (4) | 1,942,726 | (5) | ||||||||||||||||
senior vice president — | 2009 | 337,000 | 200,000 | (6) | — | — | 90 | (7) | 537,090 | |||||||||||||||||||
finance and chief financial officer | 2008 | 306,667 | — | 73,200 | (21) | — | 2,340 | (13) | 382,207 |
(1) | The amounts reported in these columns for each named executive officer reflect the aggregate grant date fair value computed in accordance with FASB ASC Topic 718. See option grants detailed in the Grants of Plan-Based Awards Table. | |
(2) | In August 2010, in connection with Citadel’s emergence from the Chapter 11 Proceedings, each named executive officer was awarded shares of unvested restricted stock as summarized in the table below. These awards were subsequently forfeited and such awards were rescinded by Citadel in November 2010 and accordingly are not included in the total compensation for 2010. |
Grant Date | ||||||||||||
Shares | Stock Price | Fair Value | ||||||||||
Farid Suleman | 1,901,042 | $ | 23.00 | $ | 43,723,966 | |||||||
Judith A. Ellis | 100,000 | 23.00 | 2,300,000 | |||||||||
Jacquelyn J. Orr | 80,000 | 23.00 | 1,840,000 | |||||||||
Patricia Stratford | 56,250 | 23.00 | 1,293,750 | |||||||||
Randy L. Taylor | 80,000 | 23.00 | 1,840,000 |
(3) | Option award compensation is based on 2,529,591 options granted on November 19, 2010, of which 75% have an exercise price of $28.00 and a grant date fair value of $11.08 per option and 25% have an exercise price of $32.00 and a grant date fair value of $10.16 per option. | |
(4) | Included in other compensation is $2,450 for matching contributions to the Citadel Broadcasting Company 401(k) Retirement Savings Plan and $104 in premiums for term life insurance. | |
(5) | Does not reflect the grant date fair value of the unvested restricted stock voluntarily forfeited by each named executive officer, as disclosed in footnote (2) above. | |
(6) | The Bankruptcy Court approved the payment of the following 2009 bonuses in 2010: $2.0 million to Mr. Suleman; $200,000 to Ms. Ellis; $200,000 to Mr. Taylor; $200,000 to Ms. Orr; and $125,000 to Ms. Stratford. | |
(7) | Included in all other compensation is $90 premium for term life insurance. | |
(8) | Stock award compensation of $4,819,642 is comprised of $3,440,000 related to 2,000,000 shares of restricted stock with solely time-based vesting conditions and $1,379,642 related to 2,000,000 shares of |
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restricted stock with both performance-based and time-based vesting conditions. Effective April 1, 2009, Mr. Suleman voluntarily cancelled both (i) the 2,000,000 shares of restricted stock with time-based vesting conditions and (ii) the 2,000,000 shares of restricted stock with performance-based and time-based vesting conditions. Therefore, the equity compensation of $4,819,642 reflected above under “stock award” was not received by Mr. Suleman. Thus, excluding these equity grants, the actual compensation received by Mr. Suleman for 2008 was $1,262,248. | ||
(9) | Included in all other compensation is $9,908 representing the value of personal benefit of use of the corporate aircraft, $2,250 for matching contributions to the Citadel Broadcasting Company 401(k) Retirement Savings Plan and $90 premium for term life insurance. | |
(10) | Includes an additional $50,000, $50,000 and $25,000 bonus above the contractual minimums for Mr. Taylor, Ms. Ellis and Ms. Stratford, respectively, in recognition of their efforts both pre- and post-bankruptcy during 2010. | |
(11) | Option award compensation is based on 133,063 options granted on November 19, 2010 at a closing stock price of $25.00, of which 75% have an exercise price of $28.00 and a grant date fair value of $11.08 per option and 25% have an exercise price of $32.00 and a grant date fair value of $10.16 per option. | |
(12) | Stock award compensation is related to 125,000 shares of restricted stock granted on June 27, 2008 at a closing stock price of $1.22 with performance-based vesting conditions. However, in November 2009, Ms. Ellis voluntarily cancelled 41,667 shares that were scheduled to vest during 2009. Therefore, $50,834 of equity compensation related to the cancelled shares that is reflected in the $152,500 above under “stock award” was not received by Ms. Ellis. Excluding the compensation related to the cancelled shares, her actual compensation related to stock awards for 2008 was $101,666. | |
(13) | Included in other compensation is $2,250 for matching contributions to the Citadel Broadcasting Company 401(k) Retirement Savings Plan and $90 in premiums for term life insurance. | |
(14) | On December 16, 2010, Citadel entered into a separation agreement with Ms. Orr pursuant to which she agreed to resign from all positions with Citadel and its affiliates, effective as of January 31, 2011. Citadel paid Ms. Orr a lump sum payment equal to $550,000 on December 31, 2010. | |
(15) | Option award compensation is based on 106,451 options granted on November 19, 2010, of which 75% have an exercise price of $28.00 and a grant date fair value of $11.08 per option and 25% have an exercise price of $32.00 and a grant date fair value of $10.16 per option. All of Ms. Orr’s outstanding option awards were unvested and forfeited as of January 31, 2011. | |
(16) | Included in all other compensation is $104 premium for term life insurance. | |
(17) | As Ms. Orr’s bonus was paid on a cycle running from May 2007 to May 2008, she was paid a bonus of $56,250 in 2008 from the prior year’s award. | |
(18) | Stock award compensation is related to 35,000 shares of restricted stock granted on June 27, 2008 at a closing price of $1.22. | |
(19) | Option award compensation is based on 74,848 options granted on November 19, 2010, of which 75% have an exercise price of $28.00 and a grant date fair value of $11.08 per option and 25% have an exercise price of $32.00 and a grant date fair value of $10.16 per option. | |
(20) | Mr. Taylor was appointed chief financial officer effective February 29, 2008. | |
(21) | Stock award compensation was related to 60,000 shares of restricted stock granted on June 27, 2008 at a closing price of $1.22. | |
(22) | Includes an additional bankruptcy emergence bonus of $150,000 for both Mr. Taylor and Ms. Orr agreed by the pre-emergence compensation committee, paid upon Citadel’s emergence from the Chapter 11 Proceedings. |
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Option Awards: | Grant Date Fair | |||||||||||||||||||
Number of | Exercise or | Value of Stock | ||||||||||||||||||
Securities | Base Price of | and Option | ||||||||||||||||||
Underlying | Option Awards | Awards | ||||||||||||||||||
Name | Grant Date | Approval Date | Options (#) | ($/Share) | ($) | |||||||||||||||
Farid Suleman | 11/19/2010 | 11/19/2010 | 1,897,194 | (2)(3) | 28.00 | 21,020,910 | ||||||||||||||
11/19/2010 | 11/19/2010 | 632,397 | (2) | 32.00 | 6,425,154 | |||||||||||||||
Judith A. Ellis | 11/19/2010 | 11/19/2010 | 99,798 | (2) | 28.00 | 1,105,762 | ||||||||||||||
11/19/2010 | 11/19/2010 | 33,265 | (2) | 32.00 | 337,972 | |||||||||||||||
Jacquelyn J. Orr | 11/19/2010 | 11/19/2010 | 79,838 | (2) | 28.00 | 884,605 | ||||||||||||||
11/19/2010 | 11/19/2010 | 26,613 | (2) | 32.00 | 270,388 | |||||||||||||||
Patricia Stratford | 11/19/2010 | 11/19/2010 | 56,137 | (2) | 28.00 | 621,998 | ||||||||||||||
11/19/2010 | 11/19/2010 | 18,711 | (2) | 32.00 | 190,104 | |||||||||||||||
Randy L. Taylor | 11/19/2010 | 11/19/2010 | 79,838 | (2) | 28.00 | 884,605 | ||||||||||||||
11/19/2010 | 11/19/2010 | 26,613 | (2) | 32.00 | 270,388 |
(1) | In connection with Citadel’s emergence from the Chapter 11 Proceedings, on August 18, 2010, each named executive officer was awarded shares of unvested restricted stock as summarized in the table below. These awards were subsequently forfeited and such awards were rescinded by Citadel in November 2010 and accordingly are not included in the total compensation for 2010. |
Grant Date | ||||||||||||
Shares | Stock Price | Fair Value | ||||||||||
Farid Suleman | 1,901,042 | $ | 23.00 | $ | 43,723,966 | |||||||
Judith A. Ellis | 100,000 | 23.00 | 2,300,000 | |||||||||
Jacquelyn J. Orr | 80,000 | 23.00 | 1,840,000 | |||||||||
Patricia Stratford | 56,250 | 23.00 | 1,293,750 | |||||||||
Randy L. Taylor | 80,000 | 23.00 | 1,840,000 |
(2) | Reflects stock options granted under the Citadel Plan during 2010. Options vest in three equal portions annually. The first tranche vested on June 3, 2011, and the remaining two tranches are scheduled to vest equally on each of June 3, 2012 and June 3, 2013. All of Ms. Orr’s outstanding option awards were unvested and forfeited as of January 31, 2011. Upon certain events related to the termination of employment of the named executive officers or the change in control of Citadel the options vest in full as more fully described in “— Summary of Citadel Employment Arrangements, Equity Arrangements and Potential Payments Upon Termination or Change in Control — Equity Arrangements” on page . | |
(3) | Pursuant to an understanding between the Chief Executive Officer, the several lenders party to the Emergence Term Loan Facility and creditors’ committee, the Chief Executive Officer was to receive approximately half of the equity awards available for grant upon Citadel’s emergence from the Chapter 11 Proceedings. |
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Accelerated | ||||||||||||||||
Vesting of | ||||||||||||||||
Restricted | ||||||||||||||||
Severance | Stock and | |||||||||||||||
Amounts | Benefits | Options | Total | |||||||||||||
($)(10) | ($) | ($)(1) | ($) | |||||||||||||
Farid Suleman(2) | ||||||||||||||||
Death or disability | 2,000,000 | — | 4,268,687 | (3) | 6,268,687 | |||||||||||
Termination by Citadel without cause or by the executive with good reason(4) | 11,750,000 | 16,700 | 4,268,687 | (3) | 16,035,387 | |||||||||||
Termination by Citadel for cause or by the executive without good reason(5) | 2,000,000 | — | — | 2,000,000 | ||||||||||||
Change in control(11) | 11,750,000 | 16,700 | 4,268,687 | (3) | 16,035,387 | |||||||||||
Judith A. Ellis(6)(7) | ||||||||||||||||
Death or disability | 200,000 | — | 224,546 | (3) | 424,546 | |||||||||||
Termination by Citadel without cause or by the executive with good reason | 1,600,000 | 16,700 | 224,546 | (3) | 1,841,246 | |||||||||||
Termination by Citadel for cause or by the executive without good reason(5) | 200,000 | — | — | 200,000 | ||||||||||||
Change in control(11) | 1,600,000 | 16,700 | 224,546 | (3) | 1,841,246 | |||||||||||
Jacquelyn J. Orr(6)(7)(8) | ||||||||||||||||
Death or disability | 200,000 | — | 179,636 | (3) | 379,636 | |||||||||||
Termination by Citadel without cause or by the executive with good reason | 1,300,000 | 16,700 | 179,636 | (3) | 1,496,336 | |||||||||||
Termination by Citadel for cause or by the executive without good reason(5) | 200,000 | — | — | 200,000 | ||||||||||||
Change in control(11) | 1,300,000 | 16,700 | 179,636 | (3) | 1,496,336 | |||||||||||
Patricia Stratford(6)(7) | ||||||||||||||||
Death or disability | 125,000 | — | 126,308 | (3) | 251,308 | |||||||||||
Termination by Citadel without cause or by the executive with good reason | 775,000 | 16,700 | 126,308 | (3) | 918,008 | |||||||||||
Termination by Citadel for cause or by the executive without good reason(5) | 125,000 | — | — | 125,000 | ||||||||||||
Change in control(11) | 775,000 | 16,700 | 126,308 | (3) | 918,008 | |||||||||||
Randy L. Taylor(6)(7)(9) | ||||||||||||||||
Death or disability | 200,000 | — | 179,636 | (3) | 379,636 | |||||||||||
Termination by Citadel without cause or by the executive with good reason | 1,832,264 | 16,700 | 179,636 | (3) | 2,028,600 | |||||||||||
Termination by Citadel for cause or by the executive without good reason(5) | 200,000 | — | — | 200,000 | ||||||||||||
Change in control(11) | 1,832,264 | 16,700 | 179,636 | (3) | 2,028,600 |
(1) | The amounts reported in this column reflect the aggregate fair market value of unvested stock option awards held by the executives on December 31, 2010 that would accelerate upon such termination or change in control, as applicable, based on the option exercise price and the stock price of Citadel’s Class A common stock as of December 31, 2010. | |
(2) | Pursuant to the SERP, Mr. Suleman will be paid $11.8 million as a lump sum cash payment upon separation from service as further described under “— Summary of Citadel Employment Arrangements, Equity Arrangements and Potential Payments Upon Termination or Change in Control” on page and “— Pension Benefits at 2010 Fiscal Year End” on page . |
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(3) | Pursuant to the applicable 2010 Employment Agreement and/or applicable award agreement, if the executive is terminated without cause or the executive terminates his or her employment for good reason (as such terms are defined in the executives’ applicable agreements), or in the event of the executive’s death or disability or a change of control of Citadel, any unvested portion of the stock option award shall immediately become vested. | |
(4) | Pursuant to Mr. Suleman’s employment agreement, the occurrence of a change in control (as such term is defined in the executive’s employment agreement) of Citadel is considered to be a good reason for termination. | |
(5) | In the event of a termination by Citadel for cause or by the executive without good reason, Citadel may continue to pay the executive his or her base salary, at the rate in effect immediately prior to termination, for a period of twelve months if Citadel elects to extend the executive’s non-compete period for twelve months following the date of termination. | |
(6) | In the event Mr. Suleman’s employment is terminated by Citadel without cause or by Mr. Suleman with good reason (each as defined in Mr. Suleman’s employment agreement), each of the executives named below may terminate his or her employment with Citadel and shall solely be entitled to receive a lump sum payment equal to one times his or her base salary and a lump sum payment equal to a pro rata portion of his or her target bonus. The potential severance payments for each such executive upon termination, assuming a termination occurred as of December 31, 2010, are summarized in the table below: |
Judith A. Ellis | $ | 700,000 | ||
Jacquelyn J. Orr | 550,000 | |||
Patricia Stratford | 325,000 | |||
Randy L. Taylor | 600,000 |
(7) | In the event Mr. Suleman voluntarily resigns without good reason, each of the executives named below may terminate his or her employment with Citadel and shall solely be entitled to receive a lump sum payment equal to one-half times his or her annual base salary and a lump sum payment equal to a pro rata portion of his or her target bonus. The potential severance payments for each such executive upon termination, assuming a termination occurred as of December 31, 2010, are summarized in the table below: |
Judith A. Ellis | $ | 450,000 | ||
Jacquelyn J. Orr | 375,000 | |||
Patricia Stratford | 225,000 | |||
Randy L. Taylor | 400,000 |
(8) | The amounts set forth in this table show severance amounts that Ms. Orr was entitled to receive pursuant to her employment agreement. The separation agreement between Citadel and Ms. Orr became effective on December 24, 2010 and superseded the terms of Ms. Orr’s employment agreement, except for the restrictive covenants and certain other specified provisions contained therein. The separation agreement is more fully described under “— Summary of Citadel Employment Arrangements, Equity Arrangements and Potential Payments Upon Termination or Change in Control” on page . | |
(9) | If terminated by Citadel without cause or by the executive with good reason under circumstances which caused Mr. Taylor’s severance payments and benefits to be considered parachute payments (within the meaning of Section 280G of the Code), Mr. Taylor would be entitled to agross-up payment for excise taxes imposed under Section 4999 of the Code. Included in the severance amount is approximately $0.4 million, which represents Citadel’s estimate of the gross-up payment due to Mr. Taylor. | |
(10) | Certain of the severance amounts shown in the table represent the payment of a pro rata portion of each individual’s bonus pursuant to his or her respective employment agreement (in this case, a full-year payment). | |
(11) | The amounts set forth in the “Severance Amounts” and “Benefits” columns reflect the payments and benefits the executives would receive upon termination by Citadel without cause or by the executive with good reason in connection with a change in control. |
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Option Awards(2) | ||||||||||||||||||||
Equity | ||||||||||||||||||||
Incentive Plan | ||||||||||||||||||||
Awards: | ||||||||||||||||||||
Number of | Number of | Number of | ||||||||||||||||||
Securities | Securities | Securities | ||||||||||||||||||
Underlying | Underlying | Underlying | ||||||||||||||||||
Unexercised | Unexercised | Unexercised | Option | |||||||||||||||||
Options | Options | Unearned | Exercise | Option | ||||||||||||||||
(#) | (#) | Options | Price | Expiration | ||||||||||||||||
Name | Exercisable | Unexercisable | (#) | ($) | Date | |||||||||||||||
Farid Suleman | — | 1,897,194 | (1) | 1,897,194 | 28.00 | 11/19/2020 | ||||||||||||||
— | 632,397 | (1) | 632,397 | 32.00 | 11/19/2020 | |||||||||||||||
Judith A. Ellis | — | 99,798 | (1) | 99,798 | 28.00 | 11/19/2020 | ||||||||||||||
— | 33,265 | (1) | 33,265 | 32.00 | 11/19/2020 | |||||||||||||||
Jacquelyn J. Orr | — | 79,838 | (1) | 79,838 | 28.00 | 11/19/2020 | ||||||||||||||
— | 26,613 | (1) | 26,613 | 32.00 | 11/19/2020 | |||||||||||||||
Patricia Stratford | — | 56,137 | (1) | 56,137 | 28.00 | 11/19/2020 | ||||||||||||||
— | 18,711 | (1) | 18,711 | 32.00 | 11/19/2020 | |||||||||||||||
Randy L. Taylor | — | 79,838 | (1) | 79,838 | 28.00 | 11/19/2020 | ||||||||||||||
— | 26,613 | (1) | 26,613 | 32.00 | 11/19/2020 |
(1) | Stock options vest in three equal portions annually. The first tranche vested on June 3, 2011, and the remaining two tranches are scheduled to vest equally on each of June 3, 2012 and June 3, 2013. Upon certain events related to the termination of employment of the named executive officers or the change in control of Citadel, the options vest in full as more fully described in “— Summary of Citadel Employment Arrangements, Equity Arrangements and Potential Payments Upon Termination or Change in Control — Equity Arrangements” on page . | |
(2) | All option and stock awards granted prior to June 3, 2010 were cancelled in connection with Citadel’s emergence from the Chapter 11 Proceedings. |
Stock Awards | ||||||||||||
Number of Shares | Value Realized on | |||||||||||
Acquired on Vesting | Vesting | |||||||||||
Vesting Date | (#) | ($) | ||||||||||
Judith A. Ellis | 3/22/2010 | (1 | ) | — | ||||||||
Jacquelyn J. Orr | 3/22/2010 | 8,333 | 292 | |||||||||
Patricia Stratford | 3/22/2010 | 8,333 | 292 | |||||||||
Randy L. Taylor | 3/22/2010 | 2,500 | 88 |
(1) | Ms. Ellis voluntarily cancelled 33,333 shares of performance-based restricted stock that were scheduled to vest on March 22, 2010. |
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Number of Shares to be | Weighted Average | |||||||
Issued Upon Exercise of | Exercise Price of | |||||||
Outstanding Options, | Outstanding Options, | |||||||
Warrants and Rights | Warrants and Rights | |||||||
Plan Category | (#) | ($) | ||||||
Equity Compensation Plans Approved by Stockholders None | — | — | ||||||
Equity Compensation Plans Not Approved by Stockholders 2010 Equity Incentive Plan (1) | 3,266,629 | 29.00 | ||||||
Total | 3,266,629 | |||||||
Number of Shares to be | ||||||||
Issued Upon Vesting of | Weighted Average | |||||||
Nonvested Shares or | Grant Date | |||||||
Nonvested Share Units | Fair Value | |||||||
Plan Category | (#) | ($) | ||||||
Equity Compensation Plans Approved by Stockholders None | — | — | ||||||
Equity Compensation Plans Not Approved by Stockholders 2010 Equity Incentive Plan (1) | 1,206,625 | 23.00 | ||||||
Total | 1,206,625 | |||||||
(1) | The 2010 Equity Incentive Plan was adopted by Citadel via approval of the Bankruptcy Court, effective as of June 3, 2010. |
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Payments | ||||||||||||||
Number of | Present | During | ||||||||||||
Years | Value of | Last | ||||||||||||
Credited | Accumulated | Fiscal | ||||||||||||
Service | Benefit | Year | ||||||||||||
Name | Plan Name | (#) | ($) | ($) | ||||||||||
Farid Suleman | Citadel Broadcasting Corporation Supplemental Executive Retirement Plan | 8.75 | 11,476,773 | — |
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Fees | ||||||||
Earned or | ||||||||
Paid in Cash | Total | |||||||
Name | ($) | ($) | ||||||
J. Anthony Forstmann | 25,000 | 25,000 | ||||||
Theodore J. Forstmann | — | — | ||||||
Michael A. Miles | 30,000 | 30,000 | ||||||
Michael J. Regan | 32,500 | 32,500 | ||||||
Thomas V. Reifenheiser | 30,000 | 30,000 | ||||||
Wayne T. Smith | 32,500 | 32,500 |
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Fees | ||||||||||||||||
Earned or | Stock | Option | ||||||||||||||
Paid in Cash | Awards | Awards | Total | |||||||||||||
Name | ($) | ($)(1) | ($) | ($) | ||||||||||||
William M. Campbell, III | 59,500 | — | 686,208 | (2) | 745,708 | (4) | ||||||||||
Jonathan Mandel | 49,583 | — | 686,208 | (2) | 735,791 | (4) | ||||||||||
Gregory Mrva | 49,583 | — | 686,208 | (2) | 735,791 | (4) | ||||||||||
Paul Saleh(3) | 59,500 | — | — | 59,500 | (4) | |||||||||||
John L. Sander | 78,472 | — | 686,208 | (2) | 764,680 | (4) | ||||||||||
Doreen A. Wright | 59,500 | — | 686,208 | (2) | 745,708 | (4) |
(1) | In August 2010, in connection with Citadel’s emergence from the Chapter 11 Proceedings, each director was awarded shares of unvested restricted stock as summarized in the table below. These awards were subsequently forfeited in November 2010. |
Grant Date | ||||||||||||
Shares | Stock Price | Fair Value | ||||||||||
John L. Sander (Chairman) | 47,530 | $ | 23.00 | $ | 1,093,190 | |||||||
William M. Campbell, III | 47,530 | 23.00 | 1,093,190 | |||||||||
Jonathan Mandel | 47,530 | 23.00 | 1,093,190 | |||||||||
Gregory Mrva | 47,530 | 23.00 | 1,093,190 | |||||||||
Paul N. Saleh(3) | 47,530 | 23.00 | 1,093,190 | |||||||||
Doreen A. Wright | 47,530 | 23.00 | 1,093,190 |
(2) | Option award compensation is based on 63,245 options granted on November 19, 2010 at a closing stock price of $25.00, of which 75% have an exercise price of $28.00 and a grant date fair value of $11.08 per option and 25% have an exercise price of $32.00 and a grant date fair value of $10.16 per option. In the event of a termination of service due to death or disability or a change in control (as such term is defined in the Citadel Plan) of Citadel (subject to continued service through the date of such change in control) any unvested portion of the option award shall immediately become vested. In the event of a termination of service due to death or disability the option will remain exercisable until the earlier of the first anniversary of the date of termination and the tenth anniversary of the date of grant. In the event of a termination of service for any reason other than due to death or disability or by Citadel for cause (as such term is defined in the Citadel Plan) the option, to the extent it is vested on the date of termination, will remain exercisable until the earlier of the second anniversary of the date of termination and the tenth anniversary of the date of grant. In the event of a termination of service by Citadel for cause the option, whether vested or unvested, will be forfeited. |
John L. Sander (Chairman) | 63,245 | |||
William M. Campbell, III | 63,245 | |||
Jonathan Mandel | 63,245 | |||
Gregory Mrva | 63,245 | |||
Doreen A. Wright | 63,245 |
(3) | Mr. Saleh resigned from Citadel’s board of directors effective on November 16, 2010. | |
(4) | Does not reflect the grant date fair value of the unvested restricted stock voluntarily forfeited by each director, as disclosed in footnote (1) above. |
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Name | Age | Position | ||||
Jonathan Mandel | 59 | Director (Class I) | ||||
Gregory Mrva | 41 | Director (Class I) |
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Name | Age | Position | ||||
William M. Campbell, III | 51 | Director (Class II) | ||||
Doreen A. Wright | 54 | Director (Class II) | ||||
John L. Sander | 69 | Director (Class III) | ||||
Farid Suleman | 59 | Director (Class III) |
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• | Cumulus Media’s proposal was neither credible nor at an appropriate valuation; | |
• | Cumulus Media provided no equity or debt financing commitments or terms; |
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• | Cumulus Media had a highly leveraged balance sheet and was operating under a suspension of certain of its debt covenants that was scheduled to expire on December 31, 2010; | |
• | Cumulus Media’s small equity market capitalization would require it to issue to Citadel stockholders more than twice as many new shares as were currently outstanding, before any additional shares that would be issued in any Cumulus Media equity financing; and | |
• | uncertainty surrounding what would be a lengthy and complex regulatory review process relating to any potential acquisition by Cumulus Media. |
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• | the value of the transaction on a per share basis based on the maximum cash and maximum stock prorations; | |
• | the fact that Citadel did not receive a proposal for an alternative transaction between the time Citadel’s entrance into exclusive negotiations with Cumulus Media leaked to the public or the time Citadel issued a press release to that effect and the time the merger agreement was to be signed; |
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• | that the Citadel board of directors ran a modified auction between two bidders and also had the opportunity to consider a proposed investment in Citadel by an investor; | |
• | that following the modified auction, the current price being considered is greater than the price offered by Company A and the Cumulus Media proposal included the opportunity to receive more cash than was offered in Company A’s proposal; | |
• | the strategic alternatives reasonably believed to be available to Citadel; | |
• | the results that could be expected to be achieved by Citadel if it continued to operate independently, and the likely benefits to Citadel’s stockholders of such course, as compared with the value of the merger consideration; | |
• | the review by the Citadel board of directors with its legal and financial advisors of the structure of the merger and the financial and other terms of the merger, including the adequacy of the merger consideration, not only in relation to the current market price but also in relation to the historical, present and anticipated future operating results and financial position of Citadel; | |
• | the potential synergies resulting from the proposed business combination; | |
• | the ability of Citadel’s stockholders to elect the form of consideration to be received; | |
• | Citadel’s right to terminate the merger agreement for a superior proposal; | |
• | the terms of the merger agreement that enable Citadel to take actions to retain its employees; | |
• | the likelihood of receiving regulatory approvals in a timely fashion, and Cumulus Media’s covenants to seek such regulatory approvals; | |
• | the provisions of Cumulus Media’s financing that are expected to incentivize Cumulus Media to obtain regulatory approval on a timely basis; | |
• | the limited guarantees by Crestview and Macquarie and their respective affiliates; | |
• | the terms of the debt commitments and investment agreements; | |
• | the potential appreciation in Cumulus Media stock price if Cumulus Media were to achieve its projected results; | |
• | that the merger is not conditioned on obtaining financing and the obligation of Cumulus Media to seek to complete its financing; | |
• | the right of Citadel to receive certain termination payments under the merger agreement if Cumulus Media does not consummate the merger under certain circumstances; | |
• | the fact that Cumulus Media obtained the required approvals from its stockholders concurrent with entering into the merger agreement, thereby eliminating a potential stockholder vote requirement that could contribute to uncertainty about the transaction; | |
• | the financial information and analyses presented by the Co-Financial Advisors, and the opinion delivered by Lazard, that, as of March 9, 2011, the consideration to be paid to holders of Citadel common stock (other than Merger Sub, Citadel (with respect to treasury shares) and such holders who are entitled to and properly demand an appraisal of their shares of Citadel common stock) in the merger was fair from a financial point of view to such holders (see the section entitled “The Merger — Co-Financial Advisors to the Citadel Board of Directors — Opinion of Lazard Frères & Co. LLC to the Citadel Board of Directors” beginning on page of this information statement/proxy statement/prospectus); | |
• | the Co-Financial Advisors’ advice that the proposed breakup fee for a superior proposal would likely not deter a serious competitive bidder, and the Co-Financial Advisors’ views to the effect that private equity sponsors would not likely be interested at such valuations; |
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• | that certain of Citadel’s stockholders requested that Citadel engage in merger discussions with Cumulus Media; | |
• | that Citadel’s stockholders must ultimately adopt the merger agreement and that Citadel’s stockholders were notlocked-up in connection with the vote; | |
• | the results of the due diligence investigation of Cumulus Media by Citadel’s management and Citadel’s advisors; | |
• | the premium the price represents with regard to the various stock prices outlined by the financial advisors in their analyses; | |
• | the limited liquidity of Citadel’s stock and warrants, and the risks and uncertainties associated with Citadel’s stock price in light of such limited liquidity; and | |
• | the potential of greater liquidity of Cumulus Media Class A common stock as compared to the Citadel Class A common stock and Citadel Class B common stock. |
• | the potential for diversion of management and employee attention, and for employee attrition, during the period prior to completion of the merger and the potential effect on Citadel’s business; | |
• | the requirement that Citadel conduct its business in the ordinary course and the other restrictions on the conduct of Citadel’s business prior to the completion of the merger, which may delay or prevent Citadel from undertaking business opportunities that may arise pending the completion of the merger; | |
• | the possible effects on Citadel should the parties fail to complete the merger; | |
• | the risk that potential benefits and synergies sought in the merger may not be realized or may not be realized within the expected time period, and the risks associated with integration of the companies (including the differences in cultures and business management philosophies); | |
• | the fact that certain provisions of the merger agreement prohibit Citadel from soliciting, and limit its ability to respond to, proposals for alternative transactions; | |
• | the requirement that, in the absence of termination of the merger agreement, Citadel submit the merger agreement to its stockholders even if Citadel’s board withdraws its recommendation in favor of the merger agreement; | |
• | the fact that if Citadel terminates the merger agreement to accept a Superior Proposal (as defined in the merger agreement) Citadel is obligated to pay a termination fee, which may deter others from proposing an alternative transaction; | |
• | that Citadel’s officers may have financial interests in the merger that are different from, or in addition to, the interests of Citadel’s stockholders; | |
• | the fact that because the stock consideration in the merger is based on a fixed exchange ratio, Citadel’s stockholders could be adversely affected by a decrease in the trading price of Cumulus Media’s stock during the pendency of the merger; | |
• | Cumulus Media’s relative pre-transaction market capitalization compared to Citadel’s market capitalization; | |
• | Cumulus Media’s post-transaction leverage; | |
• | the fact that Cumulus Media needs to refinance the indebtedness of Cumulus Media, CMP and Citadel in order to complete the transaction; | |
• | the fact that no Citadel directors will be members of the board of directors of Cumulus Media after the merger; |
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• | that after the merger the holders of Cumulus Media Class B common stock and warrants may have less liquidity than current holders of Citadel Class B common stock and warrants; and | |
• | whether Cumulus Media will achieve its projected results. |
• | Strategic Nature of the Transaction. The combination of Citadel, together with Cumulus Media and CMP, would create a leading radio broadcasting company that would provide an opportunity to expand their collective strengths, market presence and programming to new markets and regions. | |
• | National Scale and Reach. The combined company would be the largest pure-play radio company in the United States, with over 565 radio stations in 120 United States markets, reaching over 65 million listeners weekly. | |
• | Synergies. The opportunity for the combined company to achieve improvements in both annual revenues and synergies, including approximately $51.9 million of cost synergies, the majority of which management estimated could be achieved within one year of the closing of the merger. | |
• | Diversified Listener Base and Geographic Mix. The combined company would have an extensive large and mid-sized market station portfolio, including a presence in eight of the top 10 markets, and would have broad diversity in format, listener base, geography, advertiser base and revenue stream, all of which would reduce dependence on any single demographic, region or industry. | |
• | Critical Mass to Compete in the Digital Marketplace. The increased scale of the combined company would allow larger, more significant investments in the local digital media marketplace and allow Cumulus Media’s local digital platforms and strategies to be applied across significant additional markets. |
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• | Leading National Radio Network. The acquisition of Citadel’s nationwide radio network of approximately 4,000 station affiliates and 9,000 program affiliates, which reach approximately 107 million listeners weekly, would create a national network platform for the syndication of Cumulus Media’s content and technology assets. | |
• | Success in Integrating Acquired Companies. Cumulus Media management has a recognized and proven ability to integrate acquisitions and manage a large-scale platform, which would lessen the typical integration risks of transactions such as the merger. | |
• | Anticipated Accretion to Earnings. The combined company would have increased broadcast cash flow and free cash flow, increased earnings before interest, taxes, depreciation and amortization, and station operating income margins, on a per share basis, when compared to Cumulus Media on its own. | |
• | Anticipated Reduction in Debt Leverage Ratios. The combined company would have a strengthened balance sheet with debt leverage ratios that are lower than those of Cumulus Media as a standalone company. | |
• | Increase the Equity Market Capitalization and Liquidity. The issuance of additional shares of Cumulus Media common stock in the merger and pursuant to the Equity Investment would significantly increase the total equity market capitalization of Cumulus Media, which is expected to also increase the trading volume, and therefore the liquidity, of the common stock. | |
• | Strengthen the Capital Base to Position Cumulus Media for Strategic Acquisitions. The larger capital structure resulting from a combination of Cumulus Media, CMP and Citadel would strengthen the position of the combined company to pursue and finance additional strategic acquisitions. | |
• | Fairness Opinion. The Cumulus Media board of directors received the opinion of Moelis that, subject to the limitations and qualifications set forth therein, as of March 9, 2011, the exchange ratio resulting from the merger and the Equity Investment is fair, from a financial point of view, to Cumulus Media. |
• | the risk that the regulatory approvals and clearances necessary to complete the merger might not be obtained or that governmental authorities could attempt to condition approval of the merger on the companies’ compliance with certain burdensome conditions, or that regulatory approvals may be delayed; | |
• | that the pendency of the merger for an extended period of time following the announcement of the execution of the merger agreement could have an adverse impact on Cumulus Media or Citadel; | |
• | the potential for diversion of management and employee attention during the period prior to completion of the merger, and the potential negative effect on Cumulus Media’s and Citadel’s business; | |
• | the possible negative effects on Cumulus Media if the parties fail to complete the merger, including the requirement that Cumulus Media and the Investors pay to Citadel their applicable portion of a termination fee of $60.0 million if the merger agreement is terminated under certain circumstances and, if the merger agreement is terminated in certain circumstances, the requirement that Cumulus Media pay to Citadel an additional termination fee of $20 million; | |
• | the challenges associated with integrating radio stations, and the radio network, in markets that previously have not been served by Cumulus Media; | |
• | the risk that potential benefits and synergies sought in the merger may not be realized, or may not be realized within the expected time period, and the risks associated with integration of the operations of the two companies (including the differences in cultures and business management philosophies); | |
• | that the transaction may be dilutive to Cumulus Media’s stock price depending on future earnings and free cash flow valuation multiples for the combined company in the public equity markets; |
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• | that current Cumulus Media stockholders as a group would hold less than a majority of the stock of the combined company following the closing of the merger and the Equity Investment; | |
• | the fact that because the stock consideration in the merger is based on a fixed exchange ratio, Cumulus Media’s stockholders could be adversely affected by an increase in the trading price of Cumulus Media’s common stock during the pendency of the merger; | |
• | the fact that Cumulus Media would need to refinance the indebtedness of Cumulus Media, CMP (if the CMP Acquisition is completed before the merger) and Citadel in order to complete the merger; | |
• | the risks inherent in completing over $2 billion in new financing necessary to complete the merger, given the recent volatility in the U.S. debt markets; | |
• | the potential negative consequences that could result from the combined company’s significant amount of indebtedness following the closing of the merger and the Equity Investment; and | |
• | the potential that the combined company might not achieve its projected financial results. |
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• | reviewed certain publicly available business and financial information relating to Cumulus Media and Citadel that Moelis deemed relevant; | |
• | reviewed certain internal information relating to the business, including financial forecasts, earnings, cash flow, assets, liabilities and prospects of Cumulus Media as well as the amount and timing of cost savings, synergies and related expenses expected to result from the transaction, furnished to Moelis by Cumulus Media (which Moelis refers to below as the expected synergies); | |
• | reviewed certain internal information relating to the business, including financial forecasts, earnings, cash flow, assets, liabilities and prospects of Citadel, furnished to Moelis by Cumulus Media; | |
• | conducted discussions with members of senior management and representatives of Cumulus Media, concerning the matters described in the foregoing bullets as well as the respective businesses and prospects of Cumulus Media and Citadel before and after giving effect to the merger and the expected synergies; | |
• | reviewed publicly available financial and stock market data, including valuation multiples, for Cumulus Media and Citadel and compared them with those of certain other companies in lines of business that Moelis deemed relevant; | |
• | compared the proposed financial terms of the merger with the financial terms of certain other transactions that Moelis deemed relevant; | |
• | considered certain potential pro forma effects of the merger; | |
• | reviewed a draft of the merger agreement and the Investment Agreement, each dated March 9, 2011; and | |
• | conducted such other financial studies and analyses and took into account such other information as Moelis deemed appropriate. |
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• | CC Media Holdings, Inc.; | |
• | Entercom Communications Corp.; | |
• | Radio One, Inc.; and | |
• | Beasley Broadcast Group, Inc. (together, the “Selected Companies”). |
Stock | Cash | |||||||||||||||||||||||
Consideration | Consideration | |||||||||||||||||||||||
Cap | Cap | |||||||||||||||||||||||
Mean | Median | Cumulus Media | Citadel | Synergies | Synergies | |||||||||||||||||||
Total Enterprise Value/EBITDA | ||||||||||||||||||||||||
LTM | 10.2 | x | 10.2 | x | 9.4 | x | 9.5 | x | 8.4 | x | 8.2 | x | ||||||||||||
2011E | 9.6 | x | 9.9 | x | 8.5 | x | 8.9 | x | 7.9 | x | 7.7 | x | ||||||||||||
2012E | 8.9 | x | 8.4 | x | 7.7 | x | 8.1 | x | 7.3 | x | 7.1 | x | ||||||||||||
Total Enterprise Value/BCF | ||||||||||||||||||||||||
LTM | 8.3 | x | 8.4 | x | 8.4 | x | 8.8 | x | 8.3 | x | 8.1 | x | ||||||||||||
2011E | 7.9 | x | 8.2 | x | 7.7 | x | 8.3 | x | 7.8 | x | 7.7 | x | ||||||||||||
2012E | 7.5 | x | 7.4 | x | 7.0 | x | 7.5 | x | 7.2 | x | 7.1 | x |
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Cumulus Media | Synergies | Citadel | ||||||||||||||
BCF | 2011E | 38.4 | % | 6.6 | % | 55.0 | % | |||||||||
2012E | 38.7 | % | 6.1 | % | 55.2 | % | ||||||||||
2013E | 38.3 | % | 5.9 | % | 55.8 | % | ||||||||||
2014E | 38.3 | % | 5.6 | % | 56.1 | % | ||||||||||
2015E | 38.7 | % | 5.3 | % | 56.0 | % |
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Cumulus Media | Synergies | Citadel | ||||||||||||||
EBITDA | 2011E | 36.2 | % | 10.3 | % | 53.5 | % | |||||||||
2012E | 36.6 | % | 9.5 | % | 53.9 | % | ||||||||||
2013E | 36.2 | % | 9.2 | % | 54.6 | % | ||||||||||
2014E | 36.3 | % | 8.6 | % | 55.1 | % | ||||||||||
2015E | 36.4 | % | 8.3 | % | 55.3 | % | ||||||||||
Transaction EV Splits (max equity — excluding synergies) | 37.9 | % | 62.1 | % | ||||||||||||
Transaction EV Splits (max cash — excluding synergies) | 38.4 | % | 61.6 | % |
February 17, 2011 | 2010 | |||||||||||||||||||||
1-Week | 1-Month | |||||||||||||||||||||
At Public | 1-Day Prior | Prior | Prior | |||||||||||||||||||
Announ. | (1 Trading | (5 Trading | (20 Trading | |||||||||||||||||||
(02/17/11) | Day) | Days) | Days) | 12/16 | 12/05 | |||||||||||||||||
Citadel Share Price (Class B) | $37.00 | $ | 30.50 | $ | 30.50 | $ | 30.00 | $ | 29.38 | $ | 27.75 | |||||||||||
21.3 | % | 21.3 | % | 23.3 | % | 26.0 | % | 33.3 | % | |||||||||||||
Current Value of Citadel Offer (03/08/11) | ||||||||||||||||||||||
Citadel Share Price (Class B) | $39.33 | $ | 30.50 | $ | 30.50 | $ | 30.00 | $ | 29.38 | $ | 27.75 | |||||||||||
28.9 | % | 28.9 | % | 31.1 | % | 33.9 | % | 41.7 | % | |||||||||||||
Premiums in Other M&A Transactions | ||||||||||||||||||||||
All Deals $1bn to $3bn in the Last 5 Years (220 Transactions) | 27.6 | % | 28.6 | % | 33.3 | % | ||||||||||||||||
All Media Deals $1bn to $3bn in the Last 5 Years (8 Transactions) | 22.6 | % | 24.5 | % | 23.2 | % | ||||||||||||||||
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• | reviewed the financial terms and conditions of the merger agreement; | |
• | reviewed certain publicly available historical business and financial information relating to Citadel and Cumulus Media; | |
• | reviewed various financial forecasts and other data provided to Lazard by Citadel relating to the business of Citadel and financial forecasts and other data provided to Lazard by Cumulus Media relating to the business of Cumulus Media; | |
• | held discussions with members of the senior managements of Citadel and Cumulus Media with respect to the businesses and prospects of Citadel and Cumulus Media, respectively; | |
• | reviewed the projected synergies and other benefits, including the amount and timing thereof, anticipated by the management of Cumulus Media to be realized from the merger; | |
• | reviewed public information with respect to certain other companies in lines of business Lazard believed to be generally relevant in evaluating the businesses of Citadel and Cumulus Media, respectively; | |
• | reviewed the financial terms of certain business combinations involving companies in lines of business Lazard believed to be generally relevant in evaluating the business of Citadel; | |
• | reviewed historical trading prices and volumes of Citadel common stock, Citadel warrants and Cumulus Media common stock; | |
• | reviewed the potential pro forma financial impact of the merger on Cumulus Media based on the financial forecasts referred to above relating to Citadel and Cumulus Media, both including and excluding the pro forma financial impact of Cumulus Media’s proposed acquisition of CMP based on information provided by Cumulus Media; and | |
• | conducted such other financial studies, analyses and investigations as Lazard deemed appropriate. |
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• | Entercom Communications Corp.; | |
• | Cumulus Media (as of March 4, 2011 and December 3, 2010 (the last trading day before Citadel publicly disclosed that it had received an unsolicited merger proposal)); | |
• | Beasley Broadcast Group, Inc.; | |
• | Saga Communications, Inc.; | |
• | Salem Communications Corporation; | |
• | Spanish Broadcasting System, Inc.; | |
• | Radio One, Inc.; and | |
• | Emmis Communications Corporation. |
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Enterprise Value/ | ||
2011 EBITDA | ||
Mean | 8.1x | |
Median | 8.4x |
Announcement / | ||||
Confirmation Date | Acquiror | Target | ||
January 2011 | Cumulus Media | CMP* | ||
January 2011 | Hubbard Broadcasting, Inc. | Bonneville International | ||
April 2010 | JS Acquisition, Inc. | Emmis Communications Corporation | ||
April 2010 | Restructuring (Oaktree Capital Management) | Regent Communications, Inc.* | ||
March 2010 | Restructuring | Citadel* | ||
February 2010 | Restructuring (Angelo, Gordon & Co.) | NextMedia Group, Inc.* | ||
July 2009 | Univision Communications Inc./WNYC Radio | New York Times Company (WQXR-FM) | ||
August 2009 | Alpha Broadcasting, LLC/Endeavour Capital | CBS (Stations in Portland) * | ||
April 2009 | Cox Enterprises, Inc. | Cox Radio, Inc.* |
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Transaction | ||
Value/BCF | ||
Mean | 7.8x | |
Median | 8.1x |
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• | Citadel (as of March 4, 2011 and December 3, 2010 (the last trading day before Citadel publicly disclosed that it had received an unsolicited merger proposal)); | |
• | Entercom Communications Corp.; | |
• | Beasley Broadcast Group, Inc.; | |
• | Saga Communications, Inc.; | |
• | Salem Communications Corporation; | |
• | Spanish Broadcasting System, Inc.; | |
• | Radio One, Inc.; and | |
• | Emmis Communications Corporation. |
Enterprise Value/ | ||
2011 EBITDA | ||
Mean | 8.1x | |
Median | 8.4x |
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Implied Exchange | ||
Ratio | ||
Mean | 7.987x | |
Median | 7.493x | |
High (8/31/10) | 12.318x | |
Low (10/18/10) | 6.062x | |
As of 12/3/10 | 7.769x | |
As of 2/16/11 | 7.060x | |
As of 3/4/11 | 6.880x |
Citadel Blended | ||||||||||||||||
Citadel Class A/ | Citadel Class B/ | Citadel Warrants/ | Average/ | |||||||||||||
Cumulus Media | Cumulus Media | Cumulus Media | Cumulus Media | |||||||||||||
Class A | Class A | Class A | Class A | |||||||||||||
As of 8/10/10 | 9.298 | x | 9.298 | x | 9.091 | x | 9.091 | x | ||||||||
As of 12/3/10 | 7.321 | x | 7.843 | x | 7.807 | x | 7.769 | x | ||||||||
As of 2/16/11 | 6.943 | x | 7.071 | x | 7.077 | x | 7.060 | x | ||||||||
As of 3/4/11 | 6.814 | x | 6.914 | x | 6.868 | x | 6.880 | x |
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• | Revenue (2010 actual, 2011 estimated); and | |
• | EBITDA (2010 actual, 2011 estimated). |
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2011 | 2012 | 2013 | 2014 | 2015 | ||||||||||||||||
(In millions) | ||||||||||||||||||||
Net Revenues | $ | 756 | $ | 778 | $ | 794 | $ | 810 | $ | 826 | ||||||||||
Broadcast Cash Flow(1)(2) | $ | 280 | $ | 293 | $ | 303 | $ | 313 | $ | 323 | ||||||||||
EBITDA(1)(3) | $ | 260 | $ | 273 | $ | 282 | $ | 292 | $ | 303 |
(1) | Broadcast cash flow and EBITDA are not measurements of financial performance under GAAP and should not be considered as alternatives to net income (loss), operating income or other performance measures derived in accordance with GAAP, or as alternatives to cash flow from operating activities as measures of liquidity. | |
(2) | Citadel defines broadcast cash flow as operating income, adjusted to exclude depreciation and amortization, non-cash compensation, corporate general and administrative expenses, non-cash charges including asset impairments and other, net. | |
(3) | Citadel defines EBITDA as broadcast cash flow less corporate and administrative expenses exclusive of any non-cash compensation. |
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2011 | 2012 | 2013 | 2014 | |||||||||||||
(In millions) | ||||||||||||||||
Cumulus Media Net Revenues | $ | 269 | $ | 278 | $ | 283 | $ | 294 | ||||||||
Combined Cumulus Media and CMP Net Revenues | $ | 457 | $ | 475 | $ | 485 | $ | 504 | ||||||||
Cumulus Media Broadcast Cash Flow(1)(2) | $ | 113 | $ | 118 | $ | 121 | $ | 129 | ||||||||
Combined Cumulus Media and CMP Broadcast Cash Flow(1)(2) | $ | 203 | $ | 215 | $ | 219 | $ | 234 | ||||||||
Cumulus Media EBITDA(1)(3) | $ | 97 | $ | 101 | $ | 103 | $ | 110 | ||||||||
Combined Cumulus Media and CMP EBITDA(1)(3) | $ | 184 | $ | 195 | $ | 199 | $ | 212 |
(1) | Broadcast cash flow and EBITDA are not measurements of financial performance under GAAP and should not be considered as alternatives to net income (loss), operating income, or other performance measures derived in accordance with GAAP. | |
(2) | For this purpose, Cumulus Media defines broadcast cash flow, which Cumulus Media publicly reports as station operating income, as consisting of operating income before income tax expense, non-operating expenses including net interest expense, depreciation and amortization, LMA fees, non-cash stock compensation expense, corporate general and administrative expenses, gain or loss on exchange of assets |
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or stations, any realized gain or loss on derivative instruments and impairment of goodwill and intangible assets. | ||
(3) | For this purpose, Cumulus Media defines EBITDA, which Cumulus Media publicly reports as adjusted EBITDA, as operating income before depreciation and amortization, LMA fees, non-cash stock compensation expense, gain or loss on exchange of assets or stations, any realized gain or loss on derivative instruments and impairment of goodwill and intangible assets. |
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Stock Options | Restricted Stock | Restricted Stock | ||||||||||||||||||||||||||||||
Vesting Upon | Vesting Upon | Vesting Six Months | ||||||||||||||||||||||||||||||
Consummation of | Consummation of | Following | ||||||||||||||||||||||||||||||
Vested Stock Options | Merger | Merger | Consummation of Merger | |||||||||||||||||||||||||||||
Name | Shares (#) | Value ($)(1) | Shares (#) | Value ($)(1) | Shares (#) | Value ($)(2) | Shares (#) | Value ($)(2) | ||||||||||||||||||||||||
Executive Officers | ||||||||||||||||||||||||||||||||
Farid Suleman, | 843,197 | 6,745,577 | 1,686,394 | 13,491,154 | — | — | — | — | ||||||||||||||||||||||||
Chief Executive Officer | ||||||||||||||||||||||||||||||||
Randy L. Taylor, | 35,484 | 283,872 | 70,967 | 567,735 | 7,000 | 259,000 | 7,000 | 259,000 | ||||||||||||||||||||||||
Senior Vice President and Chief Financial Officer | ||||||||||||||||||||||||||||||||
Judith A. Ellis, | 44,355 | 354,839 | 88,708 | 709,668 | 11,500 | (6) | 425,500 | (6) | 11,500 | (6) | 425,500 | (6) | ||||||||||||||||||||
Chief Operating Officer | ||||||||||||||||||||||||||||||||
Patricia Stratford, | 24,950 | 199,602 | 49,898 | 399,186 | 6,500 | (6) | 240,500 | (6) | 6,500 | (6) | 240,500 | (6) | ||||||||||||||||||||
Senior Vice President, Finance and Administration | ||||||||||||||||||||||||||||||||
Jacquelyn J. Orr, | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||
Former Vice President, General Counsel and Corporate Secretary(3) | ||||||||||||||||||||||||||||||||
Hilary E. Glassman, | — | — | — | — | 5,000 | 185,000 | 5,000 | 185,000 | ||||||||||||||||||||||||
Senior Vice President, General Counsel and Corporate Secretary(4) | ||||||||||||||||||||||||||||||||
Non-Employee Directors | ||||||||||||||||||||||||||||||||
John L. Sander | 21,082 | 168,654 | 42,163 | 337,303 | — | — | — | — | ||||||||||||||||||||||||
William M. Campbell, III | 21,082 | 168,654 | 42,163 | 337,303 | — | — | — | — | ||||||||||||||||||||||||
Jonathan Mandel | 21,082 | 168,654 | 42,163 | 337,303 | — | — | — | — | ||||||||||||||||||||||||
Gregory Mrva | 21,082 | 168,654 | 42,163 | 337,303 | — | — | — | — | ||||||||||||||||||||||||
Paul N. Saleh(5) | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||
Doreen A. Wright | 21,082 | 168,654 | 42,163 | 337,303 | — | — | — | — |
(1) | Values for each option are calculated by multiplying the number of shares subject to the option by the amount the merger consideration of $37.00 per share of Citadel Class A common stock less the exercise price per share. | |
(2) | Values for restricted stock awards are calculated by multiplying the number of shares of restricted Citadel Class A common stock subject to the award by the amount of the merger consideration of $37.00 per share of Citadel Class A common stock. | |
(3) | Ms. Orr resigned from her positions with Citadel and its affiliates as of January 31, 2011. | |
(4) | Ms. Glassman became Citadel’s Senior Vice President, General Counsel and Corporate Secretary on February 1, 2011. | |
(5) | Mr. Saleh resigned from Citadel’s board of directors effective on November 16, 2010. | |
(6) | The restricted stock awards held by Ms. Ellis and Ms. Stratford contain provisions providing that if any payment, distribution or benefit to Ms. Ellis or Stratford, whether pursuant to the restricted stock award or otherwise would result in excise taxes imposed on the executive officer under Section 4999 of the U.S. Internal Revenue Code (the “Code”), then any payment, distribution or benefit under the restricted stock awards will be reduced by the minimum amount necessary to avoid the imposition of such excise taxes to the extent that such reduction puts the executive officer in a more favorable after-tax position than if no such reduction had occurred. |
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Pension and Non- | ||||||||||||||||||||||||
Qualified Deferred | Perquisites and | Tax | ||||||||||||||||||||||
Cash | Equity | Compensation | Benefits | Reimbursement | Total | |||||||||||||||||||
Name and Title | ($)(1)(6) | ($)(7)(8)(9) | ($) | ($)(11) | ($) | ($) | ||||||||||||||||||
Farid Suleman, | 10,751,000 | (2)(3) | 13,491,154 | 12,954,947 | (5)(10) | 39,043 | — | 37,236,144 | ||||||||||||||||
Chief Executive Officer | ||||||||||||||||||||||||
Randy L. Taylor, | 1,315,000 | (2)(4) | 1,085,735 | — | 39,043 | 531,583 | (12) | 2,971,361 | ||||||||||||||||
Senior Vice President and Chief Financial Officer | ||||||||||||||||||||||||
Judith A. Ellis, | 1,525,000 | (2)(4) | 1,560,668 | — | 27,211 | — | 3,112,879 | |||||||||||||||||
Chief Operating Officer | ||||||||||||||||||||||||
Patricia Stratford, | 720,000 | (2)(4) | 880,186 | — | 37,091 | — | 1,637,277 | |||||||||||||||||
Senior Vice President, Finance and Administration | ||||||||||||||||||||||||
Jacquelyn J. Orr, | — | — | — | — | — | — | ||||||||||||||||||
Former Vice President, General Counsel and Corporate Secretary(13) | ||||||||||||||||||||||||
Hilary E. Glassman, | 705,000 | (2)(4) | 370,000 | — | 12,974 | — | 1,087,974 | |||||||||||||||||
Senior Vice President, General Counsel and Corporate Secretary(14) |
(1) | The amounts reported in this column reflect the sum of the pro-rated annual bonuses described in footnote 2 below and cash severance payments described in footnotes 3 and 4 below. | |
(2) | Citadel intends to pay pro-rated annual bonuses to its employees (including, each of the named executive officers other than Ms. Orr) for the year in which merger is consummated. Such pro-rated annual bonuses will be paid at the target level and pro-rated based on the number of days in Citadel’s fiscal year prior to the date on which the merger is consummated. The amounts of the annual pro-rated bonuses payable to Messrs. Suleman and Taylor and Ms. Ellis, Ms. Stratford and Ms. Glassman are $910,000, $91,000, $91,000, $57,000 and $91,000, respectively. Such bonuses will be payable upon the consummation of the merger. | |
(3) | Mr. Suleman is entitled to certain severance payments and benefits if he terminates his employment for good reason or if Citadel terminates his employment without cause. The consummation of the merger will give rise to good reason under his employment agreement entitling him to terminate his employment within thirty days following the consummation of the merger. In the event that Mr. Suleman’s employment is terminated by Citadel without cause or by Mr. Suleman for good reason, he is entitled to the following severance payments from Citadel: (i) a pro rata portion (based on the number of days he was employed during the calendar year in which such termination of employment occurs) of the annual bonus that he would have received for the year in which the termination of employment occurs based on actual Citadel performance, payable at the same time bonuses are paid to other named executive officers; provided, that Mr. Suleman’s receipt of the payment described in footnote (2) above shall be in satisfaction of Mr. Suleman’s right to the foregoing payment to the extent such termination occurs in the same year such closing of the merger occurs, (ii) an amount equal to three times the sum of (x) his annual base salary and (y) target bonus for the year in which such termination of employment occurs, payable in a lump sum ($9,750,000) and (iii) certain accrued amounts including unpaid salary through the date of termination ($0), accrued and unused vacation and/or sick days ($89,000), any amounts or benefits due and owing to Mr. Suleman under Citadel’s benefit plans ($0) and any unreimbursed business expenses incurred by Mr. Suleman prior to the date of termination ($2,000), payable in a lump sum. All such payments, other than the accrued benefits, are subject to his execution of a general release of claims in favor of Citadel within 60 days following the termination date and, other than with respect to the accrued benefits, may be subject to a six month delay in accordance with the requirements of Section 409A of the Code. | |
(4) | In the event that any of the named executive officers other than Mr. Suleman and Ms. Orr are terminated by Citadel without cause or by such named executive officer for good reason (for the avoidance of doubt, |
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consummation of the merger shall not constitute “good reason”), such named executive officer is entitled to the following severance payments from Citadel: (i) a pro rata portion (based on the number of days the named executive officer was employed during the calendar year in which such termination of employment occurs) of the annual bonus that he or she would have received for the year in which the termination of employment occurs based on actual Citadel performance, payable at the same time bonuses are paid to other named executive officers; provided, that the receipt by Mr. Taylor, Ms. Ellis, Ms. Stratford and Ms. Glassman of the payment described in footnote (2) above shall be in satisfaction of each such named executive officer’s right to the foregoing payment to the extent such termination occurs in the same year such closing of the merger occurs, (ii) an amount equal to two times (one times with respect to Ms. Glassman) the sum of (x) his or her annual base salary and (y) target bonus for the year in which such termination of employment occurs, payable in a lump sum ($1,200,000 for Mr. Taylor, $1,400,000 for Ms. Ellis, $650,000 for Ms. Stratford and $600,000 for Ms. Glassman) and (iii) certain accrued amounts including unpaid salary through the date of termination ($0 for Mr. Taylor, $0 for Ms. Ellis, $0 for Ms. Stratford and $0 for Ms. Glassman), accrued and unused vacation and/or sick days ($24,000 for Mr. Taylor, $31,000 for Ms. Ellis, $13,000 for Ms. Stratford and $14,000 for Ms. Glassman), any amounts or benefits due and owing to the named executive officer under Citadel’s benefit plans ($0 for Mr. Taylor, $0 for Ms. Ellis, $0 for Ms. Stratford and $0 for Ms. Glassman) and any unreimbursed business expenses incurred by the named executive officer prior to the date of termination ($0 for Mr. Taylor, $3,000 for Ms. Ellis, $0 for Ms. Stratford and $0 for Ms. Glassman), payable in a lump sum. The payments set forth in clauses (i) and (ii) are subject to the executive’s execution of a general release of claims in favor of Citadel within 60 days following the termination date and all or a portion of such payments, other than the accrued benefits, may be subject to a six month delay in accordance with the requirements of Section 409A of the Code. | ||
(5) | In the event Mr. Suleman’s employment is terminated by Citadel without cause or by Mr. Suleman with good reason (each as defined in Mr. Suleman’s employment agreement), each of the named executive officers listed below may terminate his or her employment with Citadel and shall solely be entitled to receive a lump sum payment equal to one times his or her base salary and a lump sum payment equal to a pro rata portion of his or her target bonus; provided, that the receipt by each of the named executive officers listed below of the payment described in footnote (2) above shall be in satisfaction of each such named executive officer’s right to the foregoing pro rata target bonus payment. Such payment is subject to the executive’s execution of a general release of claims in favor of Citadel within 60 days following the termination date and such payment may be subject to a six month delay in accordance with the requirements of Section 409A of the Code. The potential severance payments for each such named executive officer are summarized in the table below: |
Judith A. Ellis | $ | 500,000 | ||
Patricia Stratford | 200,000 | |||
Randy L. Taylor | 400,000 |
In the event Mr. Suleman voluntarily resigns without good reason, each of the named executive officers listed below may terminate his or her employment with Citadel and shall solely be entitled to receive a lump sum payment equal to one-half times his or her annual base salary and a lump sum payment equal to a pro rata portion of his or her target bonus; provided, that the receipt by each of the named executive officers listed below of the payment described in footnote (2) above shall be in satisfaction of each such named executive officer’s right to the foregoing pro rata target bonus payment. Such payment is subject to the executive’s execution of a general release of claims in favor of Citadel within 60 days following the termination date and such payment may be subject to a six month delay in accordance with the requirements of Section 409A of the Code. The potential severance payments for each such named executive officer are summarized in the table below: |
Judith A. Ellis | $ | 250,000 | ||
Patricia Stratford | 100,000 | |||
Randy L. Taylor | 200,000 |
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(6) | Citadel intends to establish a rabbi trust to hold amounts to be used to satisfy certain cash severance obligations payable to the named executive officers which are required to be delayed for up to six months after the date of termination pursuant to Section 409A of the Code. The amounts contributed to the trust will not exceed $31,000,000. | |
(7) | With respect to Mr. Suleman, the amounts reported in this column reflect the aggregate fair market value of unvested stock option awards held by Mr. Suleman on June 15, 2011. Such unvested stock options will vest in full upon the date that is at least twenty business days prior to the consummation of the merger. The aggregate fair market value of the unvested stock option awards is calculated by multiplying the number of unvested options by the amount by which the merger consideration of $37.00 per share of Citadel Class A common stock less the exercise price per share. | |
(8) | With respect to each of the named executive officers other than Mr. Suleman, Ms. Orr and Ms. Glassman, the amounts reported in this column reflect the aggregate fair market value of unvested stock option awards and unvested restricted stock awards held by the named executive officers on June 15, 2011. The unvested stock options will vest in full upon the date that is at least twenty business days prior to the consummation of the merger. The aggregate fair market value of the unvested stock option awards is calculated by multiplying the number of unvested options by the amount the merger consideration of $37.00 per share of Citadel Class A common stock less the exercise price per share ($567,735 for Mr. Taylor, $709,668 for Ms. Ellis and $399,186 for Ms. Stratford). One half of the unvested restricted stock awards will vest upon the consummation of the merger and the remainder will vest on the date that is six months following the date the merger is consummated. In addition, pursuant to the terms of the awards, the Citadel Plan and the merger agreement, if applicable, each restricted stock award will vest in full upon specified terminations of employment of such executive officer. The aggregate fair market value of the unvested restricted stock awards is calculated by multiplying the number of unvested shares of restricted Citadel Class A common stock by the amount of merger consideration of $37.00 per share of Citadel Class A common stock ($518,000 for Mr. Taylor, $851,000 for Ms. Ellis and $481,000 for Ms. Stratford). | |
The restricted stock awards held by Ms. Ellis and Ms. Stratford contain provisions providing that if any payment, distribution or benefit to Ms. Ellis or Stratford, whether pursuant to the restricted stock award or otherwise, would result in excise taxes imposed on the executive officer under Section 4999 of the Code, then any payment, distribution or benefit under the restricted stock awards will be reduced by the minimum amount necessary to avoid the imposition of such excise taxes to the extent that such reduction puts the executive officer in a more favorable after-tax position than if no such reduction had occurred. | ||
(9) | With respect to Ms. Glassman, the amounts reported in this column reflect the aggregate fair market value of unvested restricted stock awards held by Ms. Glassman on June 15, 2011. In accordance with the merger agreement, one half of the unvested restricted stock awards will vest upon the consummation of the merger and the remainder will vest on the date that is six months following the date the merger is consummated. In addition, pursuant to the terms of the awards, the Citadel Plan and the merger agreement, if applicable, each restricted stock award will vest in full upon specified terminations of employment of Ms. Glassman. The aggregate fair market value of the unvested restricted stock awards is calculated by multiplying the number of unvested shares of restricted Citadel Class A common stock by the amount of the merger consideration of $37.00 per share of Citadel Class A common stock. | |
(10) | This amount shows the Separation Benefit (as defined in the SERP) payable by Citadel to Mr. Suleman upon his termination of employment for any reason pursuant to the terms of the SERP. Payment of the Separation Benefit may be delayed for up to six months after the date of termination to the extent necessary to comply with Section 409A of the Code. | |
(11) | The amounts reported in this column reflect the welfare benefit continuation coverage that each of the named executive officers other than Ms. Orr would be entitled to in the event the named executive officer is terminated by Citadel without cause or by the named executive officer for good reason. Upon such termination of employment the named executive officer and his or her eligible dependents are eligible to continue to participate in Citadel’s welfare benefit plans for a period of two years at Citadel’s expense. |
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The foregoing welfare benefit continuation is subject to the executive’s execution of a general release of claims in favor of Citadel within 60 days following the termination date. | ||
(12) | This amount shows thegross-up payment that would be paid to Mr. Taylor if he were terminated without cause or for good reason on June 15, 2011. Mr. Taylor is entitled to agross-up payment from Citadel as described in “— Interests of Certain Persons in the Merger — Payments to Named Executive Officers Contingent on the Merger — Severance Benefits — Mr. Taylor, Ms. Ellis, Ms. Stratford and Ms. Glassman” on page . Thegross-up payment is payable at the time the additional taxes related to thegross-up payment are imposed and may be subject to a potential six month delay in accordance with the requirements of Section 409A of the Code. | |
(13) | Ms. Orr would not be entitled to receive any payments based upon or related to the merger. Citadel entered into a separation agreement with Ms. Orr on December 16, 2010 pursuant to which she agreed to resign from all positions with Citadel and its affiliates, effective as of January 31, 2011. The payments and benefits provided under Ms. Orr’s separation agreement were in full discharge of any and all liabilities and obligations of Citadel to Ms. Orr, including under her employment agreement with Citadel. | |
(14) | Ms. Glassman became Citadel’s Senior Vice President, General Counsel and Corporate Secretary on February 1, 2011. Ms. Glassman is not a named executive officer of Citadel for 2010. Therefore, stockholders will not be voting on the Proposal to approve, on a non-binding, advisory basis the golden parachute compensation that may be paid or become payable to Ms. Glassman that is based on or otherwise relates to the merger. |
Lewis W. Dickey, Jr. | President and Chief Executive Officer; Director | |
Ralph B. Everett | Director | |
Eric P. Robison | Director | |
Robert H. Sheridan III | Director | |
David M. Tolley | Director | |
Joseph P. Hannan | Senior Vice President, Chief Financial Officer and Treasurer | |
Jonathan G. Pinch | Executive Vice President and Co-Chief Operating Officer | |
John W. Dickey | Executive Vice President and Co-Chief Operating Officer | |
Richard S. Denning | Senior Vice President, General Counsel and Secretary |
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• | duly endorsed certificates representing all of the Citadel shares to which such form of election relates, duly endorsed in blank or otherwise in a form acceptable for transfer on Citadel’s books (or appropriate evidence as to loss, theft or destruction, appropriate evidence as to the ownership of that certificate by the claimant, and appropriate and customary indemnification, as described in the form of election); or | |
• | a properly completed and signed notice of guaranteed delivery, as described in the instructions accompanying the form of election, from a firm which is a member of a registered national securities exchange or commercial bank or trust company having an office or correspondent in the United States, provided that the actual stock certificates are in fact delivered to the exchange agent by the time set forth in the notice of guaranteed delivery; or | |
• | if the Citadel shares are held in book-entry form, the documents specified in the instructions accompanying the form of election. |
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• | pay cash in excess of the Cash Consideration Cap; or | |
• | issue shares in excess of the Stock Consideration Cap. |
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• | receiving election forms; | |
• | determining in accordance with the merger agreement (and the election form) the merger consideration to be received by each holder of shares of Citadel common stock; and | |
• | exchanging the applicable merger consideration for certificates formerly representing shares of Citadel common stock or for Citadel shares represented by book-entry. |
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• | an individual citizen or resident of the United States; | |
• | a corporation (or any other entity treated as a corporation for U.S. federal income tax purposes) created or organized in or under the laws of the United States, any state thereof or the District of Columbia; | |
• | an estate the income of which is subject to U.S. federal income taxation regardless of its source; or | |
• | a trust that (i) is subject to the primary supervision of a court within the United States and one or more U.S. persons have the authority to control all substantial decisions of the trust or (ii) has a valid election in effect under applicable U.S. Treasury regulations to be treated as a U.S. person. |
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• | to use its reasonable best efforts to arrange and obtain the debt and equity financing for the merger on the terms and conditions described in the financing agreements, maintain in effect the financing agreements (including any definitive agreements entered into in connection thereto), satisfy on a timely basis (taking into account the marketing period) all conditions in the financing agreements applicable to Cumulus Media, Holdco and Merger Sub to obtaining the debt and equity financing, consummate the equity financing at or prior to the closing, negotiate and enter into definitive agreements with respect to the debt commitment letter on terms and conditions contained therein or consistent in all material respects therewith and promptly upon execution thereof provide complete executed copies of such definitive agreements to Citadel, consummate the debt financing at or prior to the closing, and fully enforce the counterparties’ obligations and its rights under the financing agreements, including by suit or other appropriate proceeding to cause the lenders under the debt financing and the equity investors under the Investment Agreement to fund in accordance with their respective commitments if all conditions to funding the debt financing and equity financing in the applicable financing agreements have been satisfied or waived; and | |
• | if any portion of the amount of the debt financing necessary to consummate the transactions contemplated by the merger agreement becomes unavailable on the material terms and conditions contemplated by the applicable financing agreements, (i) Cumulus Media is required to promptly notify Citadel and (ii) Cumulus Media has agreed to use its reasonable best efforts to arrange and obtain alternative debt financing from alternative sources in an amount sufficient to consummate the transactions contemplated by the merger agreement with terms and conditions not materially less favorable, taken as a whole, to Cumulus Media, Holdco and Merger Sub, as promptly as practicable following the occurrence of such event but no later than the final day of the marketing period. |
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• | the merger agreement must have been approved by the affirmative vote of the holders of a majority of the outstanding Citadel common stock as of the record date; | |
• | the shares of Cumulus Media Class A common stock to be issued in the merger must have been authorized for listing on the Nasdaq Stock Market, subject to official notice of issuance; | |
• | the waiting period applicable to the merger under the HSR Act must have been terminated or expired; | |
• | the FCC Approval must have been granted without any conditions that would have a material adverse effect on Cumulus Media and Citadel on a combined basis after the merger is completed; | |
• | this registration statement of which this information statement/proxy statement/prospectus forms a part must have been declared effective by the SEC and must not be subject to any stop order or proceedings initiated or threatened by the SEC; | |
• | at least twenty (20) business days must have elapsed since the mailing of this information statement/proxy statement/prospectus to holders of Cumulus Media common stock; and | |
• | no order, injunction or decree issued by any court or agency of competent jurisdiction or other legal restraint or prohibition preventing the consummation of the merger or any of the transactions contemplated under the merger agreement shall be in effect and completion of the merger must not be illegal under any applicable statute, rule, regulation, order, injunction or decree. |
• | the representations and warranties of the other party being true and correct (ignoring for such purposes any reference to material adverse effect or materiality contained in each representation or warranty) but in the aggregate, subject to the material adverse effect standard provided in the merger agreement and summarized below; | |
• | the other party having performed or complied with, in all material respects, all obligations required to be performed or complied with by it under the merger agreement; | |
• | the receipt of an officer’s certificate executed by the chief executive officer or chief financial officer of the other party certifying that the two preceding conditions have been satisfied; and | |
• | there shall not have occurred at any time after the date of the merger agreement any material adverse effect on the other party. |
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• | initiate, solicit or knowingly encourage the submission of, or participate or engage in any negotiations or discussions with respect to, any acquisition proposal (as described below); | |
• | in connection with any potential acquisition proposal, disclose or furnish any nonpublic information or data to any person concerning Citadel or afford any person access to the properties, books or records of Citadel or its subsidiaries; or | |
• | enter into or execute, or propose to enter into or execute, any acquisition agreement. |
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• | to acquire or purchase, directly or indirectly, in one transaction or a series of transaction, any assets or businesses that constitute 20% or more of the assets of Citadel and its subsidiaries (taken as a whole); or | |
• | with respect to any merger, consolidation, business combination, recapitalization, liquidation, dissolution, joint venture, binding share exchange or similar transaction involving Citadel or its subsidiaries pursuant to which any person or the stockholders of any person would beneficially own 20% or more of the outstanding Citadel preferred stock and Citadel common stock or 20% or more of any class of equity security of Citadel’s subsidiaries or of any resulting parent company of Citadel, other than the transactions contemplated by the merger agreement. |
• | more favorable to the stockholders and warrant holders of Citadel than the transactions contemplated by the merger agreement, taking into account all relevant factors (including all terms and conditions of such proposal and the merger agreement (including any changes to the terms of the merger agreement proposed by Cumulus Media in response to such offer or otherwise)); and | |
• | is reasonably capable of being completed, taking into account all financial, legal, regulatory and other aspects and conditions of such proposal. |
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• | withdraw or modify, or publicly propose to withdraw or modify in any manner adverse to Cumulus Media, its recommendation that Citadel’s stockholders approve and adopt the merger agreement; | |
• | approve, adopt or recommend, or publicly propose to approve, adopt or recommend, any acquisition proposal; | |
• | in the event of a tender offer or exchange offer for any outstanding shares of Citadel common stock or Citadel preferred stock, fail to recommend against acceptance of such tender offer or exchange offer by Citadel’s stockholders within ten business days of the commencement thereof; | |
• | recommend that Citadel’s stockholders reject adoption of the merger agreement or the transactions contemplated thereby; | |
• | allow Citadel or any of its subsidiaries to execute or enter into, any letter of intent, memorandum of understanding, agreement in principle, merger agreement, acquisition agreement, option agreement, joint venture agreement, partnership agreement, or other similar agreement related to any acquisition proposal; or | |
• | require Citadel to abandon, terminate or fail to consummate the transactions contemplated by the merger agreement. |
• | if the board of directors of Citadel provides written notice to Cumulus Media that the board of directors of Citadel is prepared to terminate the merger agreement to accept a superior proposal and provides Cumulus Media the terms and conditions relating to the transaction that constitutes such superior proposal, including the identity of the person making such superior proposal and reasonable details regarding the cause for, and nature of, the withdrawal or modification to the board of directors of Citadel’s recommendation; | |
• | at a time after 5:00 p.m. (NY time) on the fourth business day following Citadel’s delivery to Cumulus Media of such written notice advising Cumulus Media that the board of directors of Citadel intends to take such action, with any amendment to the financial terms or any other material term of such superior proposal requiring a new notice of such superior proposal and a new four business day period; and | |
• | if during such four business day period(s), the board of directors of Citadel will and will cause its financial and legal advisors, to the extent requested by Cumulus Media, to negotiate in good faith with Cumulus Media regarding any revisions to the terms of the merger agreement to so that such acquisition proposal ceases to constitute a superior proposal, or the cause for the adverse recommendation change ceases to exist, as applicable. |
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• | arrange and obtain the equity and debt financing for the merger on the terms and conditions described in the financing agreements; | |
• | maintain in effect the financing agreements (including any definitive agreements entered into in connection therewith); | |
• | satisfy on a timely basis (taking into account the marketing period) all conditions in the financing agreements applicable to Cumulus Media, Holdco and Merger Sub to obtaining the financing; | |
• | consummate the equity financing at or prior to the closing; | |
• | negotiate and enter into definitive agreements with respect to the debt commitment letter on terms and conditions contained therein or consistent in all material respects therewith and promptly upon execution thereof provide complete executed copies of such definitive agreements to Citadel; | |
• | consummate the debt financing at or prior to the closing; and |
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• | fully enforce the counterparties’ obligations and its rights under the financing agreements, including by suit or other appropriate proceeding to cause the lenders under the debt financing and the equity investors under the Investment Agreement to fund in accordance with their respective commitments if all conditions to funding the debt financing and equity financing in the applicable financing agreements have been satisfied or waived. |
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• | the closing has not occurred on or before March 8, 2012 (such date, as may be extended, the “termination date”), except that, if, as of the termination date, all conditions to the merger agreement have been satisfied or waived (other than those that are satisfied by action taken at the closing and the expiration or termination of any applicable waiting period under the HSR Act and receipt of the FCC Approvals), the termination date may be extended to June 8, 2012 by either Citadel or Cumulus Media; |
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• | any governmental entity has issued a final and non-appealable law or order or taken any other final and non-appealable action enjoining or otherwise prohibiting consummation of the transactions contemplated by the merger agreement; | |
• | stockholders of Citadel do not adopt the merger agreement at a meeting of the stockholders of Citadel or any adjournment or postponement of such meeting; | |
• | the FCC issues a decision which denies the FCC Applications or designates them for an evidentiary hearing; or | |
• | there is a breach by the non-terminating party of any of its representations, warranties, covenants or agreements in the merger agreement such that the closing conditions would not be satisfied by the termination date, or if capable of being cured, such breach has not been cured within 30 days following delivery of written notice by the terminating party, if earlier than the termination date. |
• | prior to the adoption of the merger agreement by the stockholders of Citadel, in order to concurrently enter into a definitive acquisition agreement with respect to an acquisition proposal that constitutes a superior proposal, (i) Citadel has complied with the requirements described under “— No-Solicitation of Alternative Proposals” on page and (ii) prior to or concurrently with such termination, Citadel pays the termination fee described under “— Termination Fees” on page ; or | |
• | (i) the marketing period has ended and the conditions to Cumulus Media’s obligation to effect the merger (other than those conditions that by their nature are to be satisfied by actions taken at the closing) have been satisfied on the date the closing should have been consummated, (ii) Citadel has irrevocably confirmed that all conditions to Citadel’s obligation to effect the merger have been satisfied or that it is willing to waive any unsatisfied conditions and (iii) the merger shall not have been consummated within the later of (a) six business days after satisfaction or waiver of Citadel’s and Cumulus Media’s obligation to close and (b) the earlier of (A) a date specified by Cumulus Media to Citadel on at least two business days’ notice and (B) two business days after the final day of the marketing period. |
• | the board of directors of Citadel effects a change in its recommendation that the stockholders of Citadel vote in favor of the adoption of the merger agreement; | |
• | the board of directors of Citadel materially fails to use its reasonable best efforts to obtain the requisite stockholder approval of Citadel to adopt the merger agreement; | |
• | Citadel materially fails to timely call a meeting of its stockholders for the purpose of obtaining the requisite stockholder approval required in connection with the merger agreement and the merger; or | |
• | Citadel materially breaches the “non-solicitation” provisions on page under ‘‘— No-Solicitation of Alternative Proposals” above. |
• | the merger agreement is terminated by Citadel prior to the adoption of the merger agreement by the stockholders of Citadel, in order to concurrently enter into a definitive acquisition agreement with |
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respect to an acquisition proposal that constitutes a superior proposal, if earlier than the termination date, then Citadel must pay the termination fee concurrently with such termination; |
• | the merger agreement is terminated by Cumulus Media upon a breach by Citadel of any of its representations, warranties, covenants or agreements in the merger agreement such that the closing conditions would not be satisfied by the termination date, or if capable of being cured, such breach has not been cured within 30 days following delivery of written notice by Cumulus Media, then Citadel must pay the termination fee within two business days after such termination; | |
• | the merger agreement is terminated by Cumulus Media because (i) the board of directors of Citadel effects a change in its recommendation that the stockholders of Citadel vote in favor of the adoption of the merger agreement, (ii) the board of directors of Citadel materially fails to use its reasonable best efforts to obtain the requisite stockholder approval of Citadel to adopt the merger agreement, (iii) Citadel materially fails to timely call a meeting of its stockholders for the purpose of obtaining the requisite stockholder approval required in connection with the merger agreement and the merger or (iv) Citadel materially breaches the “non-solicitation” provisions described under “— No-Solicitation of Alternative Proposals” above on page , then Citadel must pay the termination fee promptly following such termination; and | |
• | (i) after March 9, 2011 and prior to the termination of the merger agreement there was publicly disclosed or made known to the board of directors of Citadel an acquisition proposal, (ii) following such occurrence, the merger agreement is terminated by Citadel or Cumulus Media because the stockholder approval of Citadel was not obtained at the Citadel stockholders’ meeting or by Citadel or Cumulus Media because the merger was not consummated by the termination date (described under “— Termination” on page ), and (iii) within 12 months of the date of such termination of the merger agreement, Citadel or any of its subsidiaries enters into a definitive agreement with respect to any acquisition proposal for 50% or more of the assets or voting power of Citadel or the transactions contemplated by any acquisition proposal for 50% of the assets or voting power of Citadel is consummated, then Citadel must pay the termination fee upon such execution or consummation. |
• | the merger agreement is terminated by Citadel upon a breach by Cumulus Media of any of its representations, warranties, covenants or agreements in the merger agreement such that the closing conditions would not be satisfied by the termination date, or if capable of being cured, such breach has not been cured within 30 days following delivery of written notice by Citadel, if earlier than the termination date, subject to certain limitations, then Cumulus Media and each of Crestview and Macquarie must pay their applicable portion of the termination fee within two business days after such termination; and | |
• | the merger agreement is terminated by Citadel because (i) the marketing period has ended and the conditions to Cumulus Media’s obligation to effect the merger (other than those conditions that by their nature are to be satisfied by actions taken at the closing) have been satisfied on the date the closing should have been consummated, (ii) Citadel has irrevocably confirmed that all conditions to Citadel’s obligation to effect the merger have been satisfied or that it is willing to waive any unsatisfied conditions and (iii) the merger shall not have been consummated within the later of (a) six business days after satisfaction or waiver of Citadel’s and Cumulus Media’s obligation to close and (b) the earlier of (A) a date specified by Cumulus Media to Citadel on at least two business days’ notice and |
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(B) two business days after the final day of the marketing period, then Cumulus Media and each of Crestview and Macquarie must pay their applicable portion of the termination fee within two business days after such termination. |
• | the merger agreement is terminated by Citadel or Cumulus Media because the FCC issues a decision which denies certain FCC Applications or designates them for an evidentiary hearing; or | |
• | the merger agreement is terminated by Citadel or Cumulus Media because the closing of the merger has not occurred by the termination date; and | |
• | all conditions to the merger agreement have been satisfied or waived (other than those that are satisfied by action taken at the closing, the expiration or termination of any applicable waiting period under the HSR Act (so long as the condition regarding the receipt of the FCC Approvals has not been satisfied), receipt of the FCC Approvals and no order, injunction or decree issued by any court or agency of competent jurisdiction or other legal restraint or prohibition preventing the consummation of the merger or any of the transactions contemplated under the merger agreement shall be in effect and completion of the merger is not illegal under any applicable statute, rule, regulation, order, injunction or decree, in each case relating to an FCC matter), then Cumulus Media must pay the termination fee within two business days after such termination. |
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• | Citadel is required to pay all reasonableout-of-pocket expenses incurred by Cumulus Media or either of Crestview or Macquarie in connection with the transactions contemplated by the merger agreement (subject to a cap of $5,000,000) if the merger agreement is terminated by either Cumulus Media or Citadel because the requisite stockholder approval of Citadel is not obtained at the stockholders meeting duly convened therefor or any adjournment or postponement thereof, and Citadel is not then required to pay a termination fee to Cumulus Media; | |
• | Cumulus Media will reimburse and indemnify Citadel for expenses incurred by Citadel or its subsidiaries in connection with the cooperation of Citadel and its subsidiaries with respect to the arrangement of the financing of the merger and the notes tender offer; | |
• | all fees required by the FCC for the filing of the FCC Applications and such other applications as may be commercially reasonable and necessary under the Communications Act and FCC rules and policies which propose the assignment of FCC Authorizations will be shared equally by Citadel and Cumulus Media; and | |
• | Cumulus Media will pay all costs, fees and expenses incurred in connection with all filings pursuant to the HSR Act. |
• | use commercially reasonable efforts to preserve intact significant business relationships and to retain the services of its current key officers and key employees; | |
• | use commercially reasonable efforts to comply with the Communications Act and FCC rules and policies in the operation of Citadel stations; | |
• | promptly deliver to Cumulus Media copies of any material reports or applications filed with the FCC; | |
• | promptly notify Cumulus Media of any inquiry, investigation or proceeding which to the knowledge of Citadel has been initiated by the FCC relating to Citadel stations; and | |
• | diligently prosecute any pending applications or any other filings necessary or appropriate in other proceedings before the FCC to preserve or obtain any FCC Authorization for a Citadel station without material adverse modification. |
• | adjust, split, combine or reclassify any of its capital stock; | |
• | declare or pay any dividend on, make any other distribution in respect of, or purchase or otherwise acquire any shares of its capital stock; |
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• | issue any additional shares of capital stock; | |
• | make any material change in its methods or principles of accounting or any material tax election; | |
• | adopt or recommend a plan of complete or partial dissolution, liquidation, recapitalization, restructuring or other reorganization; | |
• | agree to take, make any commitment to take, or adopt any resolutions of its board of directors in support of any actions prohibited by the merger agreement; | |
• | enter into any new line of business that is material to the applicable party and its subsidiaries, except in the ordinary course of business; and | |
• | amend its certificate of incorporation or by-laws. |
• | incur any indebtedness for borrowed money or assume, guarantee, endorse or otherwise as an accommodation become responsible for the obligations of any person in excess of a specified amount; | |
• | grant any stock appreciation rights or grant any individual, corporation or entity any right to acquire any shares of its capital stock other than grants to employees made in the ordinary course of business; | |
• | changes in employee benefit plans or agreements, compensation or benefits to any director, executive officer or employee other than in the ordinary course of business; | |
• | sell, transfer, mortgage, encumber or otherwise dispose of any of its properties or assets in excess of a specified amount; | |
• | cancel, release, settle or assign any indebtedness or third party claim, action or proceeding in excess of a specified amount, other than in the ordinary course of business or pursuant to contracts in effect on the date of the merger agreement; | |
• | enter into (i) any local marketing agreement in respect of the programming of any radio or television broadcast station, (ii) contract for the acquisition or sale of any radio broadcast station or of any equity or debt interest in any person that directly or indirectly has an attributable interest in any radio broadcast station or (iii) acquire or agree to acquire any other business or material assets (except that it will be deemed reasonable for Cumulus Media to withhold consent for any such local marketing agreement or acquisition that would be reasonably likely to delay, impede or prevent receipt of the FCC Approval); | |
• | materially change any of its technology or operating policies that are material, individually or in the aggregate, to Citadel and its subsidiaries, taken as a whole, except in the ordinary course of business or as required by law; | |
• | take any action to exempt any person (other than Cumulus Media or its subsidiaries) from Section 203 of the DGCL or any similarly restrictive provisions of its organizational documents or terminate, amend or waive any provisions of any confidentiality or standstill agreements in place with any third parties; | |
• | enter into or amend in any material respect or waive any of its material rights under any material contract, except in the ordinary course of business consistent with past practice; or | |
• | except as required by law, enter into or amend in any material respect any collective bargaining agreement. |
• | acquire by merger or consolidation, or by the purchase of all or a controlling equity interest in, any person, division, business or equity interest of any person if such acquisition would reasonably be expected to impair or delay the ability of Cumulus Media, Holdco or Merger Sub (a) to satisfy any of the conditions to |
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the merger or (b) solely with respect to cash acquisitions, to perform any of the obligations regarding the making of cash payments to Citadel in respect of the termination fees set forth in the merger agreement; or |
• | make any optional prepayments of indebtedness. |
• | for six months following the effective time of the merger, provide medical benefits to each employee of the surviving corporation and its subsidiaries under applicable Citadel benefit plans in effect immediately prior to the effective time of the merger; | |
• | to honor all written employment, retention and change in control agreements and arrangements existing as of March 9, 2011 and listed in disclosures made by one party to the other or as otherwise specifically contemplated by the merger agreement which are maintained by or between Citadel or any of its subsidiaries and any of their respective directors, officers or employees; | |
• | to the extent that it is practicable to do so, entitle employees of the surviving corporation and its subsidiaries to participate in Cumulus Media retirement, welfare benefit and similar plans without regard to waiting periods, exceptions for pre-existing conditions, requirements of insurability or any “actively at work” requirement or exclusion; | |
• | to the extent it is practicable to do so, credit years of service with Citadel or any of its subsidiaries as if such service were with Cumulus Media with respect to Cumulus Media retirement, welfare benefit and similar plans (provided that no credit for years will be given for purposes of benefit accrual under any defined benefit pension plan of Cumulus Media); and | |
• | to the extent that it is practicable to do so, credit under Cumulus Media’s group health plans all deductibles and co-payments and amounts paid towardout-of-pocket limits by Citadel employees under the group health plans maintained by Citadel prior to the effective time of the merger. |
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• | extend the time for the performance of any of the obligations or other acts provided for in the merger agreement; | |
• | waive any inaccuracies in the representations and warranties contained in the merger agreement; and | |
• | waive compliance with any of the agreements or conditions contained in the merger agreement. |
• | may be intended not as statements of fact, but rather as a way of allocating the risk to one of the parties if those statements prove to be inaccurate; | |
• | have been qualified by disclosures that were made to Citadel or Cumulus Media in connection with the negotiation of the merger agreement, which disclosures are not reflected in the merger agreement; | |
• | may apply standards of materiality in a way that is different from what may be viewed as material to you or other investors; and | |
• | were made only as of the date of the merger agreement or such other date or dates as may be specified in the merger agreement and are subject to more recent developments. |
• | corporate organization and similar corporate matters; | |
• | capital structure; | |
• | subsidiaries; | |
• | approval and authorization of the merger agreement and the transactions contemplated by the merger agreement; | |
• | absence of conflicts; |
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• | required consents and approvals of governmental entities in connection with the transactions contemplated by the merger agreement; | |
• | documents filed with the SEC, financial statements included in those documents and regulatory reports filed with governmental entities; | |
• | disclosure controls and procedures and internal controls over financial reporting; | |
• | absence of undisclosed liabilities; | |
• | absence of material adverse effect since September 30, 2010; | |
• | legal proceedings; | |
• | taxes; | |
• | compliance with applicable laws, licenses and permits; | |
• | environmental matters; | |
• | FCC Authorizations; | |
• | intellectual property matters; | |
• | opinion of financial advisor; | |
• | information supplied in connection with this information statement/proxy statement/prospectus and the registration statement of which it is a part; | |
• | brokers and finders; and | |
• | the stockholder vote required to adopt the merger agreement and the transactions contemplated by the merger agreement. |
• | subsidiaries; | |
• | material contracts; | |
• | title to properties; assets; | |
• | insurance; | |
• | employee benefits and labor matters; and | |
• | in-applicability of state takeover laws. |
• | financing for the merger; and | |
• | delivery of the Investment Agreement. |
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CUMULUS MEDIA COMMON STOCK AND CITADEL COMMON STOCK
Cumulus Media | Citadel | |||
Authorized Capital Stock: | Cumulus Media is authorized to issue shares divided into four classes consisting of: | Citadel is authorized to issue 250,000,000 shares divided into three classes consisting of: | ||
(i) 750,000,000 shares of Class A common stock, par value $.01 per share; | (i) 100,000,000 shares of Class A common stock, par value $0.001 per share; | |||
(ii) 600,000,000 shares of Class B common stock, par value $.01 per share; | (ii) 100,000,000 shares of Class B common stock, $0.001 per share; and | |||
(iii) 644,871 shares of Class C common stock, par value $.01 per share; and | (iii) 50,000,000 shares of preferred stock, par value $0.001 per share. | |||
(iv) 100,000,000 shares of preferred stock, par value $.01 per share. | ||||
Rights of Preferred Stock: | The Third Amendment and Restatement provides that the board of directors is authorized to issue shares of undesignated preferred stock in such series and to fix from time to time before issuance the number of shares to be included in any series and the designation, relative powers, preferences and rights and qualifications, limitations or restrictions of all shares of such series. | The Citadel Charter provides that shares of preferred stock may be issued from time to time in one or more series, each of which series shall have such distinctive designations and number of shares shall be fixed by the board of directors of Citadel prior to the issuance of any shares. Each such series of preferred stock shall have such voting powers, full or limited, or no voting powers, and such preferences and relative, participating, optional or other special rights, and such qualifications, limitations or restrictions, as stated in such resolution or resolutions providing for the issuance of such series of preferred stock. Except to the extent otherwise provided in any resolution or resolutions providing for the issuance of any series of | ||
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Cumulus Media | Citadel | |||
preferred stock, the number of authorized shares of preferred stock may be increased or decreased (but not below the number of shares then outstanding) by the affirmative vote of the holders of a majority of the outstanding shares of common stock. | ||||
Number of Directors: | The Cumulus Media Bylaws state that the board of directors will consist of six members or such other number as may be fixed by resolution of the board of directors from time to time. There are currently five members on Cumulus Media’s board of directors. The existing board of directors has agreed to increase the number of directors to seven as of the date of the completion of the merger, and has further agreed that the two vacancies to be created thereby will be filled by individuals who will be designated by Crestview (one of which will be appointed as lead director of the Cumulus board of directors). The Stockholders Agreement will acknowledge the 7-member board and provide that Crestview will have the right to designate two individuals for nomination to the board of directors, and the Dickeys, the BofA Entities and Blackstone will each have the right to designate one individual for nomination to the board of directors. The remaining directors will initially be Cumulus Media’s two current independent directors or their successors, who shall meet applicable independence criteria. The Stockholders Agreement will provide that, for so long as Crestview is the largest stockholder of Cumulus Media, it will have the right to have one of its designees who is elected to the board of directors and selected by it, who shall be an independent director, to be appointed as the lead director of the board. | The Citadel Charter provides that the number of directors shall be fixed from time to time exclusively by the board of directors pursuant to a resolution adopted by a majority of the then authorized number of directors of Citadel, whether or not there exist any vacancies in previously authorized directorships, but in no event shall the number of directors be fewer than three. There are currently six board members serving on Citadel’s board of directors and one vacant position. | ||
Election of Directors: | In connection with the completion of the merger, it is expected that | Citadel directors are elected by the plurality vote of stockholders | ||
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Cumulus Media | Citadel | |||
the Cumulus Media Bylaws will be amended to provide that Cumulus Media directors are elected by the plurality vote of stockholders present or represented by proxy at the annual meeting. | present or represented by proxy at the annual meeting. | |||
Pursuant to the Stockholders Agreement, certain existing stockholders, along with Crestview, will agree to vote in favor of the director candidates nominated by the Cumulus Media board of directors, so long as the slate of candidates is consistent with required director designees as described above under “Number of Directors.” | ||||
Cumulative Voting: | The Third Amendment and Restatement provides that no holder of any shares of any class of stock of Cumulus Media shall be entitled to cumulative voting rights in any circumstances. | The Citadel Charter and Bylaws do not provide for cumulative voting. | ||
Classification of Board of Directors: | The board of directors of Cumulus Media is not classified. All Cumulus Media directors are elected annually to serve one-year terms. | The members of Citadel’s board of directors are classified into three classes as nearly equal in number as possible and no class shall include less than one director. At each annual meeting of stockholders beginning in 2011, directors elected to succeed those directors whose terms expire shall be elected for a term of office to expire at the third succeeding annual meeting of stockholders after their election, and shall continue to hold office until their respective successors are elected and qualified. | ||
Removal of Directors: | The Third Amendment and Restatement and Cumulus Media Bylaws are silent regarding the removal of directors. Under the DGCL, any Cumulus Media director may be removed, with or without cause, by the holders of a majority of the shares then entitled to vote at an election of directors. The Stockholders Agreement is expected to provide that none of the parties thereto will vote to remove a director designated for election by another party as | The Citadel Charter provides that any director may be removed from office at any time, but only for cause, at a meeting called for that purpose, and only by the affirmative vote of the holders of at least a majority of the voting power of all issued and outstanding shares or capital stock of Citadel entitled to vote generally in the election of directors, voting together as a single class. | ||
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Cumulus Media | Citadel | |||
provided above under “Number of Directors.” | ||||
Board Vacancies: | The Cumulus Media Bylaws provide that any vacancy occurring in the board of directors, and any directorship to be filled by reason of an increase in the number of directors, shall be filled by election at the annual meeting or a special meeting of the stockholders called for such purpose. Until such time as the vacancy is filled by the stockholders, the board of directors may fill the vacancy or, if the directors remaining in office constitute fewer than a quorum of the board of directors, such directors may fill the vacancy by the affirmative vote of a majority of the directors remaining in office. A director elected to fill a vacancy shall serve for the unexpired term of his predecessor in office and until his successor is elected and qualified. | The Citadel Charter provides that any vacancies in the board of directors resulting from death, resignation, retirement, disqualification, removal from office or any other cause shall, unless otherwise provided by law or by resolution of the board of directors, be filled only by a majority vote of the directors then in office, even if less than a quorum is then in office, or by the sole remaining director, and shall not be filled by the stockholders. Directors elected to fill a vacancy shall hold office for the remainder of the full term of the class of directors in which the vacancy occurred and until such director’s successor has been elected and has qualified. | ||
Director Nominations by Stockholders: | The Cumulus Media Bylaws provide that for nominations by stockholders for the election of directors, the stockholder must have given timely notice in writing to the Secretary of Cumulus Media. All notices given shall be in writing and must be received by the Secretary of Cumulus Media not later than 90 days prior to the anniversary date of the annual meeting of stockholders in the immediately preceding year. | The Citadel Bylaws provide that nominations of persons for election to the board of directors may be made at any annual meeting of stockholders of Citadel or at any special meeting of stockholders of Citadel called for the purpose of electing directors. The stockholder must have given timely notice in writing to the secretary. To be timely, a stockholder’s notice must be received by the secretary at the principal executive offices of Citadel by the close of business: (i) in the case of an annual meeting, no fewer than 90 nor more than 120 days prior to the first anniversary of the preceding year’s annual meeting; provided, however, that in the event that no annual meeting was held in the previous year or the annual meeting is called for a date that is not within 30 days before or 60 days after such anniversary date, to be timely a stockholder’s notice must be received by the secretary by the close of business |
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Cumulus Media | Citadel | |||
on the tenth day following the day on which a public announcement with respect to the date of such meeting is first made by Citadel; (ii) in the case of a special meeting called for the purpose of electing directors, no fewer than 90 nor more than 120 days prior the date of such meeting; provided however, that if the first public announcement of the date or such special meeting is less than 100 days prior to the date of such special meeting, to be timely a stockholder’s notice must be received by the secretary by the close of business on the 10th day following the day on which a public announcement with respect to the date of such meeting is first made by Citadel. | ||||
Stockholder Nominations and Proposals (Requirements for Delivery and Notice): | In addition to the advance notice requirements described above, the Cumulus Media Bylaws provide that all notices shall include (i) a representation that the person sending the notice is a stockholder of record and will remain such through the meeting record date; (ii) the name and address of such stockholder; (iii) the class and number of Cumulus Media’s shares which are owned beneficially and of record by such stockholder; and (iv) a representation that such stockholder intends to appear in person or by proxy at such meeting to make the nomination or move the consideration of other business set forth notice. | In addition to the advance notice requirements described above, the Citadel Bylaws provide that a stockholder’s notice given to the secretary for director nominations must set forth (i) the name and address of such stockholder, as they appear on Citadel’s books, and of such beneficial owner; (ii) any interests held by the stockholder, beneficial owner or any member of such stockholder’s or beneficial owner’s immediate family sharing the same household; (iii) all information relating to such person that would be required to be disclosed in a proxy statement, a description of all direct and indirect compensation and other material agreements, arrangement and understandings during the past three years and any other beneficial relationships, and a completed and signed questionnaire, representation and agreement; (iv) a statement as to whether either such stockholder or beneficial owner intends to deliver a proxy statement and form of proxy to holders of at least the percentage of Citadel’s voting shares required under applicable law and any other information that would be required to be disclosed | ||
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Cumulus Media | Citadel | |||
as may be requested by Cumulus Media to comply with federal securities laws, rules and regulations. | in a proxy statement; and (v) a representation that the stockholder is a holder of record of shares of Citadel entitled to vote at such meeting and intends to appear in person or by proxy at the meeting to propose such nomination. | |||
Stockholder Action by Written Consent: | The Third Amendment and Restatement provides that all actions of Cumulus Media stockholders must be taken at an annual or special meeting of the stockholders of Cumulus Media and may not be taken by written consent without a meeting. | The Citadel Bylaws provide that any action required or permitted to be taken by the stockholders or any class or series thereof, must be effected at a duly called annual or special meeting of such stockholders and may not be effected by any consent in writing in lieu of a meeting of such stockholders. | ||
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Cumulus Media | Citadel | |||
Certificate of Incorporation Amendments: | The Third Amendment and Restatement is silent regarding amendment. | The Citadel Charter provides that Citadel reserves the right to amend, alter, change or repeal any provision contained in the Citadel Charter, in the manner now or hereafter prescribed by statute, and all rights conferred upon stockholders therein are granted subject to this reservation. | ||
Bylaw Amendments: | The Third Amendment and Restatement provides that the board of directors is expressly authorized to make, alter, amend or repeal the Cumulus Media Bylaws, without any action on the part of the stockholders, but the stockholders may make additional bylaws and may alter, amend or repeal any bylaw whether adopted by them or otherwise. Cumulus Media may in its bylaws confer powers upon the board of directors in addition to the foregoing and in addition to the powers and authorities expressly conferred upon the board of directors by applicable law. | The Citadel Charter provides that the board of directors is expressly authorized to adopt, amend, or repeal the bylaws of Citadel. | ||
Special Meetings of Stockholders: | The Third Amendment and Restatement provides that special meetings of stockholders of Cumulus Media may be called by (i) the Chairman of the board of directors, (ii) the Chief Executive Officer of Cumulus Media or (iii) by the board of directors upon the demand, in accordance with procedures in Section 2.2 of the Cumulus Media Bylaws, of the holders of record of shares representing at least 25% of all the votes entitled to be cast on any issue proposed to be considered at the special meeting. In connection with the completion of the merger, it is expected that the Cumulus Media Bylaws will be amended to contain similar limiting provisions. | The Citadel Bylaws provide that special meetings may be called at any time by the board of directors or the chairman of the board, if one shall have been elected, or the president or chief executive officer. | ||
Notice of Special Meetings of Stockholders: | The Cumulus Media Bylaws provide that written notice stating | The Citadel Bylaws provide that written notice stating the date, |
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Cumulus Media | Citadel | |||
the place, day and hour, and purpose for which the meeting is called shall be delivered no less than 10 days (20 days in the case of a merger, consolidation, share exchange, dissolution or sale, lease or exchange of assets) nor more than 60 days before the date of the meeting, by or at the direction of the Chairman, the President, or the Secretary, to each stockholder of record entitled to vote at such meeting and to any other stockholder entitled to receive notice of such meeting. | place, if any, and hour of the meeting, the means of remote communications, if any, and the purpose for which the meeting is called, shall be given to each stockholder or record entitled to vote thereat not less than 10 nor more than 60 days before the date of the meeting. Notice shall be given personally or by mail. | |||
Proxy: | The Cumulus Media Bylaws provide that a stockholder entitled to vote may vote in person or by proxy appointed in writing by the stockholder or by his/her duly authorized attorney-in-fact. No proxy appointment shall be valid after three years from the date of its execution, unless otherwise expressly provided in the appointment form. | The Citadel Bylaws provide that each stockholder entitled to vote at any meeting of stockholders may authorize another person or persons to act for him by a proxy, signed by such stockholder or his attorney-in-fact. No proxy shall be voted after three years from its date unless the proxy provides for a longer period. | ||
Limitation of Personal Liability of Directors: | The Third Amendment and Restatement provides that to the full extent permitted by the DGCL or any other applicable law currently or hereafter in effect, no director of Cumulus Media will be personally liable to Cumulus Media or its stockholders for or with respect to any acts or omissions in the performance of his or her duties as a director of Cumulus Media. | The Citadel Charter provides that a director of Citadel shall not be personally liable to Citadel or its stockholders for monetary damages for breach of fiduciary duty as a director except to the extent such elimination from liability or limitation is not permitted under the DGCL. | ||
Indemnification of Directors and Officers: | The Third Amendment and Restatement and the Cumulus Media Bylaws provide that each person who is made a party or is threatened to be made a party to or is otherwise involved in any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative, by reason of the fact that he or she is or was a director or an officer of Cumulus Media or is or was serving at the request of Cumulus Media as a director, officer, employee or agent of another corporation or of a partnership, joint venture, trust or | The Citadel Bylaws provide that Citadel shall indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative (other than an action by or in the right of Citadel) by reason of the fact that such person is or was a director, officer, employee or agent of Citadel, or is or was serving at the request of Citadel as a director, officer, employee or agent of another corporation, partnership, joint | ||
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Cumulus Media | Citadel | |||
other enterprise, including service with respect to an employee benefit plan, whether the basis of such proceeding is alleged action in an official capacity as a director, officer, employee or agent or in any other capacity while serving as a director, officer, employee or agent, shall be indemnified and held harmless by Cumulus Media to the fullest extent permitted or required by the DGCL against all expense, liability and loss (including attorneys’ fees, judgments, fines, ERISA excise taxes or penalties and amounts paid in settlement) reasonably incurred or suffered by such indemnitee in connection therewith. | venture, trust or other enterprise, against expenses (including attorneys’ fees), judgments, fines, excise taxes assessed with respect to any employee benefit plan and amounts paid in settlement actually and reasonably incurred if indemnitee acted in good faith and in a manner reasonably believed to be in or not opposed to the best interest of Citadel. No indemnification shall be made in respect of any claim, issue or matter as to which such indemnitee shall have been adjudged to be liable to Citadel unless and only to the extent that the Court of Chancery of the State of Delaware or the court in which such action or suit was brought shall determine upon application that, such person is fairly and reasonably entitled to indemnity for such expenses. | |||
DGCL Section 203 Election: | The Third Amendment and Restatement and Cumulus Media Bylaws are silent regarding DGCL Section 203 election. | The Citadel Charter provides that Citadel elects to be governed by Section 203 of the DGCL. | ||
Vote on Business Combinations: | The Third Amendment and Restatement provides that the holders of Class A common stock and Class C common stock are entitled to vote together, as a single class, on any matter submitted to a vote of the stockholders of Cumulus Media. | The Citadel Charter provides that holders of Class A common stock and Class B common stock are entitled to vote on any material sale of assets, recapitalization, merger, business combination, consolidation, exchange or other similar reorganization involving Citadel or any of its subsidiaries |
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• | designate employees to receive awards under the 2011 Equity Plan; and | |
• | determine the size of any such awards. |
• | the aggregate number of shares of Cumulus Media Class A common stock actually issued or transferred upon the exercise of incentive stock options (“ISOs”) will not exceed 17,500,000 shares; | |
• | the number of shares of Cumulus Media Class A common stock issued as restricted stock, RSUs, performance shares, performance units and other awards (after taking into account any forfeitures and cancellations) will not, during the term of the 2011 Equity Plan, in the aggregate exceed 12,000,000 shares of Cumulus Media Class A common stock; | |
• | no participant will be granted stock options or SARs, in the aggregate, for more than 11,500,000 shares of Cumulus Media Class A common stock during any calendar year; and |
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• | no participant will be granted awards of restricted stock, RSUs, performance shares or other awards that are intended to qualify as “qualified performance-based compensation” under Section 162(m) of the Code, in the aggregate, for more than 3,000,000 shares of Cumulus Media Class A common stock during any calendar year; and | |
• | no participant during any calendar year will be granted awards of performance units that are intended to qualify as “qualified performance-based compensation” under Section 162(m) of the Code, in the aggregate, for more than a maximum value of $5,000,000 as of their respective dates of grant. |
• | shares tendered in payment of the option exercise price; | |
• | shares withheld by Cumulus Media to satisfy the tax withholding obligation; and | |
• | shares that are repurchased by Cumulus Media with stock option proceeds. |
• | Stock options and SARs may not become exercisable by the passage of time sooner than one-third per year over three years except in the event of retirement, death or disability of a participant or in the event of a change in control (described below); | |
• | Stock options and SARs that become exercisable upon the achievement of Management Objectives (as defined below) cannot become exercisable sooner than one year from the date of grant except in the event of retirement, death or disability of a participant or in the event of a change in control; | |
• | Restricted stock and RSUs may not become unrestricted by the passage of time sooner than one-third per year over three years unless restrictions lapse sooner by virtue of retirement, death or disability of a participant or in the event of a change in control; | |
• | The period of time within which Management Objectives relating to performance shares and performance units must be achieved will be a minimum of one year, subject to earlier lapse or modification by virtue of retirement, death or disability of a participant or in the event of a change in control; | |
• | Restricted stock and RSUs that vest upon the achievement of Management Objectives cannot vest sooner than one year from the date of grant, but may be subject to earlier lapse or modification by virtue of retirement, death or disability of a participant or in the event of a change in control; and | |
• | As described below, a limited number of awards, however, including restricted stock and RSUs granted to non-employee directors, may be granted without regard to the above minimum vesting periods. |
• | there is a consummation of a sale, lease, transfer, conveyance or other disposition (other than by way of merger or consolidation), in one or a series of related transactions, of all or substantially all of the assets of Cumulus Media and its subsidiaries taken as a whole to any person or group; | |
• | a plan relating to the liquidation or dissolution of Cumulus Media is adopted; |
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• | there is a consummation of any transaction (including, without limitation, any purchase, sale, acquisition, disposition, merger or consolidation) the result of which is that any person or group becomes the beneficial owner (excluding any options to purchase equity securities of Cumulus Media held by such person or group) of more than 50% of the aggregate voting power of all classes of capital stock of Cumulus Media having the right to elect directors under ordinary circumstances; or | |
• | a majority of the members of Cumulus Media’s board of directors are not Continuing Directors. For purposes of this definition, a “Continuing Director” is, as of any date of determination, any member of the Cumulus Media board of directors who (1) was a member of the Cumulus Media board of directors on the date the 2011 Equity Plan was approved by Cumulus Media’s stockholders or (2) was nominated for election or elected to the Cumulus Media board of directors with the approval of either two-thirds of the Continuing Directors who were members of the Cumulus Media board of directors at the time of such nomination or election or two-thirds of those Cumulus Media directors who were previously approved by Continuing Directors. |
• | The 2011 Equity Plan provides that no stock options or SARs will be granted with an exercise or base price less than the fair market value of the Cumulus Media Class A common stock on the date of grant. | |
• | The 2011 Equity Plan is designed to allow awards to qualify as qualified performance-based compensation under Section 162(m) of the Code. |
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• | awards of restricted stock, RSUs, performance shares, performance units and other awards that do not comply with the three-year or one-year vesting requirements set forth in the 2011 Equity Plan; plus | |
• | awards granted to non-employee directors. |
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• | convertible or exchangeable debt securities; | |
• | other rights convertible or exchangeable into shares of Cumulus Media Class A common stock; | |
• | purchase rights for shares of Cumulus Media Class A common stock; |
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• | awards with value and payment contingent upon Cumulus Media’s performance or that of specified subsidiaries, affiliates or other business units of Cumulus Media or any other factors designated by the Committee; and | |
• | awards valued by reference to the book value of shares of Cumulus Media Class A common stock or the value of securities of, or the performance of specified subsidiaries or affiliates or other business units of Cumulus Media. |
• | Profits (e.g., operating income, EBIT, EBT, net income, “station operating income,” earnings per share, residual or economic earnings, economic profit — these profitability metrics could be measured or subject to GAAP definition); | |
• | Cash Flow (e.g., EBITDA, free cash flow, “broadcast cash flow,” free cash flow with or without specific capital expenditure target or range, including or excluding divestmentsand/or acquisitions, total cash flow, cash flow in excess of cost of capital or residual cash flow or cash flow return on investment); | |
• | Returns (e.g., Profits or Cash Flow returns on: assets, invested capital, net capital employed, and equity); | |
• | Working Capital (e.g., working capital divided by sales, days’ sales outstanding, days’ sales inventory, and days’ sales in payables); | |
• | Profit Margins (e.g., Profits divided by revenues, gross margins and material margins divided by revenues, and material margin divided by sales pounds); |
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• | Liquidity Measures (e.g.,debt-to-capital,debt-to-EBITDA, total debt ratio); | |
• | Sales Growth, Gross Margin Growth, Cost Initiative and Stock Price Metrics (e.g., revenues, revenue growth, revenue growth outside the United States, gross margin and gross margin growth, material margin and material margin growth, stock price appreciation, total return to shareholders, sales and administrative costs divided by sales, and sales and administrative costs divided by profits); and | |
• | Strategic Initiative Key Deliverable Metrics consisting of one or more of the following: product development, strategic partnering, research and development, vitality index, market penetration, geographic business expansion goals, cost targets, customer satisfaction, employee satisfaction, management of employment practices and employee benefits, supervision of litigation and information technology, and goals relating to acquisitions or divestitures of subsidiaries, affiliates and joint ventures. |
• | designate employees to receive awards under the 2011 Equity Plan; and | |
• | determine the size of any such awards. |
• | materially increase the benefits accruing to participants under the 2011 Equity Plan; | |
• | materially increase the number of securities which may be issued under the 2011 Equity Plan; | |
• | materially modify the requirements for participation in the 2011 Equity Plan; or | |
• | need to be approved by Cumulus Media’s stockholders in order to comply with applicable law or the rules of the Nasdaq Stock Market (or Cumulus Media’s applicable securities exchange). |
• | an option or SAR may be exercised; |
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• | the restrictions for restricted stock, RSUs or other awards may lapse; or | |
• | the performance requirements for performance shares and performance units may be deemed achieved. |
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• | any stock dividend, stock split, combination of shares, recapitalization or other change in the capital structure of Cumulus Media; | |
• | any merger, consolidation, spin-off, split- off, spin-out,split-up, reorganization, partial or complete liquidation or other distribution of assets, issuance of rights or warrants to purchase securities; or | |
• | any other corporate transaction or event having an effect similar to these events or transactions. |
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Cumulus Media Inc. 2011 Equity Incentive Plan
Number of | ||||||||
Name and Position | Dollar Value ($) | Stock Options | ||||||
Lewis W. Dickey, Jr., Chairman, President and Chief Executive Officer, and Director | — | 11,500,000 | ||||||
Joseph P. Hannan, Senior Vice President, Treasurer and Chief Financial Officer | — | 900,000 | ||||||
Jonathan G. Pinch, Executive Vice President and Co-Chief Operating Officer | — | 1,725,000 | ||||||
John W. Dickey, Executive Vice President and Co-Chief Operating Officer | — | 2,760,000 | ||||||
Executive Group(1) | — | 17,748,000 | ||||||
Non-Executive Director Group(2) | — | — | ||||||
Non-Executive Officer Employee Group(3) | — | 5,252,000 |
(1) | This group includes all of Cumulus Media’s current executive officers. | |
(2) | This group includes all of Cumulus Media’s current non-employee directors. | |
(3) | This group includes all of Cumulus Media’s employees, including its current officers who are not executive officers. |
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RESTATED CERTIFICATE OF INCORPORATION
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• | Citadel’s Annual Report onForm 10-K for the fiscal year ended December 31, 2010; | |
• | Citadel’s Quarterly Report onForm 10-Q for the quarter ended March 31, 2011; and | |
• | Citadel’s Current Reports onForm 8-K filed on February 3, 2011 (other than item 7.01, which is not deemed to be filed) and March 11, 2011. |
7690 W. Cheyenne Avenue
Suite 220
Las Vegas, Nevada 89129
Attention: Investor Relations
Telephone Number:(702) 804-5200
www.citadelbroadcasting.com
• | Cumulus Media’s Annual Report onForm 10-K for the fiscal year ended December 31, 2010 (as amended by the Annual Report onForm 10-K/A filed on May 2, 2011); | |
• | Cumulus Media’s Quarterly Report onForm 10-Q for the quarter ended March 31, 2011; |
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• | Cumulus Media’s Current Reports onForm 8-K filed on February 2, 2011, February 18, 2011, March 3, 2011, March 10, 2011, April 25, 2011 and May 16, 2011; and | |
• | The description of the Cumulus Media Class A Common Stock, $0.01 par value, contained in Post-Effective Amendment No. 1 to the Registration Statement onForm 8-A, filed by the Cumulus Media pursuant to Section 12 of the Exchange Act, and any amendment or report filed for the purpose of updating such description. |
3280 Peachtree Road, N.W.
Suite 2300
Atlanta, Georgia 30305
Attention: Investor Relations
Telephone Number:(404) 949-0700
www.cumulus.com
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• | a CMP Pro Forma Basis, giving effect to the 2019 Notes Offering and the CMP Acquisition (including certain developments in its business); | |
• | a Citadel Pro Forma Basis, giving effect to the 2019 Notes Offering, the merger and the Global Refinancing (excluding any portion thereof related to refinancing the CMP Debt); and |
• | an Overall Pro Forma Basis, giving effect to the 2019 Notes Offering, the CMP Acquisition (including certain developments in its business), the merger and the Global Refinancing. |
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for the Three Months Ended March 31, 2011
CMP | ||||||||||||||||||||
Cumulus | Pro Forma | CMP | ||||||||||||||||||
Media | CMP | KC LLC | Basis | Pro Forma | ||||||||||||||||
Historical | Historical | Historical(A) | Adjustments | Basis | ||||||||||||||||
(Dollars in thousands) | ||||||||||||||||||||
Broadcast revenues | $ | 56,733 | $ | 39,143 | $ | (1,779 | ) | $ | — | $ | 94,097 | |||||||||
Management fees | 1,125 | — | — | (1,000 | )(B) | 125 | ||||||||||||||
Net revenues | 57,858 | 39,143 | (1,779 | ) | (1,000 | ) | 94,222 | |||||||||||||
Operating expenses | ||||||||||||||||||||
Station operating expenses (excluding depreciation, amortization and LMA fees) | 37,555 | 23,757 | (1,564 | ) | — | 59,748 | ||||||||||||||
Depreciation and amortization | 2,123 | 2,116 | (443 | ) | — | 3,796 | ||||||||||||||
LMA fees | 581 | — | — | — | 581 | |||||||||||||||
Corporate general and administrative expenses | 8,129 | 2,482 | (461 | ) | (1,000 | )(B) | 9,150 | |||||||||||||
Gain on exchange of assets or stations | (15,158 | ) | — | — | — | (15,158 | ) | |||||||||||||
Realized loss on derivative instrument | 40 | — | — | — | 40 | |||||||||||||||
Other operating expenses | — | (6 | ) | — | — | (6 | ) | |||||||||||||
Total operating expenses | 33,270 | 28,349 | (2,468 | ) | (1,000 | ) | 58,151 | |||||||||||||
Operating income | 24,588 | 10,794 | 689 | — | 36,071 | |||||||||||||||
Non-operating (expense) income: | ||||||||||||||||||||
Interest (expense) income, net | (6,318 | ) | (6,219 | ) | 1,559 | (5,861 | )(C) | (16,839 | ) | |||||||||||
Total non-operating (expense) income, net | (6,318 | ) | (6,219 | ) | 1,559 | (5,861 | ) | (16,839 | ) | |||||||||||
Income (loss) before income taxes and equity in net losses of affiliate | 18,270 | 4,575 | 2,248 | (5,861 | ) | 19,232 | ||||||||||||||
Income tax (expense) benefit | (2,149 | ) | (2,479 | ) | 17 | 2,227 | (D) | (2,384 | ) | |||||||||||
Net income (loss) | $ | 16,121 | $ | 2,096 | $ | 2,265 | $ | (3,634 | ) | $ | 16,848 | |||||||||
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for the Year Ended December 31, 2010
CMP | ||||||||||||||||||||
Cumulus | Pro Forma | CMP | ||||||||||||||||||
Media | CMP | KC LLC | Basis | Pro Forma | ||||||||||||||||
Historical | Historical | Historical(A) | Adjustments | Basis | ||||||||||||||||
(Dollars in thousands) | ||||||||||||||||||||
Broadcast revenues | $ | 259,187 | $ | 188,718 | $ | (7,043 | ) | $ | — | $ | 440,862 | |||||||||
Management fees | 4,146 | — | — | (4,000 | )(B) | 146 | ||||||||||||||
Net revenues | 263,333 | 188,718 | (7,043 | ) | (4,000 | ) | 441,008 | |||||||||||||
Operating expenses: | ||||||||||||||||||||
Station operating expenses (excluding depreciation, amortization and LMA fees) | 159,807 | 103,103 | (6,086 | ) | — | 256,824 | ||||||||||||||
Depreciation and amortization | 9,098 | 8,576 | (1,780 | ) | — | 15,894 | ||||||||||||||
LMA fees | 2,054 | — | — | — | 2,054 | |||||||||||||||
Corporate general and administrative expenses | 18,519 | 8,397 | (1,138 | ) | (4,000 | )(B) | 21,778 | |||||||||||||
Loss on sale of assets | — | 29 | — | — | 29 | |||||||||||||||
Realized loss on derivative instrument | 1,957 | — | — | — | 1,957 | |||||||||||||||
Impairment of intangible assets and goodwill | 671 | 3,296 | (3,296 | ) | — | 671 | ||||||||||||||
Total operating expenses | 192,106 | 123,401 | (12,300 | ) | (4,000 | ) | 299,207 | |||||||||||||
Operating income | 71,227 | 65,317 | 5,257 | — | 141,801 | |||||||||||||||
Non-operating (expense) income: | ||||||||||||||||||||
Interest (expense) income, net | (30,307 | ) | (28,171 | ) | 6,034 | (18,391 | )(C) | (70,835 | ) | |||||||||||
Terminated transaction expense | (7,847 | ) | — | — | — | (7,847 | ) | |||||||||||||
Other income (expense), net | 108 | 349 | (350 | ) | — | 107 | ||||||||||||||
Total non-operating (expense) income, net | (38,046 | ) | (27,822 | ) | 5,684 | (18,391 | ) | (78,575 | ) | |||||||||||
Income (loss) before income taxes and equity in net losses of affiliate | 33,181 | 37,495 | 10,941 | (18,391 | ) | 63,226 | ||||||||||||||
Income tax (expense) benefit | (3,779 | ) | (18,210 | ) | 847 | 6,989 | (D) | (14,153 | ) | |||||||||||
Net income (loss) | $ | 29,402 | $ | 19,285 | $ | 11,788 | $ | (11,402 | ) | $ | 49,073 | |||||||||
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CMP | ||||||||||||||||||||
Cumulus | Pro Forma | CMP | ||||||||||||||||||
Media | CMP | KC LLC | Basis | Pro Forma | ||||||||||||||||
Historical | Historical | Historical(A) | Adjustments | Basis | ||||||||||||||||
(Dollars in thousands) | ||||||||||||||||||||
Assets | ||||||||||||||||||||
Current assets: | ||||||||||||||||||||
Cash and cash equivalents | $ | 2,435 | $ | 12,717 | $ | (1,920 | ) | $ | 20,507 | (C) | $ | 33,739 | ||||||||
Restricted cash | 604 | 601 | — | — | 1,205 | |||||||||||||||
Accounts receivable, less allowance for doubtful accounts | 33,377 | 29,009 | (1,199 | ) | — | 61,187 | ||||||||||||||
Trade receivable | 2,977 | 1,078 | — | — | 4,055 | |||||||||||||||
Prepaid expenses and other current assets | 4,996 | 8,494 | 41 | (1,000 | )(B) | 12,531 | ||||||||||||||
Total current assets | 44,389 | 51,899 | (3,078 | ) | 19,507 | 112,717 | ||||||||||||||
Property and equipment, net | 38,927 | 24,362 | (5,385 | ) | — | 57,904 | ||||||||||||||
Intangible assets, net | 171,214 | 243,027 | (15,233 | ) | 19,037 | (E) | 418,045 | |||||||||||||
Goodwill | 60,422 | 79,700 | — | 439,949 | (E) | 580,071 | ||||||||||||||
Deferred financing costs | 818 | 4,512 | (152 | ) | 12,907 | (C) | 18,085 | |||||||||||||
Long-term investments | — | 4,000 | — | 2,400 | (E) | 6,400 | ||||||||||||||
Other assets | 3,106 | 333 | (48 | ) | — | 3,391 | ||||||||||||||
Total assets | $ | 318,876 | $ | 407,833 | $ | (23,896 | ) | $ | 493,800 | $ | 1,196,614 | |||||||||
Liabilities and Stockholders’ (Deficit) Equity | ||||||||||||||||||||
Current liabilities: | ||||||||||||||||||||
Accounts payable and accrued expenses | $ | 22,929 | $ | 20,626 | $ | (9,288 | ) | $ | (2,260 | )(B) | $ | 32,007 | ||||||||
Trade payable | 3,094 | 802 | — | — | 3,896 | |||||||||||||||
Derivative instrument | — | 1,666 | — | — | 1,666 | |||||||||||||||
Current portion of long-term debt | 5,982 | 93,228 | (86,228 | ) | (5,982 | )(C) | 7,000 | |||||||||||||
Total current liabilities | 32,005 | 116,322 | (95,516 | ) | (8,242 | ) | 44,569 | |||||||||||||
Long-term debt | 567,287 | 613,984 | — | 42,713 | (C) | 1,223,984 | ||||||||||||||
Other liabilities | 17,223 | 8,157 | (21 | ) | (1,715 | )(E) | 23,644 | |||||||||||||
Deferred income taxes | 26,764 | 84,315 | — | 7,234 | (E) | 118,313 | ||||||||||||||
Total liabilities | 643,279 | 822,778 | (95,537 | ) | 39,990 | 1,410,510 | ||||||||||||||
Stockholders’ (deficit) equity: | ||||||||||||||||||||
Class A common stock | 596 | — | — | 116 | (L) | 712 | ||||||||||||||
Class B common stock | 58 | — | — | — | 58 | |||||||||||||||
Class C common stock | 6 | — | — | — | 6 | |||||||||||||||
Class D common stock | — | — | — | 66 | (L) | 66 | ||||||||||||||
Treasury stock, at cost | (251,360 | ) | — | — | — | (251,360 | ) | |||||||||||||
Additionalpaid-in-capital | 959,512 | 310,850 | (367 | ) | (233,450 | )(O) | 1,036,545 | |||||||||||||
Accumulated (deficit) equity | (1,033,215 | ) | (793,272 | ) | 72,008 | 730,479 | (O) | (1,024,000 | ) | |||||||||||
Noncontrolling interest | — | 67,477 | — | (43,400 | )(E) | 24,077 | ||||||||||||||
Total stockholders’ (deficit) equity | (324,403 | ) | (414,945 | ) | 71,641 | 453,811 | (213,896 | ) | ||||||||||||
Total liabilities and stockholders’ (deficit) equity | $ | 318,876 | $ | 407,833 | $ | (23,896 | ) | $ | 493,800 | $ | 1,196,614 | |||||||||
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for the Three Months Ended March 31, 2011
March 31, 2011 | ||||||||||||||||
Citadel | ||||||||||||||||
Cumulus | Pro Forma | Citadel | ||||||||||||||
Media | Citadel | Basis | Pro Forma | |||||||||||||
Historical | Historical(M) | Adjustments | Basis | |||||||||||||
(Dollars in thousands) | ||||||||||||||||
Broadcast revenues | $ | 56,733 | $ | 160,022 | $ | — | $ | 216,755 | ||||||||
Management fees | 1,125 | — | — | 1,125 | ||||||||||||
Net revenues | 57,858 | 160,022 | — | 217,880 | ||||||||||||
Operating expenses | ||||||||||||||||
Station operating expenses (excluding depreciation, amortization and LMA fees) | 37,555 | 114,714 | — | 152,269 | ||||||||||||
Depreciation and amortization | 2,123 | 23,043 | — | 25,166 | ||||||||||||
LMA fees | 581 | 99 | — | 680 | ||||||||||||
Corporate general and administrative expenses | 8,129 | 14,452 | — | 22,581 | ||||||||||||
Gain on exchange of assets or stations | (15,158 | ) | 166 | — | (14,992 | ) | ||||||||||
Realized loss on derivative instrument | 40 | — | — | 40 | ||||||||||||
Other operating expenses | — | 7,118 | — | 7,118 | ||||||||||||
Total operating expenses | 33,270 | 159,592 | — | 192,862 | ||||||||||||
Operating income | 24,588 | 430 | — | 25,018 | ||||||||||||
Non-operating (expense) income: | ||||||||||||||||
Interest expense, net | (6,318 | ) | (12,411 | ) | (12,755 | )(I) | (31,484 | ) | ||||||||
Total non-operating expense, net | (6,318 | ) | (12,411 | ) | (12,755 | ) | (31,484 | ) | ||||||||
Income (loss) before income taxes and equity in net losses of affiliate | 18,270 | (11,981 | ) | (12,755 | ) | (6,466 | ) | |||||||||
Income tax (expense) benefit | (2,149 | ) | 5,343 | 4,847 | (D) | 8,041 | ||||||||||
Net income (loss) | $ | 16,121 | $ | (6,638 | ) | $ | (7,908 | ) | $ | 1,575 | ||||||
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for the Year Ended December 31, 2010
December 31, 2010 | |||||||||||||||||||||||||
Citadel | |||||||||||||||||||||||||
Cumulus | Predecessor | Successor | Combined | Pro Forma | Citadel | ||||||||||||||||||||
Media | Citadel | Citadel | Citadel | Basis | Pro Forma | ||||||||||||||||||||
Historical | Historical(M) | Historical(M) | Historical(M) | Adjustments | Basis | ||||||||||||||||||||
(Dollars in thousands) | |||||||||||||||||||||||||
Broadcast revenues | $ | 259,187 | $ | 295,424 | $ | 444,142 | $ | 739,566 | $ | — | $ | 998,753 | |||||||||||||
Management fees | 4,146 | — | — | — | — | 4,146 | |||||||||||||||||||
Net revenues | 263,333 | 295,424 | 444,142 | 739,566 | — | 1,002,899 | |||||||||||||||||||
Operating expenses: | |||||||||||||||||||||||||
Station operating expenses (excluding depreciation, amortization and LMA fees) | 159,807 | 194,685 | 278,231 | 472,916 | — | 632,723 | |||||||||||||||||||
Depreciation and amortization | 9,098 | 11,365 | 58,564 | 69,929 | 20,204 | (K) | 99,231 | ||||||||||||||||||
LMA fees | 2,054 | 455 | 379 | 834 | — | 2,888 | |||||||||||||||||||
Corporate general and administrative expenses | 18,519 | 8,929 | 26,394 | 35,323 | 6,500 | (G) | 60,342 | ||||||||||||||||||
Loss on sale of assets | — | 859 | 271 | 1,130 | — | 1,130 | |||||||||||||||||||
Realized loss on derivative instrument | 1,957 | — | — | — | — | 1,957 | |||||||||||||||||||
Impairment of intangible assets and goodwill | 671 | — | — | — | — | 671 | |||||||||||||||||||
Other operating (expenses) income | — | (5 | ) | 7,215 | 7,210 | — | 7,210 | ||||||||||||||||||
Total operating expenses | 192,106 | 216,288 | 371,054 | 587,342 | 26,704 | 806,152 | |||||||||||||||||||
Operating income (loss) | 71,227 | 79,136 | 73,088 | 152,224 | (26,704 | ) | 196,747 | ||||||||||||||||||
Non-operating (expense) income: | |||||||||||||||||||||||||
Interest expense, net | (30,307 | ) | (17,771 | ) | (46,349 | ) | (64,120 | ) | (30,513 | )(I) | (124,940 | ) | |||||||||||||
Terminated transaction expense | (7,847 | ) | — | — | — | — | (7,847 | ) | |||||||||||||||||
Other income (expense), net | 108 | 1,014,077 | (20,969 | ) | 993,108 | (993,108 | )(K) | 108 | |||||||||||||||||
Total non-operating (expense) income, net | (38,046 | ) | 996,306 | (67,318 | ) | 928,988 | (1,023,621 | ) | (132,679 | ) | |||||||||||||||
Income (loss) before income taxes and equity in net losses of affiliate | 33,181 | 1,075,442 | 5,770 | 1,081,212 | (1,050,325 | ) | 64,068 | ||||||||||||||||||
Income tax (expense) benefit | (3,779 | ) | (5,737 | ) | (7,553 | ) | (13,290 | ) | 13,774 | (D) | (3,295 | ) | |||||||||||||
Net income (loss) | $ | 29,402 | $ | 1,069,705 | $ | (1,783 | ) | $ | 1,067,922 | $ | (1,036,551 | ) | $ | 60,773 | |||||||||||
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Citadel | ||||||||||||||||
Cumulus | Pro Forma | Citadel | ||||||||||||||
Media | Citadel | Basis | Pro Forma | |||||||||||||
Historical | Historical(M) | Adjustments | Basis | |||||||||||||
(Dollars in thousands) | ||||||||||||||||
Assets | ||||||||||||||||
Current assets: | ||||||||||||||||
Cash and cash equivalents | $ | 2,435 | $ | 145,257 | $ | (792 | )(I) | $ | 146,900 | |||||||
Restricted cash | 604 | 3,846 | — | 4,450 | ||||||||||||
Accounts receivable, less allowance for doubtful accounts | 33,377 | 122,611 | (1,077 | )(F) | 154,911 | |||||||||||
Trade receivable | 2,977 | 1,848 | — | 4,825 | ||||||||||||
Deferred tax asset | — | 23,023 | — | 23,023 | ||||||||||||
Prepaid expenses and other current assets | 4,996 | 15,072 | — | 20,068 | ||||||||||||
Total current assets | 44,389 | 311,657 | (1,869 | ) | 354,177 | |||||||||||
Property and equipment, net | 38,927 | 197,667 | — | 236,594 | ||||||||||||
Intangible assets, net | 171,214 | 1,094,833 | — | 1,266,047 | ||||||||||||
Goodwill | 60,422 | 763,849 | 368,681 | (F) | 1,192,952 | |||||||||||
Deferred Financing costs | 818 | 19,978 | 29,324 | (I) | 50,120 | |||||||||||
Other assets | 3,106 | 19,461 | — | 22,567 | ||||||||||||
Total assets | $ | 318,876 | $ | 2,407,445 | $ | 396,136 | $ | 3,122,457 | ||||||||
Liabilities and Stockholders’ (Deficit) Equity | ||||||||||||||||
Current liabilities: | ||||||||||||||||
Accounts payable and accrued expenses | $ | 22,929 | $ | 60,440 | $ | (6,705 | )(N) | $ | 76,664 | |||||||
Trade payable | 3,094 | 1,176 | — | 4,270 | ||||||||||||
Current portion of long-term debt | 5,982 | 875 | (6,857 | )(I) | — | |||||||||||
Total current liabilities | 32,005 | 62,491 | (13,562 | ) | 80,934 | |||||||||||
Long-term debt | 567,287 | 745,625 | 974,249 | (I) | 2,287,161 | |||||||||||
Other liabilities | 17,223 | 56,440 | — | 73,663 | ||||||||||||
Deferred income taxes | 26,764 | 262,839 | — | 289,603 | ||||||||||||
Total liabilities | 643,279 | 1,127,395 | 960,687 | 2,731,361 | ||||||||||||
Stockholders’ (Deficit) Equity: | ||||||||||||||||
Preferred stock | — | — | — | — | ||||||||||||
Class A common stock | 596 | 5 | 2,306 | (L) | 2,907 | |||||||||||
Class B common stock | 58 | 18 | (18 | )(F) | 58 | |||||||||||
Class C common stock | 6 | — | — | 6 | ||||||||||||
Class D common stock | — | — | — | — | ||||||||||||
Successor equity held in reserve | — | 12,883 | (12,883 | )(F) | — | |||||||||||
Treasury stock, at cost | (251,360 | ) | — | — | (251,360 | ) | ||||||||||
Additionalpaid-in-capital | 959,512 | 1,275,565 | (513,710 | )(O) | 1,721,367 | |||||||||||
Accumulated deficit | (1,033,215 | ) | (8,421 | ) | (40,245 | )(O) | (1,081,881 | ) | ||||||||
Total stockholders’ (deficit) equity | (324,403 | ) | 1,280,050 | (564,551 | ) | 391,096 | ||||||||||
Total liabilities and stockholders’ (deficit) equity | $ | 318,876 | $ | 2,407,445 | $ | 396,136 | $ | 3,122,457 | ||||||||
P-10
Table of Contents
for the Three Months Ended March 31, 2011
Citadel | ||||||||||||||||||||||||||||
Pro Forma | ||||||||||||||||||||||||||||
CMP | and Global | |||||||||||||||||||||||||||
Cumulus | Pro Forma | CMP | Refinancing | Overall | ||||||||||||||||||||||||
Media | CMP | Basis | Pro Forma | Citadel | Basis | Pro Forma | ||||||||||||||||||||||
Historical | Historical | Adjustments | Basis | Historical(M) | Adjustments | Basis | ||||||||||||||||||||||
(Dollars in thousands) | ||||||||||||||||||||||||||||
Broadcast revenues | $ | 56,733 | $ | 39,143 | $ | (1,779 | )(A) | $ | 94,097 | $ | 160,022 | $ | — | $ | 254,119 | |||||||||||||
Management fees | 1,125 | — | (1,000 | )(B) | 125 | — | — | 125 | ||||||||||||||||||||
Net revenues | 57,858 | 39,143 | (2,779 | ) | 94,222 | 160,022 | — | 254,244 | ||||||||||||||||||||
Operating expenses | ||||||||||||||||||||||||||||
Station operating expenses (excluding depreciation, amortization and LMA fees) | 37,555 | 23,757 | (1,564 | )(A) | 59,748 | 114,714 | — | 174,462 | ||||||||||||||||||||
Depreciation and amortization | 2,123 | 2,116 | (443 | )(A) | 3,796 | 23,043 | — | 26,839 | ||||||||||||||||||||
LMA fees | 581 | — | — | 581 | 99 | — | 680 | |||||||||||||||||||||
Corporate general and administrative expenses | 8,129 | 2,482 | (1,461 | )(A,B) | 9,150 | 14,452 | — | 23,602 | ||||||||||||||||||||
Gain on exchange of assets or stations | (15,158 | ) | — | — | (15,158 | ) | 166 | — | (14,992 | ) | ||||||||||||||||||
Realized loss on derivative instrument | 40 | — | — | 40 | — | — | 40 | |||||||||||||||||||||
Other operating expenses | — | (6 | ) | — | (6 | ) | 7,118 | — | 7,112 | |||||||||||||||||||
Total operating expenses | 33,270 | 28,349 | (3,468 | ) | 58,151 | 159,592 | 217,743 | |||||||||||||||||||||
Operating income | 24,588 | 10,794 | 689 | 36,071 | 430 | — | 36,501 | |||||||||||||||||||||
Non-operating expense: | ||||||||||||||||||||||||||||
Interest expense, net | (6,318 | ) | (6,219 | ) | (4,302 | )(A,C) | (16,839 | ) | (12,411 | ) | (9,504 | )(I) | (38,754 | ) | ||||||||||||||
Total non-operating expense, net | (6,318 | ) | (6,219 | ) | (4,302 | ) | (16,839 | ) | (12,411 | ) | (9,504 | ) | (38,754 | ) | ||||||||||||||
Income (loss) before income taxes and equity in net losses of affiliate | 18,270 | 4,575 | (3,613 | ) | 19,232 | (11,981 | ) | (9,504 | ) | (2,253 | ) | |||||||||||||||||
Income tax (expense) benefit | (2,149 | ) | (2,479 | ) | 2,244 | (A,D) | (2,384 | ) | 5,343 | 3,611 | (D) | 6,570 | ||||||||||||||||
Net income (loss) | $ | 16,121 | $ | 2,096 | $ | (1,369 | ) | $ | 16,848 | $ | (6,638 | ) | $ | (5,893 | ) | $ | 4,317 | |||||||||||
P-11
Table of Contents
for the Year Ended December 31, 2010
Citadel | |||||||||||||||||||||||||||||||||||||
Pro Forma | |||||||||||||||||||||||||||||||||||||
CMP | and Global | ||||||||||||||||||||||||||||||||||||
Cumulus | Pro Forma | CMP | Predecessor | Successor | Combined | Refinancing | Overall | ||||||||||||||||||||||||||||||
Media | CMP | Basis | Pro Forma | Citadel | Citadel | Citadel | Basis | Pro Forma | |||||||||||||||||||||||||||||
Historical | Historical | Adjustments | Basis | Historical(M) | Historical(M) | Historical(M) | Adjustments | Basis | |||||||||||||||||||||||||||||
(Dollars in thousands) | |||||||||||||||||||||||||||||||||||||
Broadcast revenues | $ | 259,187 | $ | 188,718 | $ | (7,043 | )(A) | $ | 440,862 | $ | 295,424 | $ | 444,142 | $ | 739,566 | $ | — | $ | 1,180,428 | ||||||||||||||||||
Management fees | 4,146 | — | (4,000 | )(B) | 146 | — | — | — | — | 146 | |||||||||||||||||||||||||||
Net revenues | 263,333 | 188,718 | (11,043 | ) | 441,008 | 295,424 | 444,142 | 739,566 | — | 1,180,574 | |||||||||||||||||||||||||||
Operating expenses: | |||||||||||||||||||||||||||||||||||||
Station operating expenses (excluding depreciation, amortization and LMA fees) | 159,807 | 103,103 | (6,086 | )(A) | 256,824 | 194,685 | 278,231 | 472,916 | — | 729,740 | |||||||||||||||||||||||||||
Depreciation and amortization | 9,098 | 8,576 | (1,780 | )(A) | 15,894 | 11,365 | 58,564 | 69,929 | 20,204 | (K) | 106,027 | ||||||||||||||||||||||||||
LMA fees | 2,054 | — | — | 2,054 | 455 | 379 | 834 | — | 2,888 | ||||||||||||||||||||||||||||
Corporate general and administrative expenses | 18,519 | 8,397 | (5,138 | )(A,B) | 21,778 | 8,929 | 26,394 | 35,323 | 6,500 | (G) | 63,601 | ||||||||||||||||||||||||||
Loss on sale of assets | — | 29 | — | 29 | 859 | 271 | 1,130 | — | 1,159 | ||||||||||||||||||||||||||||
Realized loss on derivative instrument | 1,957 | — | — | 1,957 | — | — | — | — | 1,957 | ||||||||||||||||||||||||||||
Impairment of intangible assets and goodwill | 671 | 3,296 | (3,296 | )(A) | 671 | — | — | — | — | 671 | |||||||||||||||||||||||||||
Other operating expenses | — | — | — | — | (5 | ) | 7,215 | 7,210 | — | 7,210 | |||||||||||||||||||||||||||
Total operating expenses | 192,106 | 123,401 | (16,300 | ) | 299,207 | 216,288 | 371,054 | 587,342 | 26,704 | 913,253 | |||||||||||||||||||||||||||
Operating income (loss) | 71,227 | 65,317 | 5,257 | 141,801 | 79,136 | 73,088 | 152,224 | (26,704 | ) | 267,321 | |||||||||||||||||||||||||||
Non-operating income (expense): | |||||||||||||||||||||||||||||||||||||
Interest expense, net | (30,307 | ) | (28,171 | ) | (12,357 | )(A,C) | (70,835 | ) | (17,771 | ) | (46,349 | ) | (64,120 | ) | (19,992 | )(I) | (154,947 | ) | |||||||||||||||||||
Terminated transaction expense | (7,847 | ) | — | — | (7,847 | ) | — | — | — | — | (7,847 | ) | |||||||||||||||||||||||||
Other income (expense), net | 108 | 349 | (350 | )(A) | 107 | 1,014,077 | (20,969 | ) | 993,108 | (993,108 | )(K) | 107 | |||||||||||||||||||||||||
Total non-operating income (expense), net | (38,046 | ) | (27,822 | ) | (12,707 | ) | (78,575 | ) | 996,306 | (67,318 | ) | 928,988 | (1,013,100 | ) | (162,687 | ) | |||||||||||||||||||||
Income (loss) before income taxes and equity in net losses of affiliate | 33,181 | 37,495 | (7,450 | ) | 63,226 | 1,075,442 | 5,770 | 1,081,212 | (1,039,804 | ) | 104,634 | ||||||||||||||||||||||||||
Income tax (expense) benefit | (3,779 | ) | (18,210 | ) | 7,836 | (A,D) | (14,153 | ) | (5,737 | ) | (7,553 | ) | (13,290 | ) | 9,775 | (D) | (17,668 | ) | |||||||||||||||||||
Net income (loss) | $ | 29,402 | $ | 19,285 | $ | 386 | $ | 49,073 | $ | 1,069,705 | $ | (1,783 | ) | $ | 1,067,922 | $ | (1,030,029 | ) | $ | 86,966 | |||||||||||||||||
P-12
Table of Contents
as of March 31, 2011
Citadel | ||||||||||||||||||||||||||||
CMP | and Global | |||||||||||||||||||||||||||
Cumulus | Pro Forma | CMP | Refinancing | Overall | ||||||||||||||||||||||||
Media | CMP | Basis | Pro Forma | Citadel | Pro Forma Basis | Pro Forma | ||||||||||||||||||||||
Historical | Historical | Adjustments | Basis | Historical(M) | Adjustments | Basis | ||||||||||||||||||||||
(Dollars in thousands) | ||||||||||||||||||||||||||||
Assets | ||||||||||||||||||||||||||||
Current assets: | ||||||||||||||||||||||||||||
Cash and cash equivalents | $ | 2,435 | $ | 12,717 | $ | 18,587 | (A,C) | $ | 33,739 | $ | 145,257 | $ | (70,973 | )(I) | $ | 108,023 | ||||||||||||
Restricted cash | 604 | 601 | — | 1,205 | 3,846 | — | 5,051 | |||||||||||||||||||||
Accounts receivable, less allowance for doubtful accounts | 33,377 | 29,009 | (1,199 | )(A) | 61,187 | 122,611 | (1,077 | )(F) | 182,721 | |||||||||||||||||||
Trade receivable | 2,977 | 1,078 | — | 4,055 | 1,848 | — | 5,903 | |||||||||||||||||||||
Deferred tax asset | — | — | — | — | 23,023 | — | 23,023 | |||||||||||||||||||||
Prepaid expenses and other current assets | 4,996 | 8,494 | (959 | )(A,B) | 12,531 | 15,072 | — | 27,603 | ||||||||||||||||||||
Total current assets | 44,389 | 51,899 | 16,429 | 112,717 | 311,657 | (72,050 | ) | 352,324 | ||||||||||||||||||||
Property and equipment, net | 38,927 | 24,362 | (5,385 | )(A) | 57,904 | 197,667 | — | 255,571 | ||||||||||||||||||||
Intangible assets, net | 171,214 | 243,027 | 3,804 | (A,E) | 418,045 | 1,094,833 | — | 1,512,878 | ||||||||||||||||||||
Goodwill | 60,422 | 79,700 | 454,679 | (E,J) | 594,801 | 763,849 | 368,681 | (F) | 1,727,331 | |||||||||||||||||||
Deferred financing costs | 818 | 4,512 | 12,755 | (A,C) | 18,085 | 19,978 | 22,924 | (I) | 60,987 | |||||||||||||||||||
Long-term investments | — | 4,000 | 2,400 | (E) | 6,400 | — | — | 6,400 | ||||||||||||||||||||
Other assets | 3,106 | 333 | (48 | )(A) | 3,391 | 19,461 | — | 22,852 | ||||||||||||||||||||
Total assets | $ | 318,876 | $ | 407,833 | $ | 484,634 | $ | 1,211,344 | $ | 2,407,445 | $ | 319,555 | $ | 3,938,343 | ||||||||||||||
Liabilities and Stockholders’ (Deficit) Equity | ||||||||||||||||||||||||||||
Current liabilities: | ||||||||||||||||||||||||||||
Accounts payable and accrued expenses | $ | 22,929 | $ | 20,626 | $ | (11,548 | )(A,B) | $ | 32,007 | $ | 60,440 | $ | (6,450 | )(N) | $ | 85,997 | ||||||||||||
Trade payable | 3,094 | 802 | — | 3,896 | 1,176 | — | 5,072 | |||||||||||||||||||||
Derivative instrument | — | 1,666 | — | 1,666 | — | — | 1,666 | |||||||||||||||||||||
Current portion of long-term debt | 5,982 | 93,228 | (92,210 | )(A,C) | 7,000 | 875 | (7,875 | )(I) | — | |||||||||||||||||||
Total current liabilities | 32,005 | 116,322 | (103,758 | ) | 44,569 | 62,491 | (14,325 | ) | 92,735 | |||||||||||||||||||
Long-term debt | 567,287 | 613,984 | 42,713 | (C) | 1,223,984 | 745,625 | 938,536 | (I) | 2,908,145 | |||||||||||||||||||
Other liabilities | 17,223 | 8,157 | (1,736 | )(A) | 23,644 | 56,440 | (1,716 | )(I) | 78,369 | |||||||||||||||||||
Deferred income taxes | 26,764 | 84,315 | 7,233 | (E) | 118,312 | 262,839 | — | 381,152 | ||||||||||||||||||||
Total liabilities | 643,279 | 822,778 | (55,548 | ) | 1,410,509 | 1,127,395 | 922,495 | 3,460,400 | ||||||||||||||||||||
Stockholders’ (deficit) equity: | ||||||||||||||||||||||||||||
Preferred stock | — | — | — | — | — | — | — | |||||||||||||||||||||
Class A common stock | 596 | — | 116 | (L) | 712 | 5 | 2,306 | (L) | 3,023 | |||||||||||||||||||
Class B common stock | 58 | — | — | 58 | 18 | (18 | )(F) | 58 | ||||||||||||||||||||
Class C common stock | 6 | — | — | 6 | — | — | 6 | |||||||||||||||||||||
Class D common stock | — | — | 66 | (L) | 66 | — | — | 66 | ||||||||||||||||||||
Successor equity held in reserve | — | — | — | — | 12,883 | (12,883 | )(F) | — | ||||||||||||||||||||
Treasury stock, at cost | (251,360 | ) | — | — | (251,360 | ) | — | — | (251,360 | ) | ||||||||||||||||||
Additional paid-in-capital | 959,512 | 310,850 | (233,817 | )(A,E) | 1,036,545 | 1,275,565 | (513,710 | )(0) | 1,798,400 | |||||||||||||||||||
Accumulated deficit | (1,033,215 | ) | (793,272 | ) | 802,487 | (C,E) | (1,024,000 | ) | (8,421 | ) | (39,829 | )(0) | (1,072,250 | ) | ||||||||||||||
Noncontrolling interest | — | 67,477 | (28,670 | )(J) | 38,807 | — | (38,807 | )(J) | — | (J) | ||||||||||||||||||
Total stockholders’ (deficit) equity | (324,403 | ) | (414,945 | ) | 540,182 | (199,166 | ) | 1,280,050 | (602,941 | ) | 477,943 | |||||||||||||||||
Total liabilities and stockholders’ equity | $ | 318,876 | $ | 407,833 | $ | 484,634 | $ | 1,211,344 | $ | 2,407,445 | $ | 319,555 | $ | 3,938,343 | ||||||||||||||
P-13
Table of Contents
A. | Adjustments to reflect the KC Restructuring.On February 4, 2011, CMP, CMP Susquehanna Holdings Corp., a wholly-owned subsidiary of CMP and the parent company of Radio Holdings (“Radio Holdco”) and KC LLC entered into the KC Restructuring Agreement with the lenders under KC LLC’s credit facility (the “CMP KC Credit Facility”) regarding the KC Restructuring. The KC Restructuring is expected to be implemented through a pre-packaged plan of reorganization filed with the United States Bankruptcy Court for the District of Delaware (the “Pre-packaged Bankruptcy Proceeding”). CMP expects that the Pre-packaged Bankruptcy Proceeding will occur, and the KC Restructuring is contemplated to be completed, during the third quarter of 2011. If the KC Restructuring is completed in accordance with the terms and conditions of the KC Restructuring Agreement, among other things: (1) Radio Holdco will distribute all of the outstanding common stock of Radio Holdings to CMP; (2) KC LLC’s outstanding debt and owners’ interest of $92.6 million at March 31, 2011 will be reduced to $20 million; (3) all of the equity of Radio Holdco will be transferred to the lenders under the CMP KC Credit Facility or their nominee; and (4) Cumulus Media will continue to manage the radio stations of KC LLC through 2011, which management agreement will be subject to annual renewal thereafter. |
B. | Adjustments to reflect the termination of the CMP Management Agreement and write off of deferred financing fees and debt discount, net of tax.Cumulus Media currently manages the CMP business pursuant to a management agreement (the “CMP Management Agreement”). Under the terms of the CMP Management Agreement, CMP is required to pay to Cumulus Media the greater of $4.0 million or 4% of Radio Holdco’s adjusted EBITDA on an annual basis. Such amount has been eliminated in the consolidated pro forma statements of operations. In the March 31, 2011 Pro Forma Balance Sheet, an adjustment is made to record approximately $1.3 million in deferred income tax benefit associated with the write off of $0.8 million in deferred financing fees and $2.5 million in debt discount related to the CMP Management Agreement. At March 31, 2011, Cumulus Media had deferred revenue of $1.0 million and CMP had prepaid expenses of $1.0 million related to this agreement. Upon the closing of the CMP Acquisition, the CMP Management Agreement will no longer be in effect. |
(Dollars in thousands) | ||||
Pro Forma Balance Sheet as of March 31, 2011 Adjustments: | ||||
Elimination of prepaid management fee and deferred revenue: | ||||
Pro forma adjustment to line item, “Prepaid expenses and other current assets” | $ | 1,000 | ||
Pro forma adjustment to line item, “Accounts payable and accrued expenses” | $ | 1,000 | ||
Accrual of tax benefit from write off of Cumulus Media deferred financing fees and debt discount: | ||||
Cumulus Media deferred financing fees and debt discount | $ | 3,317 | ||
Combined federal and state statutory rate | 38% | |||
Tax benefit from the write off of deferred financing costs and debt discount | $ | 1,260 | ||
Elimination of deferred revenue | $ | 1,000 | ||
Accrual of tax benefit from write off of Cumulus Media deferred financing fees and debt discount | 1,260 | |||
Pro forma adjustment to line item, “Accounts payable and accrued expenses” | $ | 2,260 | ||
Pro Forma Statement Of Operations for the three months ended March 31, 2011 Adjustments: | ||||
Elimination of management fee income and expense: | ||||
Pro forma adjustment to line item, “Management fees” | $ | 1,000 | ||
Pro forma adjustment to line item, “Corporate general and administrative expenses” | $ | 1,000 | ||
Pro Forma Statement of Operations for the year ended December 31, 2010 Adjustments: | ||||
Elimination of 2011 management fee income and expense: | ||||
Pro forma adjustment to line item, “Management fees” | $ | 4,000 | ||
Pro forma adjustment to line item, “Corporate general and administrative expenses” | $ | 4,000 |
C. | Adjustments to reflect issuance of the 2019 Notes.In connection with the repayment of the term loan under the Existing Credit Agreement using proceeds from the issuance of the 2019 Notes on May 13, 2011, |
P-14
Table of Contents
approximately $6.0 million related to the current portion of Cumulus Media’s existing debt was eliminated. Adjustments also reflect the elimination of deferred financing costs and debt discount and related amortization associated with the term loan under the Existing Credit Agreement and the recordation of deferred financing costs of $13.7 million and related amortization of $0.4 million and $1.4 million associated with the issuance of the 2019 Notes for the three months ended March 31, 2011 and the year ended December 31, 2010, respectively. Deferred financing fees will be amortized through interest expense using the effective interest method. As a result, interest expense on a CMP Pro Forma Basis was $16.8 million and $70.8 million for the three months ended March 31, 2011 and the year ended December 31, 2010, respectively. |
Pro Forma Balance Sheet Adjustments | Amounts | |||
(Dollars in thousands) | ||||
Change In Long-Term Debt at March 31, 2011: | ||||
Issuance of 2019 Notes | $ | 610,000 | ||
Non-cash debt discount | 2,499 | |||
Repayment of term loan under Existing Credit Agreement (excluding $6.0 million of short-term debt) | (569,786 | ) | ||
CMP Pro Forma Basis adjustment to line item, “Long term debt” | $ | 42,713 | ||
Change In Deferred Financing Costs at March 31, 2011: | ||||
Reclassification of deferred financing costs under Existing Credit Agreement | $ | (818 | ) | |
Deferred financing costs associated with 2019 Notes | 13,725 | |||
CMP Pro Forma Basis adjustment to line item, “Deferred financing costs” | $ | 12,907 | ||
Change In Cash And Cash Equivalents at March 31, 2011: | ||||
Proceeds from issuance of 2019 Notes | $ | 610,000 | ||
Repayment of term loan under Existing Credit Agreement (including $6.0 million of current portion) | (575,768 | ) | ||
Deferred financing costs | (13,725 | ) | ||
CMP Pro Forma Basis cash adjustment to line item, “Cash and cash equivalents” | $ | 20,507 | ||
For the | ||||||||||||
Three Months | For the | |||||||||||
Ended | Year Ended | |||||||||||
March 31, | December 31, | |||||||||||
Pro Forma Statements Of Operations Adjustments | Interest Rate | 2011 | 2010 | |||||||||
(Dollars in thousands) | ||||||||||||
Pro Forma Interest Expense: | ||||||||||||
2019 Notes | 7.75% | $ | 11,819 | $ | 47,275 | |||||||
CMP (excluding KC LLC) debt interest expense | n/a | 4,660 | 22,137 | |||||||||
Amortization of deferred financing fees and related amortization | n/a | 360 | 1,423 | |||||||||
$ | 16,839 | a | $ | 70,835 | a | |||||||
(a) | Represents pro forma interest expense for the respective periods presented, which is equal to the historical interest expense of Cumulus Media and CMP plus the additional interest expense pro forma adjustment as set out below: |
For the | ||||||||
Three Months | For the | |||||||
Ended | Year Ended | |||||||
March 31, | December 31, | |||||||
2011 | 2010 | |||||||
(Dollars in thousands) | ||||||||
Historical Cumulus Media interest expense | $ | 6,318 | $ | 30,307 | ||||
Historical CMP interest expense (excluding KC LLC) | 4,660 | 22,137 | ||||||
Combined historical Cumulus Media and CMP (excluding KC LLC) interest expense | $ | 10,978 | $ | 52,444 | ||||
Interest expense on a CMP Pro Forma Basis | 16,839 | 70,835 | ||||||
Interest expense adjustment on a CMP Pro Forma Basis | $ | 5,861 | $ | 18,391 | ||||
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D. | Adjustments to reflect income tax impacts of pro forma adjustments. Adjustments to reflect the income tax impact resulting from the pro forma adjustments to the condensed consolidated statements of operations and balance sheets based on an estimated combined federal and state statutory income tax rate of 38.0% are set forth below: |
For the | ||||||||
Three Months | For the | |||||||
Ended | Year Ended | |||||||
March 31, | December 31, | |||||||
2011 | 2010 | |||||||
(Dollars in thousands) | ||||||||
CMP Pro Forma Income Tax (Expense) Benefit: | ||||||||
Pro forma interest expense adjustment (CMP Pro Forma Basis) (see note C) | $ | 5,861 | $ | 18,391 | ||||
Combined federal and state statutory income tax rate | 38% | 38% | ||||||
Pro forma adjustment to line item, “Income tax (expense) benefit” | $ | 2,227 | $ | 6,989 | ||||
Citadel Pro Forma Income Tax (Expense) Benefit: | ||||||||
Pro forma interest expense adjustments (Citadel Pro Forma Basis) | $ | 12,755 | $ | 30,513 | ||||
Pro forma corporate general and administrative adjustment (see note G) | — | 6,500 | ||||||
Pro forma depreciation and amortization adjustments (Citadel Pro Forma Basis) (see note K) | — | 20,204 | ||||||
Pro forma net debt extinguishment adjustment | — | (20,969 | ) | |||||
$ | 12,755 | $ | 36,248 | |||||
Combined federal and state statutory income tax rate | 38% | 38% | ||||||
Pro forma adjustment to line item, “Income tax benefit” | $ | 4,847 | $ | 13,774 | ||||
Overall Pro Forma Income Tax (Expense) Benefit: | ||||||||
Pro forma interest expense adjustments (Overall Pro Forma Basis) | $ | 9,505 | $ | 19,992 | ||||
Pro forma corporate general and administrative adjustment (see note G) | — | 6,500 | ||||||
Pro forma depreciation and amortization adjustments (Overall Pro Forma Basis) (see note K) | — | 20,204 | ||||||
Pro forma net debt extinguishment adjustment (see note K) | — | (20,969 | ) | |||||
$ | 9,505 | $ | 25,727 | |||||
Combined federal and state statutory income tax rate | 38% | 38% | ||||||
Pro forma adjustment to line item, “Income tax (expense) benefit” | $ | 3,612 | $ | 9,775 | ||||
As of | ||||
March 31, | ||||
2011 | ||||
Citadel Pro Forma Basis: | ||||
Historical Cumulus deferred financing costs | $ | 818 | ||
Historical Cumulus Media debt discount | 2,499 | |||
Historical Citadel deferred financing costs | 19,978 | |||
Severance to be paid to Citadel employees and executives in connection with the merger | 24,200 | |||
Make whole provision related to redemption of Citadel Senior Notes | 31,000 | |||
Total to be tax effected | 78,495 | |||
Combined federal and state statutory income tax rate | 38% | |||
Tax effect impacting Citadel Pro Forma Basis adjustment to line item, “Accumulated deficit(a) | $ | 29,829 | ||
As of | ||||
March 31, | ||||
2011 | ||||
Overall Pro Forma Basis: | ||||
Historical CMP deferred financing costs | $ | 4,360 | ||
Historical Citadel deferred financing costs | 19,978 | |||
Historical liability related to future interest payments recorded resultant from CMP’s 2009 debt exchange (the “2009 CMP Exchange Offer”) and debt issuance costs | (1,715 | ) | ||
Severance to be paid to Citadel employees and executives in connection with the merger | 24,200 | |||
Make whole provision related to redemption of Citadel Senior Notes | 31,000 | |||
Total to be tax effected | 77,823 | |||
Combined federal and state statutory income tax rate | 38% | |||
Tax effect impacting Overall Pro Forma Basis adjustment to line item, “Accumulated deficit(a) | $ | 29,573 | ||
(a) | Refer to the Appendix to Pro Forma Adjustments for reconciliation. |
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E. | Adjustments to reflect the CMP Acquisition.The CMP Acquisition will result in the issuance by Cumulus Media of 9,945,714 shares of its common stock and the elimination of CMP and KC LLC’s historical members’ equity. The amount reflected in retained earnings (accumulated deficit) in the accompanying unaudited pro forma condensed consolidated balance sheet includes the gain recognized on Cumulus Media’s existing equity interest in CMP. The gain of $11.3 million is the difference between the estimated fair value of Cumulus Media’s existing investment in CMP and the book value of such investment, which had been reduced to zero in Cumulus Media’s historical consolidated financial statements as a result of CMP’s accumulated historical losses. |
Equity consideration to CMP Sellers | $ | 77,215 | a | |
Fair value of non-controlling interests—preferred stock | 24,077 | b | ||
Assumption of debt | 620,984 | c | ||
Total purchase price | $ | 722,276 | ||
Fair value of Cumulus Media’s existing equity interest in CMP | 11,272 | e | ||
Total fair value for allocation | $ | 733,548 | ||
Current assets | 47,821 | d | ||
Intangible assets | 246,832 | f | ||
Plant, property and equipment, net | 18,977 | d | ||
Other assets | 11,045 | d | ||
Current liabilities | (12,806 | )d | ||
Other long-term liabilities | (6,421 | )d | ||
Deferred income tax liabilities | (91,549 | )g | ||
Allocation to goodwill | 519,649 | h | ||
Total purchase price allocation | $ | 733,548 | ||
(a) | Represents the estimated fair value (at $3.40 per share) of 9,945,714 shares of Cumulus Media common stock to be issued to the CMP Sellers. In addition, includes $43.4 million of Cumulus Media Class A common stock warrant in exchange for a warrant in CMPSC. | |
(b) | Represents the estimated fair value of the non-controlling interest of preferred stock, and warrants to purchase common stock, of Radio Holdings held by persons other than the CMP Sellers. | |
(c) | Consists of $7.0 million of short-term debt under the CMPSC Credit Agreement, $587.9 million of long-term debt pursuant to the CMPSC Credit Agreement and an aggregate amount of $26.1 million related to the CMP 9.875% Notes and CMP 2014 Notes. |
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(d) | Represents the book value of CMP, adjusted as follows: |
CMP historical current assets | $ | 51,899 | ||
Exclusion of KC LLC (see note A) | (3,078 | ) | ||
Elimination of amounts related to CMP Management Agreement (see note B) | (1,000 | ) | ||
Current assets for CMP Acquisition purchase price allocation | $ | 47,821 | ||
CMP historical plant property and equipment | $ | 24,362 | ||
Exclusion of KC LLC (see note A) | (5,385 | ) | ||
Plant, property and equipment for CMP Acquisition purchase price allocation | $ | 18,977 | ||
Deferred financing costs and other assets | $ | 4,845 | ||
Long-term investments | 4,000 | |||
Exclusion of KC LLC (see note A) | (200 | ) | ||
Fair value adjustment to CMP’s investment in San Francisco Giants | 2,400 | |||
Other assets for CMP Acquisition purchase price allocation | $ | 11,045 | ||
CMP historical current liabilities, excluding short-term debt | $ | 23,094 | ||
Exclusion of KC LLC (see note A) | (9,288 | ) | ||
Elimination of amounts related to management services agreement (see note B) | (1,000 | ) | ||
Current liabilities for CMP Acquisition purchase price allocation | $ | 12,806 | ||
CMP historical other long-term liabilities | $ | 8,157 | ||
Exclusion of KC LLC (see note A) | (21 | ) | ||
Elimination of accrued bond interest | (1,715 | ) | ||
Other long-term liabilities for CMP Acquisition purchase price allocation | $ | 6,421 | ||
(e) | Represents the estimated fair value of Cumulus Media’s existing equity interest in CMP, which is not being acquired in the CMP Acquisition. | |
(f) | Includes an adjustment of $19.0 million to fair value of CMP’s FCC license intangible assets. The adjustment is based upon fair value information as of March 31, 2011. | |
(g) | The historical deferred income tax assets of CMP were adjusted by the FCC license intangible assets’ fair value adjustment of $19.0 million multiplied by an estimated combined federal and state statutory income tax rate of 38%: |
Pro forma adjustment to fair value the FCC license intangible assets | $ | 19,037 | ||
Combined federal and state statutory income tax rate | 38% | |||
Pro forma adjustment to line item, “Deferred income taxes“ | $ | 7,234 | ||
(h) | Represents allocation to goodwill resulting from the CMP Acquisition. Below is a reconciliation of CMP historical goodwill as of March 31, 2011 and the CMP Pro Forma Basis goodwill adjustment resulting from the CMP Acquisition: |
CMP Preliminary purchase price allocation to goodwill as of March 31, 2011 | $ | 519,649 | ||
Less: Existing CMP goodwill balance at March 31, 2011 | (79,700 | ) | ||
CMP Pro Forma Basis goodwill adjustment | $ | 439,949 | ||
F. | Adjustments to reflect the merger.For purposes of this unaudited pro forma condensed consolidated financial information, Cumulus Media has assumed that the merger consideration will consist of a payment of $1,258.2 million in cash (which represents the arithmetic mean, or “midpoint,” of the amount of cash which would be payable to holders of Citadel common stock and warrants in each of the Maximum Stock Scenario and the Maximum Cash Scenario), and the issuance of 114,872,375 shares of Cumulus Class A common stock, (which represents the arithmetic mean, or “midpoint,” of the number of shares of Cumulus Media Class A common stock that would be issued to Citadel stockholders in each of the Maximum Stock Scenario and the Maximum Cash Scenario, and has further assumed that all of the equity consideration payable in the merger would be in the form of Cumulus Media Class A common stock), which shares have an assumed aggregate value of $390.6 million (based on an assumed price per share of Cumulus Media common stock of $3.40, the closing price of such common stock on the Nasdaq Global Select Market on |
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June 20, 2011, the most recent practicable date). Because applicable accounting guidance prohibits the inclusion in this unaudited condensed consolidated pro forma financial information of the impact of any cash flow from operations expected to be generated by either of CMP or Citadel prior to the closing date of each respective transaction, and also prohibits the inclusion of any expected cost synergies related thereto, in the event of the Maximum Cash Scenario, an additional $70.0 million of borrowings under the revolving credit facility under the Acquisition Credit Facility and a corresponding increase of $0.6 million and $2.6 million in interest expense for the three months ended March 31, 2011 and the year ended December 31, 2010, respectively, would be required to fund such payments, and would also be included in the presentation on an Overall Pro Forma Basis. |
(Dollars in thousands) | ||||
Cash consideration to Citadel stockholders and warrant holders | $ | 1,258,165 | a | |
Equity consideration to Citadel stockholders and warrant holders | 390,566 | a | ||
Assumption of debt | 746,500 | b | ||
Total purchase price | $ | 2,395,231 | ||
Current assets | $ | 311,657 | ||
Intangible assets | 1,094,833 | |||
Plant, property and equipment, net | 197,667 | |||
Other assets | 39,439 | |||
Current liabilities | (61,616 | )c | ||
Other long-term liabilities | (56,440 | ) | ||
Deferred tax liabilities | (262,839 | ) | ||
Allocation to goodwill | 1,132,530 | d | ||
Total purchase price allocation | $ | 2,395,231 | ||
(a) | In accordance with the terms of the merger agreement, the amount of cash and Cumulus Media common stock to be issued may vary depending upon certain elections made (or deemed to be made) by Citadel stockholders and warrant holders, subject to certain maximum amounts. | |
(b) | Represents short-term debt of $0.9 million and long-term debt of $745.6 million. | |
(c) | Represents current liabilities of $62.5 million less $0.9 million of short-term debt included in the assumption of debt. | |
(d) | Represents additional goodwill generated by the merger at March 31, 2011 as follows: |
Citadel preliminary purchase price allocation to goodwill | $ | 1,132,530 | ||
Less: Existing Citadel goodwill balance | 763,849 | |||
Citadel Pro Forma Basis goodwill adjustment | $ | 368,681 | ||
G. | Adjustment to recognize additional severance and retention bonuses to be paid to Citadel employees and executives in connection with the merger.Severance amounts of $17.7 million and retention bonuses of $13.0 million were negotiated as a part of the merger agreement or will otherwise be due under preexisting |
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agreements, and will be accounted for in accordance with ASC 805,Business Combinations. Retention bonuses of $6.5 million for pre-acquisition services will be payable as of the date of the closing of the merger and are reflected in the Overall Condensed Consolidated Balance Sheet. The remaining $6.5 million in retention bonuses for post-acquisition services will be payable subsequent to the closing of the merger and are reflected in the Overall Pro Forma Basis Condensed Consolidated Statements of Operations. |
H. | Adjustments to reflect Equity Investment.Pursuant to the terms of the Investment Agreement, Cumulus Media has agreed to sell up to $500.0 million, in the aggregate, of its equity securities to the Investors, net of fees of $21.4 million. To the extent that the consideration payable in the merger requires the payment of cash in an amount payable less than the Maximum Cash Scenario, the Investors’ commitments will be reduced, subject to a minimum investment of $395.0 million. In addition, under certain circumstances in which Cumulus Media does not require Macquarie’s full investment to consummate the merger, Macquarie may elect to reduce its investment by an equivalent amount. Based on the assumed cash consideration payable to Citadel stockholders of $1,258.2 million, the value of the equity securities to be sold pursuant to the Investment Agreement is $373.6 million, net of fees of $21.4 million. |
I. | Adjustments to reflect the debt to be incurred pursuant to the Global Refinancing, assuming the CMP Acquisition is completed prior to the completion of the merger.In connection with the repayment of the outstanding indebtedness of each of Cumulus Media, CMP (excluding KC LLC) and Citadel contemplated by the Global Refinancing, the debt of Cumulus Media, CMP and Citadel will be eliminated. Additionally, $1.7 million of non-cash accrued interest on exchanged notes related to the CMPSC Credit Agreement has been eliminated in the accompanying unaudited pro forma condensed consolidated financial information. As a result, interest expense on an Overall Pro Forma Basis is $38.8 million and $154.9 million for the three months ended March 31, 2011 and the year ended December 31, 2010, respectively. Cumulus Media expects to record deferred financing fees of $61.0 million and related amortization of $1.6 million and $6.3 million for the three month period ended March 31, 2011 and for the year ended December 31, 2010, respectively, in connection with the Global Refinancing. |
Overall Pro Forma Balance Sheet Adjustments | Amounts | |||
(Dollars in thousands) | ||||
Change in current portion of Long-Term Debt: | ||||
Current portion of long-term debt: | ||||
Elimination of CMP current portion of debt related to term loan under CMP credit agreement | $ | (93,228 | ) | |
Exclusion of KC LLC historical financial condition | 86,228 | |||
Elimination of Citadel current portion of debt related to term loan under Citadel Credit Facilities | (875 | ) | ||
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Overall Pro Forma Balance Sheet Adjustments | Amounts | |||
(Dollars in thousands) | ||||
Citadel Pro Forma Basis adjustment | $ | (7,875 | ) | |
Change in Long-Term Debt: | ||||
2019 Notes | $ | 610,000 | ||
Acquisition Credit Facility | ||||
Term loan | 2,040,000 | |||
Revolving credit facility | 258,145 | |||
Total Acquisition Credit Facility | 2,908,145 | |||
Repayment of existing long-term Cumulus debt, net $2.5 million of debt discount | (567,287 | ) | ||
Repayment of outstanding amounts under CMPSC Credit Agreement | (587,823 | ) | ||
Repayment of CMP 9.875% Notes and CMP 2014 Notes | (26,161 | ) | ||
Repayment of Citadel Credit Facilities | (345,625 | ) | ||
Repayment of Citadel Senior Notes | (400,000 | ) | ||
CMP Pro Forma Basis adjustment to line item, “Long-term debt” | (42,713 | ) | ||
Overall Pro Forma Basis long-term debt adjustment | $ | 938,536 | ||
Change in Deferred Financing Costs: | ||||
Deferred financing costs under Existing Credit Agreement | $ | (818 | ) | |
Deferred financing costs under CMPSC Credit Agreement | (4,512 | ) | ||
Deferred financing costs under Citadel Credit Facility | (19,978 | ) | ||
Deferred financing costs associated with 2019 Notes and Acquisition Credit Facility | 60,987 | (a) | ||
CMP Pro Forma Basis adjustment to line item, “Deferred financing costs” | (12,907 | ) | ||
Exclusion of KC LLC deferred financing costs | 152 | |||
Overall Pro Forma Basis adjustment to line item, “Deferred financing costs” | $ | 22,924 | ||
Change in Cash And Cash Equivalents: | ||||
Proceeds from borrowings under Acquisition Credit Facility | $ | 2,908,145 | ||
Proceeds from Equity Investment, net | 373,600 | |||
Redemption of Radio Holdings preferred stock | (38,807 | ) | ||
Repayment of existing Cumulus Media, CMP and Citadel debt at March 31, 2011 | (1,943,252 | ) | ||
Cash payments to Citadel stockholders and warrant holders | (1,258,165 | ) | ||
Make whole provision payment pursuant to Citadel Senior Notes | (31,000 | ) | ||
Deferred financing fees | (60,987 | ) | ||
CMP Pro Forma Basis cash adjustment related to 2019 Notes (See note c) | (20,507 | ) | ||
Overall Pro Forma Basis adjustment to line item, “Cash and cash equivalents” | $ | (70,973 | ) | |
(a) | Represents debt issuance costs to be incurred related to the Global Refinancing as set forth below: |
Acquisition Credit Facility fee of 1.75% of total commitment | $ | 42,262 | ||
2019 Notes fee | 13,725 | |||
Bridge facility commitment fee of 1.25% | 3,125 | |||
Revolving credit facility upfront fee of 0.5% | 1,875 | |||
$ | 60,987 | |||
For the | ||||||||||||
Three Months | For the | |||||||||||
Ended | Year Ended | |||||||||||
Pro Forma | March 31, | December 31, | ||||||||||
Overall Pro Forma Basis Statement Of Operations Adjustments | Interest Rate | 2011 | 2010 | |||||||||
(Dollars in thousands) | ||||||||||||
Pro forma interest expense: | ||||||||||||
2019 Notes | 7.75%a | $ | 11,819 | $ | 47,275 | |||||||
Term loan under Acquisition Credit Facility | 4.50%b | 22,950 | 91,800 | |||||||||
Revolving credit facility under Acquisition Credit Facility | 3.70%c | 2,388 | 9,551 | |||||||||
Amortization of deferred financing fees | n/a | 1,597 | 6,321 | |||||||||
$ | 38,754 | d | $ | 154,947 | d | |||||||
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(a) | Actual interest rate on 2019 Notes. | |
(b) | In accordance with the term loan agreement there is a 1% LIBOR floor. Due to the 30 day LIBOR rate being below 1% as of the most recent practicable date, for purposes of this unaudited condensed consolidated financial information, Cumulus Media used the floor plus a spread of 350 bps for the Overall Pro Forma Basis interest rate. | |
(c) | Assumed interest rate has been determined in accordance with the terms contained in the Debt Commitment and calculated based on the 30 day LIBOR in effect as of the most recent practicable date, plus a spread of 350 bps. | |
(d) | Represents interest expense on an Overall Pro Forma Basis for the periods presented, respectively, which is equal to the historical interest expense for Cumulus Media, CMP and Citadel for the periods presented, plus the additional interest expense pro forma adjustment as set forth below: |
For the | ||||||||
Three Months | For the | |||||||
Ended | Year Ended | |||||||
March 31, | December 31, | |||||||
2011 | 2010 | |||||||
Interest expense on each of a CMP and Overall Pro Forma Basis | $ | 38,754 | $ | 154,947 | ||||
Historical Cumulus Media interest expense | 6,318 | 30,307 | ||||||
Historical CMP interest expense | 6,219 | 28,171 | ||||||
Historical Citadel interest expense | 12,411 | 64,120 | ||||||
Less: Combined historical Cumulus Media, CMP and Citadel interest expense | 24,948 | 122,598 | ||||||
Interest expense adjustment on an Overall Pro Forma Basis | $ | 13,806 | e | $ | 32,349 | f | ||
(e) | Consists of $4.3 million and $9.5 million of pro forma interest expense adjustments on a CMP Pro Forma Basis and Overall Pro Forma Basis, respectively, for the three months ended March 31, 2011. | |
(f) | Consists of $12.4 million and $19.9 million of pro forma interest expense adjustments on a CMP Pro Forma Basis and Overall Pro Forma Basis, respectively, for the year ended December 31, 2010. |
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Citadel Pro forma balance sheet adjustments (dollars in thousands) | Amounts | |||
Change in current portion of Long-term debt: | ||||
Elimination of Cumulus Media current portion of debt | $ | 5,982 | ||
Elimination of Citadel current portion of debt | 875 | |||
Citadel Pro Forma Basis adjustment to line item, “Current portion of Long-term debt” | $ | 6,857 | ||
Change in long-term debt: | ||||
2019 Notes | $ | 610,000 | ||
Acquisition Credit Facility | ||||
Term loan | 1,419,016 | |||
Revolving credit facility | 258,145 | |||
Total debt incurred pursuant to Global Refinancing | $ | 2,287,161 | ||
Repayment of existing long-term Cumulus Media debt, net $2.5 million of debt discount | (567,287 | ) | ||
Repayment of Citadel Credit Facilities | (345,625 | ) | ||
Repayment of Citadel Senior Notes | (400,000 | ) | ||
Citadel Pro Forma Basis adjustment to line item, “Long-term debt” | $ | 974,249 | ||
Change in deferred financing costs: | ||||
Deferred financing costs and related amortization of term loan under Existing Credit Agreement | $ | (818 | ) | |
Deferred financing costs and related amortization of Citadel Credit Facilities and of any unamortized original issue discount or fees or expenses | (19,978 | ) | ||
Deferred financing costs associated with the 2019 Notes and Acquisition Credit Facility | 50,120 | |||
Citadel Pro forma adjustment to line item, “Deferred financing costs” | $ | 29,324 | ||
Change in cash and cash equivalents: | ||||
Debt incurred pursuant to Global Refinancing | $ | 2,287,161 | ||
Proceeds from Investment Agreement, net | 373,600 | |||
Repayment of Cumulus Media and Citadel current debt | (6,857 | ) | ||
Repayment of Cumulus Media and Citadel long-term debt | (1,312,912 | ) | ||
Cash payments to Citadel stockholders | (1,258,165 | ) | ||
Make whole premium in connection with the repayment of Citadel Senior Notes | (31,000 | ) | ||
Deferred financing fees | (50,120 | ) | ||
Non cash debt discount | (2,499 | ) | ||
Citadel Pro Forma Basis adjustment to line item, “Cash and cash equivalents” | $ | (792 | ) | |
Citadel | For the | For The | ||||||||||
Pro Forma | Three Months Ended | Year Ended | ||||||||||
Basis | March 31, | December 31, | ||||||||||
Citadel Pro forma statement of operations adjustment | interest rate | 2011 | 2010 | |||||||||
(dollars in thousands) | ||||||||||||
Pro forma interest expensee: | ||||||||||||
2019 Notes | 7.75 | %a | $ | 11,819 | $ | 47,275 | ||||||
Term loan under Acquisition Credit Facility | 4.50 | %b | 15,964 | 62,955 | ||||||||
Revolving line of credit under Acquisition Credit Facility | 3.70 | %c | 2,388 | 9,551 | ||||||||
Amortization of deferred financing fees | n/a | 1,313 | 5,159 | |||||||||
Citadel Pro Forma Basis Interest expense | $ | 31,484 | d | $ | 124,940 | |||||||
(a) | Actual interest rate on 2019 Notes. | |
(b) | In accordance with the term loan agreement there is a 1% LIBOR floor. Due to the 30 day LIBOR rate being below 1% as of the most recent practicable date, Cumulus Media used the floor plus a spread of 350 bps for the Pro Forma interest rate. | |
(c) | Assumed interest rate has been determined in accordance with the terms contained in the Debt Commitment and calculated based on the 30 day LIBOR in effect as of the most recent practicable date, plus a spread of 350 bps. |
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(d) | Represents interest expense on a Citadel Pro Forma Basis for the three months ended March 31, 2011 and the year ended December 31, 2010, which is equal to the historical interest expense for both Cumulus Media and Citadel, plus additional interest expense pro forma adjustment as set forth below: |
For the | For The | |||||||
Three Months Ended | Year Ended | |||||||
March 31, | December 31, | |||||||
2011 | 2010 | |||||||
Interest expense on a Citadel pro forma basis | $ | 31,484 | $ | 124,940 | ||||
Historical Cumulus Media interest expense | 6,318 | 30,307 | ||||||
Historical Citadel interest expense | 12,411 | 64,120 | ||||||
Less: Combined historical Cumulus Media and Citadel interest expense | 18,729 | 94,427 | ||||||
Interest expense adjustment on a Citadel pro forma basis | $ | 12,755 | $ | 30,513 | ||||
(e) | Pro forma interest expense does not include $31.0 million of make whole premium related to the Citadel Senior Notes. |
J. | Accrual and payment of CMP preferred stock and related dividends.Pursuant to the terms of the CMP Acquisition agreement, upon the closing of the merger, Cumulus Media will redeem the outstanding CMP preferred stock at par value plus accrued dividends. On a CMP Pro Forma Basis, Cumulus Media does not contemplate the acquisition of Citadel and as such, does not include the redemption of the CMP preferred stock, nor the accrual of dividends on said stock. On an Overall Pro Forma Basis, Cumulus Media includes the assumption that the acquisition of Citadel will have been completed and as such, recognizes a contingent liability for the accrual of the CMP preferred stock dividend in the amount of $14.7 million, which is included in $38.8 million of preferred stock within noncontrolling interest. Additionally, Cumulus Media assumes the redemption of the $38.8 million of CMP preferred stock, resulting in $0.0 million of noncontrolling interest on an Overall Pro Forma Basis. |
K. | Adjustments to increase pro forma depreciation and amortization expense to reflect the impact of the increase in estimated fair value of tangible assets and amortizable intangible assets due to Citadel’s application of Fresh-Start Accounting. Net fresh start valuation adjustments in connection with Citadel’s application of fresh-start accounting increased the book value of Citadel’s assets, excluding goodwill, by $543.8 million. In addition to revaluing existing assets, Citadel recorded certain previously unrecognized assets, including customer and affiliate relationships and income contracts. |
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Twelve Months | ||||||||||||
Ended | ||||||||||||
Fair | Estimated | December 31, | ||||||||||
(Dollars in millions) | Value | Useful Life | 2010 | |||||||||
Historical amortization and depreciation | $ | 69.9 | ||||||||||
Intangible assets: | ||||||||||||
Customer and affiliate relationships | $ | 238.9 | 4 to 6 years | $ | 66.0 | |||||||
Other intangibles | 36.7 | 4 to 6 years | 10.0 | |||||||||
275.6 | 76.0 | |||||||||||
Property and Equipment: | ||||||||||||
Land and improvements | 89.3 | 3 to 25 years | 0.4 | |||||||||
Buildings and improvements | 34.1 | 3 to 25 years | 3.3 | |||||||||
Towers | 54.7 | 5 to 10 years | 5.5 | |||||||||
Equipment and vehicles | 24.8 | 2 to 12 years | 4.9 | |||||||||
202.9 | 14.1 | |||||||||||
Total | $ | 478.5 | 90.1 | |||||||||
Overall Pro Forma Basis depreciation and amortization expense adjustment | $ | 20.2 |
Gain on extinguishment of debt | $ | (139,813 | ) | |
Revaluation of assets and liabilities | (921,801 | ) | ||
Supplemental executive retirement plan | 10,510 | |||
Professional fees | 31,666 | |||
Rejected executory contracts | 5,361 | |||
Net debt extinguishment loss | 20,969 | (a) | ||
Overall Pro Forma Basis adjustment to line item, “Other income (expense), net” | $ | (993,108 | ) | |
(a) | On the Citadel Emergence Date, debt outstanding under the Predecessor Senior Credit and Term Facility was converted into the Emergence Term Loan Facility. A valuation adjustment of $19.1 million was recorded to reflect the Emergence Term Loan Facility at its estimated fair value upon issuance. This valuation adjustment was being amortized as a reduction of interest expense, net, over the contractual term of the Emergence Term Loan Facility. |
Citadel financial statement line item | ||||
(Dollars in thousands) | ||||
Early termination penalty | $ | 38,030 | ||
Write-off of fair value valuation adjustment at December 31, 2010 | (17,061 | ) | ||
Net debt extinguishment loss | $ | 20,969 | ||
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L. | Adjustments to reflect the issuance of shares.On each of a CMP Pro Forma Basis, Citadel Pro Forma Basis and an Overall Pro Forma Basis, Cumulus Media assumes the issuance of shares of its Class A and Class D (only pursuant to the CMP Acquisition) common stock, each with a par value of $0.01 per share, in order to effect each respective transaction. Resulting changes to the par value are illustrated below (dollars in thousands): |
Elimination of | ||||||||||||||||
Number of | Historical | Pro Forma | ||||||||||||||
Shares | Par Value | Par Value | Adjustment | |||||||||||||
CMP Pro Forma Basis: | ||||||||||||||||
Issuance of Class A common stock | 11,583,206 | $ | 116 | $ | — | $ | 116 | |||||||||
Issuance of Class D common stock | 6,630,476 | 66 | — | 66 | ||||||||||||
Citadel and Overall Pro Forma Basis: | ||||||||||||||||
Issuance of Class A common stock | 264,970,523 | $ | 2,311 | $ | (5 | ) | $ | 2,306 |
M. | Adjustments to reconcile Citadel financial statement line items per the Unaudited Pro Forma Condensed Consolidated Financial Information to the amounts reported in Citadel’s quarterly report on Form10-Q for the quarter ended March 31, 2011 and its annual report on Form10-K for the year ended December 31, 2010. Included below is a reconciliation between line items reported in the Unaudited Pro Forma Condensed Consolidated Financial Information and amounts reported in Citadel’s quarterly report on Form10-Q for the quarter ended March 31, 2011 and its annual report onForm 10-K for the year ended December 31, 2010, as appropriate. |
For the | For The | |||||||||||
Three Months | Year Ended | |||||||||||
Ended | December 31, | |||||||||||
March 31, | 2010 | |||||||||||
2011 | Predecessor | Successor | ||||||||||
To reconcile station operating expenses (excluding depreciation, amortization and LMA fees) as reported to the unaudited pro forma condensed consolidated financial information included herein: | ||||||||||||
Unaudited Pro Forma Condensed Consolidated Financial Information: | ||||||||||||
Station operating expenses (excluding depreciation, amortization and LMA fees) | $ | 114,714 | $ | 194,685 | $ | 278,231 | ||||||
Citadel’s financial statements: | ||||||||||||
Cost of revenue, exclusive of depreciation and amortization and including non-cash compensation expense of $643, $526, and $954, respectively | $ | 68,522 | $ | 116,103 | $ | 164,594 | ||||||
Selling, general and administrative, including non-cash compensation expense of $2,164, $785, and $3,244, respectively | 46,192 | 78,582 | 113,637 | |||||||||
$ | 114,714 | $ | 194,685 | $ | 278,231 | |||||||
To reconcile gain on exchange of assets or stations and other operating expenses as reported to the unaudited pro forma condensed consolidated financial information included herein: | ||||||||||||
Unaudited Pro Forma Condensed Consolidated Financial Information: | ||||||||||||
Loss on exchange of assets or stations | $ | 166 | $ | 859 | $ | 271 | ||||||
Other operating expenses (income) | 7,118 | (5 | ) | 7,215 | ||||||||
$ | 7,284 | 854 | 7,486 | |||||||||
Citadel’s financial statements: | ||||||||||||
Other, net | $ | 7,284 | $ | 854 | $ | 7,486 | ||||||
To reconcile interest expense, net as reported to the unaudited pro forma condensed consolidated financial information: | ||||||||||||
Unaudited Pro Forma Condensed Consolidated Financial Information: | ||||||||||||
Interest expense, net | $ | 12,411 | $ | 17,771 | $ | 46,349 | ||||||
Citadel’s financial statements: | ||||||||||||
Interest expense, net | $ | 12,411 | $ | 17,771 | $ | 45,365 | ||||||
Write-off of deferred financing costs and debt discount upon extinguishment of debt and other debt-related fees | — | — | 984 | |||||||||
$ | 12,411 | $ | 17,771 | $ | 46,349 | |||||||
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Table of Contents
As of | ||||
March 31, | ||||
2011 | ||||
To reconcile restricted cash, deferred tax asset, and prepaid expenses and other current assets with the unaudited pro forma condensed consolidated financial information: | ||||
Unaudited Pro Forma Condensed Consolidated Financial Information: | ||||
Restricted cash | $ | 3,846 | ||
Deferred tax asset | 23,023 | |||
Prepaid expenses and other current assets | 15,072 | |||
$ | 41,941 | |||
Citadel’s financial statements: | ||||
Prepaid expenses and other current assets | $ | 41,941 | ||
To reconcile accounts receivable with the unaudited pro forma condensed consolidated financial information: | ||||
Unaudited Pro Forma Condensed Consolidated Financial Information: | ||||
Accounts receivable, less allowance for doubtful accounts | $ | 122,611 | ||
Trade receivable | 1,848 | |||
$ | 124,459 | |||
Citadel’s financial statements: | ||||
Accounts receivable, net | $ | 124,459 | ||
To reconcile Intangible assets, net, deferred financing costs, and other assets with the unaudited pro forma condensed consolidated financial information: | ||||
Unaudited Pro Forma Condensed Consolidated Financial Information: | ||||
Intangible assets, net | $ | 1,094,833 | ||
Deferred Financing costs | 19,978 | |||
Other assets | 19,461 | |||
$ | 1,134,272 | |||
Citadel’s financial statements: | ||||
FCC licenses | $ | 887,910 | ||
Customer and affiliate relationships, net | 178,583 | |||
Other assets, net | 67,779 | |||
$ | 1,134,272 | |||
To reconcile accounts payable and accrued expenses and trade accounts payable with the unaudited pro forma condensed consolidated financial information: | ||||
Unaudited Pro Forma Condensed Consolidated Financial Information: | ||||
Accounts payable and accrued expenses | $ | 60,440 | ||
Trade payable | 1,176 | |||
$ | 61,616 | |||
Citadel’s Financial Statements, to conform to Cumulus Media’s presentation: | ||||
Accounts payable, accrued liabilities and other liabilities | $ | 61,616 | ||
To reconcile long-term debt with the unaudited pro forma condensed consolidated financial information: | ||||
Unaudited Pro Forma Condensed Consolidated Financial Information: | ||||
Long-term debt | $ | 745,625 | ||
Citadel’s financial statements: | ||||
Senior debt, less current portion | $ | 345,625 | ||
Citadel Senior notes | 400,000 | |||
$ | 745,625 | |||
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Table of Contents
N. | To present a reconciliation for the Citadel Pro Forma Basis and Overall Pro Forma Basis adjustments to accounts payable and accrued expenses: |
Amounts | ||||
(Dollars in thousands) | ||||
Citadel Pro Forma Basis adjustments to Accounts payable and accrued expenses | ||||
Severance to be paid to Citadel employees and executives in connection with the merger | $ | 24,200 | ||
Elimination of intercompany balances | (1,077 | ) | ||
Tax benefit (Note D) | (29,828 | ) | ||
Citadel Pro Forma Basis adjustment to line item, “Accounts payable and accrued expenses” | $ | (6,705 | ) | |
Overall Pro Forma Basis adjustments to Accounts payable and accrued expenses | ||||
Severance to be paid to Citadel employees and executives in connection with the merger | $ | 24,200 | ||
Elimination of intercompany balances | (1,077 | ) | ||
Tax benefit from severance to be paid and Citadel and CMP Deferred Financing Fees | (29,573 | ) | ||
Overall Pro Forma Basis adjustment to line item, “Accounts payable and accrued expenses” | $ | (6,450 | ) | |
O. | To present a reconciliation for the CMP, Citadel and Overall Pro Forma Basis adjustments to accumulated deficit and additionalpaid-in-capital: |
(Dollars in thousands) | ||||
CMP Pro Forma Basis | ||||
Accumulated deficit: | ||||
CMP historical accumulated deficit | $ | 793,272 | ||
KC LLC historical accumulated deficit | (72,008 | ) | ||
Elimination of Cumulus Media ownership interest in CMP | 11,272 | |||
Write off of deferred financing costs and debt discount | (3,317 | ) | ||
Tax benefit from the write off of deferred financing costs and debt discount | 1,260 | |||
CMP Pro Forma Basis adjustment | $ | 730,479 | ||
Additionalpaid-in-capital: | ||||
Exclusion of CMP historical financial condition (less KC LLC) | $ | (310,483 | ) | |
Equity consideration to CMP Sellers | 77,033 | |||
CMP Pro Forma Basis adjustment | $ | (233,450 | ) | |
Citadel Pro Forma Basis | ||||
Accumulated deficit: | ||||
Cumulus Media historical accumulated deficit | $ | 8,421 | ||
Severance to be paid to Citadel employees and executives in connection with the merger | (24,200 | ) | ||
Write off of Historical Cumulus Media deferred financing costs and debt discount of $818 and $2,499 respectively | (3,317 | ) | ||
Write off of Historical Citadel deferred financing costs | (19,978 | ) | ||
Bond Make Whole payment | (31,000 | ) | ||
Tax benefit (Note D) | 29,829 | |||
Citadel Pro Forma Basis adjustment | $ | (40,245 | ) | |
Additionalpaid-in-capital: | ||||
$373.6 million of Cumulus Media equity securities to be sold to the Investors, net of fees of $21.4 million | $ | 373,600 | ||
Elimination of Citadel historical additionalpaid-in-capital | (1,275,565 | ) | ||
Recognition of $0.01 par value of class A common stock to be issued | (2,311 | ) | ||
Equity consideration to Citadel stockholders and warrant holders | 390,566 | |||
Citadel Pro Forma Basis and Overall Pro Forma Basis adjustment | $ | (513,710 | ) | |
Overall Pro Forma Basis | ||||
Accumulated deficit: | ||||
Citadel historical accumulated deficit | $ | 8,421 | ||
Severance to be paid to Citadel employees and executives in connection with the merger | (24,200 | ) | ||
Payment of make whole provision related to redemption of Citadel Senior Notes | (31,000 | ) |
P-28
Table of Contents
(Dollars in thousands) | ||||
Write-off Historical Citadel deferred financing costs | (19,978 | ) | ||
Write off of Historical CMP deferred financing costs | (4,360 | ) | ||
Write off of liability related to future interest payments recorded resultant from 2009 CMP Exchange Offer and debt issuance costs | 1,715 | |||
Tax benefit from the write off of Historical Citadel and CMP deferred financing costs, write off of liability related to future interest payments, exclusion of KC LLC historical financial condition, severance to be paid to Citadel employees and executives, and payment of make whole provision related to redemption of Citadel Senior Notes | 29,573 | |||
Overall Pro Forma Basis adjustment | $ | (39,829 | ) | |
For the | ||||||||
Three Months | For the | |||||||
Ended | Year Ended | |||||||
March 31, | December 31, | |||||||
(Dollars in thousands) | 2011 | 2010 | ||||||
Corporate general and administrative expenses: | ||||||||
Exclusion of KC LLC historical results of operations | $ | (461 | ) | $ | (1,138 | ) | ||
Elimination of CMP historical expense incurred in conjunction with CMP Management Agreement | (1,000 | ) | (4,000 | ) | ||||
CMP Pro Forma Basis adjustment | $ | (1,461 | ) | $ | (5,138 | ) | ||
Interest expense, net: | ||||||||
Exclusion of KC LLC historical results of operations | $ | 1,559 | $ | 6,034 | ||||
Elimination of CMP historical interest expense, net | (5,861 | ) | (18,391 | ) | ||||
CMP Pro Forma Basis adjustment | $ | (4,302 | ) | $ | (12,357 | ) | ||
Income tax (expense) benefit: | ||||||||
Exclusion of KC LLC historical results of operations | $ | 17 | $ | 847 | ||||
Elimination of CMP historical income tax expense | 2,227 | 6,989 | ||||||
CMP Pro Forma Basis adjustment | $ | 2,244 | $ | 7,836 | ||||
(Dollars in thousands) | ||||
Cash and cash equivalents: | ||||
Exclusion of KC LLC historical financial condition | $ | (1,920 | ) | |
CMP Pro Forma Basis cash and cash equivalents adjustment | 20,507 | |||
CMP Pro Forma Basis adjustment | $ | 18,587 | ||
Prepaid expenses and other current assets: | ||||
Exclusion of KC LLC historical financial condition | $ | 41 | ||
CMP prepaid expense specific to CMP Management Agreement | (1,000 | ) | ||
CMP Pro Forma Basis adjustment | $ | (959 | ) | |
Intangible assets, net: | ||||
Exclusion of KC LLC historical financial condition | $ | (15,233 | ) | |
Adjustment to fair value of CMP’s FCC license intangible assets | 19,037 | |||
CMP Pro Forma Basis adjustment | $ | 3,804 | ||
Goodwill: | ||||
CMP Pro Forma Basis adjustment to Goodwill | $ | 439,949 | ||
Dividend related to the CMP Preferred Stock | 14,730 | |||
P-29
Table of Contents
(Dollars in thousands) | ||||
CMP Pro Forma Basis adjustment | $ | 454,679 | ||
Deferred financing costs: | ||||
Exclusion of KC LLC historical financial condition | $ | (152 | ) | |
Deferred financing costs and related amortization of term loan under Existing Credit Agreement | (818 | ) | ||
Deferred financing costs and related amortization | 13,725 | |||
CMP Pro Forma Basis adjustment | $ | 12,755 | ||
Accounts payable and accrued expenses: | ||||
Exclusion of KC LLC historical financial condition | $ | (9,288 | ) | |
Cumulus Media deferred revenue specific to CMP Management Agreement | (1,000 | ) | ||
Tax benefit from the write off of deferred financing costs | (1,260 | ) | ||
CMP Pro Forma Basis adjustment | $ | (11,548 | ) | |
Current portion of long-term debt: | ||||
Exclusion of KC LLC historical financial condition | $ | (86,228 | ) | |
Elimination of current portion of debt related to term loan under Existing Credit Agreement | (5,982 | ) | ||
CMP Pro Forma Basis adjustment | $ | (92,210 | ) | |
Additional Paid-in capital: | ||||
Exclusion of KC LLC historical financial condition | $ | (367 | ) | |
Exclusion of CMP historical financial condition (less KC LLC) | (310,483 | ) | ||
Equity consideration to CMP Sellers | 77,033 | |||
CMP Pro Forma Basis adjustment | $ | (233,817 | ) | |
Accumulated deficit: | ||||
CMP historical accumulated deficit | $ | 793,272 | ||
Removal of historical Cumulus Media ownership interest in CMP | 11,272 | |||
Write off of deferred financing costs and debt discount | (3,317 | ) | ||
Tax benefit from the write off of deferred financing costs and debt discount | 1,260 | |||
CMP Pro Forma Basis adjustment | $ | 802,487 | ||
P-30
Table of Contents
Unaudited Condensed Consolidated Financial Statements of Cumulus Media Partners, LLC | ||||
F-2 | ||||
F-3 | ||||
F-4 | ||||
F-5 | ||||
Audited Consolidated Financial Statements of Cumulus Media Partners, LLC | ||||
F-16 | ||||
F-17 | ||||
F-18 | ||||
F-19 | ||||
F-20 | ||||
F-21 |
F-1
Table of Contents
CONDENSED CONSOLIDATED BALANCE SHEETS
(Dollars in thousands)
(Unaudited)
March 31, | December 31, | |||||||
2011 | 2010 | |||||||
Assets | ||||||||
Current assets: | ||||||||
Cash and cash equivalents | $ | 12,717 | $ | 21,953 | ||||
Restricted cash | 601 | 601 | ||||||
Accounts receivable, less allowance for doubtful accounts | ||||||||
of $367 and $449 in 2011 and 2010, respectively | 30,087 | 35,846 | ||||||
Prepaid expenses and other current assets | 8,494 | 7,002 | ||||||
Deferred tax asset | — | 807 | ||||||
Total current assets | 51,899 | 66,209 | ||||||
Property and equipment, net | 24,362 | 26,538 | ||||||
Intangible assets, net | 243,027 | 243,144 | ||||||
Goodwill | 79,700 | 79,700 | ||||||
Deferred financing costs, net (including accumulated amortization | ||||||||
of $13,399 and $12,709 in 2011 and 2010, respectively) | 4,512 | 5,202 | ||||||
Other assets | 333 | — | ||||||
Long-term investment | 4,000 | 4,000 | ||||||
Total assets | $ | 407,833 | $ | 424,793 | ||||
Liabilities and Members’ Deficit | ||||||||
Current liabilities: | ||||||||
Accounts payable | $ | 1,435 | $ | 130 | ||||
Accrued interest | 9,216 | 7,363 | ||||||
Accrued state income taxes | 1,021 | 1,118 | ||||||
Derivative instrument | 1,666 | 3,252 | ||||||
Current portion of long-term debt | 93,228 | 109,786 | ||||||
Other current liabilities | 9,756 | 12,355 | ||||||
Total current liabilities | 116,322 | 134,004 | ||||||
Long-term debt | 613,984 | 615,734 | ||||||
Other liabilities | 8,157 | 8,476 | ||||||
Deferred income taxes | 84,315 | 83,620 | ||||||
Total liabilities | 822,778 | 841,834 | ||||||
Members’ deficit | ||||||||
Additional paid-in capital | 310,850 | 310,850 | ||||||
Accumulated deficit | (793,272 | ) | (795,368 | ) | ||||
Total Cumulus Media Partners, LLC members’ deficit | (482,422 | ) | (484,518 | ) | ||||
Non-controlling interest | 67,477 | 67,477 | ||||||
Total members’ deficit | (414,945 | ) | (417,041 | ) | ||||
Total liabilities and members’ deficit | $ | 407,833 | $ | 424,793 | ||||
F-2
Table of Contents
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Dollars in thousands)
(Unaudited)
Three Months Ended March 31, | ||||||||
2011 | 2010 | |||||||
Net revenues | $ | 39,143 | $ | 37,917 | ||||
Operating expenses: | ||||||||
Station operating expenses (excluding depreciation and amortization | ||||||||
and including LMA fees) | 23,757 | 22,736 | ||||||
Depreciation and amortization | 2,116 | 2,134 | ||||||
Corporate general and administrative expenses | �� | 2,482 | 1,770 | |||||
(Gain) loss on disposals of assets or stations | (6 | ) | 1 | |||||
Total operating expenses | 28,349 | 26,641 | ||||||
Operating income | 10,794 | 11,276 | ||||||
Non-operating (expense) income: | ||||||||
Interest expense, net | (6,219 | ) | (7,750 | ) | ||||
Total non-operating expense, net | (6,219 | ) | (7,750 | ) | ||||
Income before income taxes | 4,575 | 3,526 | ||||||
Income tax expense | (2,479 | ) | (2,113 | ) | ||||
Net income | $ | 2,096 | $ | 1,413 | ||||
F-3
Table of Contents
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Dollars in thousands)
(Unaudited)
Three Months Ended March 31, | ||||||||
2011 | 2010 | |||||||
Cash flows from operating activities: | ||||||||
Net income | $ | 2,096 | $ | 1,413 | ||||
Adjustments to reconcile net income to net cash provided by operating activities: | ||||||||
Depreciation and amortization | 2,116 | 2,134 | ||||||
Amortization of debt issuance costs | 691 | 663 | ||||||
Provision for doubtful accounts | (41 | ) | 42 | |||||
Loss (gain) on disposals of assets or stations | (6 | ) | 1 | |||||
Fair value adjustment of derivative instruments | (1,587 | ) | (250 | ) | ||||
Deferred income taxes | 1,502 | 2,107 | ||||||
Changes in assets and liabilities: | ||||||||
Restricted cash | — | 57 | ||||||
Accounts receivable | 5,801 | 6,334 | ||||||
Prepaid expenses and other current assets | (1,492 | ) | (1,621 | ) | ||||
Other assets | 94 | — | ||||||
Accounts payable and accrued expenses | 462 | (6,414 | ) | |||||
Other liabilities | (319 | ) | (384 | ) | ||||
Net cash provided by operating activities | 9,317 | 4,082 | ||||||
Cash flows from investing activities: | ||||||||
Capital expenditures | (245 | ) | (304 | ) | ||||
Net cash used in investing activities | (245 | ) | (304 | ) | ||||
Cash flows from financing activities: | ||||||||
Repayments of borrowings from bank credit facilities | (18,308 | ) | (1,750 | ) | ||||
Net cash used in financing activities | (18,308 | ) | (1,750 | ) | ||||
(Decrease) increase in cash and cash equivalents | (9,236 | ) | 2,028 | |||||
Cash and cash equivalents at beginning of period | 21,953 | 80,223 | ||||||
Cash and cash equivalents at end of period | $ | 12,717 | $ | 82,251 | ||||
Supplemental disclosures of cash flow information: | ||||||||
Interest paid | $ | 5,259 | $ | 5,750 | ||||
Income taxes paid | 3,632 | 4,446 | ||||||
Trade revenue | 899 | 1,070 | ||||||
Trade expense | 835 | 1,124 |
F-4
Table of Contents
1. | Interim Financial Data and Basis of Presentation: |
F-5
Table of Contents
2. | Pending Acquisition of CMP by Cumulus Media Inc. |
3. | Derivative Financial Instruments |
F-6
Table of Contents
Fair Value at | ||||||||||||
Balance Sheet | March 31, | December 31, | ||||||||||
Location | 2011 | 2010 | ||||||||||
Derivative not designated as hedging instrument: | ||||||||||||
Interest rate swap | Other current liabilities | $ | 1,666 | $ | 3,252 | |||||||
Total | $ | 1,666 | $ | 3,252 | ||||||||
Amount of Income Recognized on | ||||||||||||
the Derivative Instrument | ||||||||||||
Derivative | for the Three Months Ended | |||||||||||
Instrument | Statement of Operations Location | March 31, 2011 | March 31, 2010 | |||||||||
Interest rate swap | Interest income | $ | 1,586 | $ | 250 | |||||||
Total | $ | 1,586 | $ | 250 | ||||||||
4. | Fair Value Measurements |
F-7
Table of Contents
Fair Value Measurements at Reporting Date Using | ||||||||||||||||
Quoted Prices | Significant Other | Significant | ||||||||||||||
Total | in Active Markets | Observable Inputs | Unobservable Inputs | |||||||||||||
Fair Value | (Level 1) | (Level 2) | (Level 3) | |||||||||||||
Financial liabilities: | ||||||||||||||||
Other current liabilities | ||||||||||||||||
Interest rate swap(1) | $ | (1,666 | ) | $ | — | $ | (1,666 | ) | $ | — | ||||||
Total liabilities | $ | (1,666 | ) | $ | — | $ | (1,666 | ) | $ | — | ||||||
(1) | CMP’s derivative financial instrument consists solely of the 2008 Swap. The fair value of the 2008 Swap is determined based on the present value of future cash flows using observable inputs, including interest rates and yield curves. In accordance withmark-to-market fair value accounting requirements, derivative valuations incorporate adjustments that are necessary to reflect CMP’s own credit risk. |
March 31, 2011 | December 31, 2010 | |||||||||||||||
CMPSC | KC LLC | CMPSC | KC LLC | |||||||||||||
Term loan: | ||||||||||||||||
Carrying value | $ | 594,823 | $ | 69,228 | $ | 613,131 | $ | 69,228 | ||||||||
Fair value | $ | 585,783 | $ | 8,654 | $ | 576,077 | $ | 8,654 | ||||||||
Revolving credit facility: | ||||||||||||||||
Carrying value | $ | — | $ | 17,000 | $ | — | $ | 17,000 | ||||||||
Fair value(1) | $ | — | $ | 2,131 | $ | — | $ | 2,131 |
(1) | The KC LLC revolving credit facility was not actively traded during the three months ended March 31, 2011 or December 31, 2010. |
• | discount cash flow rate of 3.3%; | |
• | interest rate of 2.2%; and | |
• | credit spread of 2.6%. |
F-8
Table of Contents
5. | Long-Term Debt |
March 31, 2011 | December 31, 2010 | |||||||
Term loan facilities | $ | 664,051 | $ | 682,359 | ||||
Revolving credit facilities | 17,000 | 17,000 | ||||||
9.875% senior subordinated notes | 12,130 | 12,130 | ||||||
Variable rate senior subordinated secured second lien notes | 14,031 | 14,031 | ||||||
Total debt | 707,212 | 725,520 | ||||||
Less: Current portion of long-term debt | (93,228 | ) | (109,786 | ) | ||||
Long-term portion of debt | $ | 613,984 | $ | 615,734 | ||||
F-9
Table of Contents
• | a maximum total leverage ratio; | |
• | a minimum interest coverage ratio; and | |
• | a limit on annual capital expenditures. |
F-10
Table of Contents
F-11
Table of Contents
F-12
Table of Contents
6. | Intangible Assets and Goodwill |
Indefinite Lived | Definite Lived | Total | ||||||||||
Intangible Assets: | ||||||||||||
Balance as of December 31, 2009 | $ | 243,023 | $ | 3,937 | $ | 246,960 | ||||||
Amortization | — | (520 | ) | (520 | ) | |||||||
Impairment | (3,296 | ) | — | (3,296 | ) | |||||||
Balance as of December 31, 2010 | $ | 239,727 | $ | 3,417 | $ | 243,144 | ||||||
Amortization | — | (117 | ) | (117 | ) | |||||||
Balance as of March 31, 2011 | $ | 239,727 | $ | 3,300 | $ | 243,027 | ||||||
Goodwill | ||||
Goodwill: | ||||
Balance as of December 2009 | $ | 79,700 | ||
Impairment | — | |||
Balance as of December 2010 | $ | 79,700 | ||
Impairment | — | |||
Balance as of March 31, 2011 | $ | 79,700 | ||
7. | Members’ Deficit |
F-13
Table of Contents
• | senior to the common stock of Radio Holdings and all other equity securities designated as ranking junior to the preferred stock; | |
• | on a parity with all equity securities designated as ranking on a parity with the preferred stock; and | |
• | junior to all equity securities designated as ranking senior to the preferred stock. |
8. | Commitments and Contingencies |
F-14
Table of Contents
9. | Tax |
10. | Restricted Cash |
11. | Related Party |
F-15
Table of Contents
F-16
Table of Contents
December 31, | ||||||||
2010 | 2009 | |||||||
(Dollars in thousands) | ||||||||
Assets | ||||||||
Current assets: | ||||||||
Cash and cash equivalents | $ | 21,953 | $ | 79,623 | ||||
Restricted cash | 601 | 668 | ||||||
Accounts receivable, less allowance for doubtful accounts of $448 and $540 in 2010 and 2009, respectively | 35,846 | 36,111 | ||||||
Prepaid expenses and other current assets | 7,002 | 6,221 | ||||||
Deferred tax asset | 807 | 778 | ||||||
Total current assets | 66,209 | 123,401 | ||||||
Property and equipment, net | 26,538 | 33,389 | ||||||
Intangible assets, net | 243,144 | 246,959 | ||||||
Goodwill | 79,700 | 79,700 | ||||||
Deferred financing costs, net (including accumulated amortization of $12,709 and $10,191 in 2010 and 2009, respectively) | 5,202 | 8,234 | ||||||
Long-term investment | 4,000 | 4,000 | ||||||
Total assets | $ | 424,793 | $ | 495,683 | ||||
Liabilities and Members’ Deficit | ||||||||
Current liabilities: | ||||||||
Accounts payable | $ | 130 | $ | 2,182 | ||||
Current portion of long-term debt | 109,786 | 93,228 | ||||||
Accrued interest | 7,363 | 1,871 | ||||||
Accrued state income taxes | 1,118 | 5,175 | ||||||
Derivative instrument | 3,252 | — | ||||||
Other current liabilities | 12,355 | 10,376 | ||||||
Total current liabilities | 134,004 | 112,832 | ||||||
Long-term debt | 615,734 | 731,341 | ||||||
Other liabilities | 8,476 | 18,104 | ||||||
Deferred income taxes | 83,620 | 69,732 | ||||||
Total liabilities | 841,834 | 932,009 | ||||||
Members’ deficit | ||||||||
Additional paid-in capital | 310,850 | 310,850 | ||||||
Accumulated deficit | (795,368 | ) | (814,653 | ) | ||||
Total Cumulus Media Partners, LLC members’ deficit | (484,518 | ) | (503,803 | ) | ||||
Non-controlling interest | 67,477 | 67,477 | ||||||
Total members’ deficit | (417,041 | ) | (436,326 | ) | ||||
Total liabilities and members’ deficit | $ | 424,793 | $ | 495,683 | ||||
F-17
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Years Ended December 31, | ||||||||||||
2010 | 2009 | 2008 | ||||||||||
(Dollars in thousands) | ||||||||||||
Net revenues | $ | 188,718 | $ | 175,896 | $ | 212,429 | ||||||
Operating expenses: | ||||||||||||
Station operating expenses (excluding depreciation | ||||||||||||
and amortization and including LMA fees) | 103,103 | 100,952 | 128,670 | |||||||||
Depreciation and amortization | 8,576 | 8,232 | 9,015 | |||||||||
Corporate general and administrative expenses | 8,397 | 10,701 | 7,465 | |||||||||
Loss (gain) on disposals of stations or assets | 29 | 68 | (660 | ) | ||||||||
Impairment of long-term investments | — | — | 3,011 | |||||||||
Impairment of goodwill and intangible assets | 3,296 | 209,939 | 687,849 | |||||||||
Total operating expenses | 123,401 | 329,892 | 835,350 | |||||||||
Operating income (loss) | 65,317 | (153,996 | ) | (622,921 | ) | |||||||
Non-operating (expense) income: | ||||||||||||
Interest expense, net | (28,171 | ) | (34,473 | ) | (71,308 | ) | ||||||
Gain on early extinguishment of debt | — | 86,958 | 20,935 | |||||||||
Other income, net | 349 | 753 | 258 | |||||||||
Income (loss) before income taxes | 37,495 | (100,758 | ) | (673,036 | ) | |||||||
Income tax (expense) benefit | (18,210 | ) | 51,507 | 127,519 | ||||||||
Net income (loss) | $ | 19,285 | $ | (49,251 | ) | $ | (545,517 | ) | ||||
F-18
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Years Ended December 31, | ||||||||||||||||||||||||||||||||||||||||||||||||
Class A | Class B | Class C | Class AA | Additional | Non- | Total | ||||||||||||||||||||||||||||||||||||||||||
Number | Par | Number | Par | Number | Par | Number | Par | paid-in | Accumulated | controlling | members’ | |||||||||||||||||||||||||||||||||||||
of units | value | of units | value | of units | value | of units | value | capital | deficit | interest | equity (deficit) | |||||||||||||||||||||||||||||||||||||
(Dollars in thousands) | ||||||||||||||||||||||||||||||||||||||||||||||||
Balance as of December 31, 2007 | 225 | $ | — | 75 | $ | — | 75 | $ | — | 25 | $ | — | $ | 310,850 | $ | (219,885 | ) | $ | — | $ | 90,965 | |||||||||||||||||||||||||||
Net loss | — | — | — | — | — | — | — | — | — | (545,517 | ) | — | (545,517 | ) | ||||||||||||||||||||||||||||||||||
Total comprehensive loss | (545,517 | ) | ||||||||||||||||||||||||||||||||||||||||||||||
Balance as of December 31, 2008 | 225 | $ | — | 75 | $ | — | 75 | $ | — | 25 | $ | — | $ | 310,850 | $ | (765,402 | ) | $ | — | $ | (454,552 | ) | ||||||||||||||||||||||||||
Net loss | — | — | — | — | — | — | — | — | — | (49,251 | ) | — | (49,251 | ) | ||||||||||||||||||||||||||||||||||
Total comprehensive loss | (49,251 | ) | ||||||||||||||||||||||||||||||||||||||||||||||
Distributions to non-controlling interests | — | — | — | — | — | — | — | — | — | — | 67,477 | 67,477 | ||||||||||||||||||||||||||||||||||||
Balance as of December 31, 2009 | 225 | $ | — | 75 | $ | — | 75 | $ | — | 25 | $ | — | $ | 310,850 | $ | (814,653 | ) | $ | 67,477 | $ | (436,326 | ) | ||||||||||||||||||||||||||
Net income | — | — | — | — | — | — | — | — | — | 19,285 | — | 19,285 | ||||||||||||||||||||||||||||||||||||
Total comprehensive income | 19,285 | |||||||||||||||||||||||||||||||||||||||||||||||
Balance as of December 31, 2010 | 225 | $ | — | 75 | $ | — | 75 | $ | — | 25 | $ | — | $ | 310,850 | $ | (795,368 | ) | $ | 67,477 | $ | (417,041 | ) | ||||||||||||||||||||||||||
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Year ended December 31, | ||||||||||||
2010 | 2009 | 2008 | ||||||||||
(Dollars in thousands) | ||||||||||||
Cash flows from operating activities: | ||||||||||||
Net income (loss) | $ | 19,285 | $ | (49,251 | ) | $ | (545,517 | ) | ||||
Adjustments to reconcile net loss to net cash provided by operating activities: | ||||||||||||
Gain on debt exchange | — | (86,958 | ) | (20,935 | ) | |||||||
Depreciation and amortization | 8,576 | 8,232 | 9,015 | |||||||||
Amortization of debt issuance costs | 2,595 | 2,996 | 3,670 | |||||||||
Provision for doubtful accounts | 419 | 688 | 2,234 | |||||||||
Loss (gain) on disposals of assets or stations | 29 | 68 | (660 | ) | ||||||||
Gain on casualty loss | (350 | ) | (592 | ) | — | |||||||
Fair value adjustment of derivative instruments | (4,213 | ) | 1,522 | 5,944 | ||||||||
Impairment of long-term investments | — | — | 3,011 | |||||||||
Impairment of goodwill and intangibles | 3,296 | 209,939 | 687,849 | |||||||||
Deferred income taxes | 13,859 | (53,925 | ) | (129,285 | ) | |||||||
Changes in assets and liabilities, net of effects of acquisitions/dispositions: | ||||||||||||
Accounts receivable | (151 | ) | 2,893 | 6,874 | ||||||||
Restricted cash | 67 | (668 | ) | — | ||||||||
Prepaid expenses and other current assets | (784 | ) | (2,762 | ) | (993 | ) | ||||||
Accounts payable and accrued expenses | (808 | ) | 5,361 | (144 | ) | |||||||
Other liabilities | 10 | (974 | ) | (52 | ) | |||||||
Net cash provided by operating activities | 41,830 | 36,569 | 21,011 | |||||||||
Cash flows from investing activities: | ||||||||||||
Capital expenditures | (801 | ) | (1,375 | ) | (2,700 | ) | ||||||
Insurance proceeds from losses related to Hurricane Ike | 350 | — | 1,000 | |||||||||
Proceeds from sale of assets or radio stations | — | — | 2,460 | |||||||||
Purchase of intangible assets | — | (174 | ) | (9 | ) | |||||||
Net cash (used in) provided by investing activities | (451 | ) | (1,549 | ) | 751 | |||||||
Cash flows from financing activities: | ||||||||||||
Proceeds from revolving credit facilities | — | 5,500 | 115,130 | |||||||||
Repurchase of senior notes | — | — | (32,486 | ) | ||||||||
Debt amendment costs and other bank fees | — | (380 | ) | — | ||||||||
Payments on revolving line of credit and term loan | (99,049 | ) | (42,543 | ) | (22,724 | ) | ||||||
Debt exchange costs | — | (2,257 | ) | — | ||||||||
Net cash (used in) provided by financing activities | (99,049 | ) | (39,680 | ) | 59,920 | |||||||
Net (decrease) increase in cash and cash equivalents | (57,670 | ) | (4,660 | ) | 81,682 | |||||||
Cash and cash equivalents, beginning of period | 79,623 | 84,283 | 2,601 | |||||||||
Cash and cash equivalents, end of period | $ | 21,953 | $ | 79,623 | $ | 84,283 | ||||||
Supplemental disclosures of cash flow information: | ||||||||||||
Interest paid | $ | 24,371 | $ | 29,686 | $ | 65,110 | ||||||
Income taxes paid | 3,202 | 1,742 | 1,767 | |||||||||
Trade revenue | 4,803 | 4,918 | 3,074 | |||||||||
Trade expense | 4,576 | 5,226 | 3,028 |
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1. | Description of business, basis of presentation and summary of significant accounting policies: |
F-21
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F-22
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F-23
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2. | Recent accounting pronouncements: |
F-24
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3. | Property and equipment |
Estimated | ||||||||||||
useful life | 2010 | 2009 | ||||||||||
Land | $ | 6,128 | $ | 6,129 | ||||||||
Broadcasting and other equipment | 3 to 7 years | 41,569 | 40,515 | |||||||||
Computer and capitalized software costs | 1 to 3 years | 1,167 | 1,135 | |||||||||
Furniture and fixtures | 5 years | 3,764 | 3,756 | |||||||||
Leasehold improvements | 5 years | 4,181 | 4,122 | |||||||||
Buildings | 20 years | 3,950 | 3,949 | |||||||||
60,759 | 59,606 | |||||||||||
Less: accumulated depreciation | (34,221 | ) | (26,217 | ) | ||||||||
Total property and equipment, net | $ | 26,538 | $ | 33,389 | ||||||||
4. | Intangible assets and goodwill |
Indefinite lived | Definite lived | Total | ||||||||||
Intangible Assets: | ||||||||||||
Balance as of December 31, 2008 | $ | 452,788 | $ | 4,639 | $ | 457,427 | ||||||
Disposition | 174 | 174 | ||||||||||
Amortization | — | (702 | ) | (702 | ) | |||||||
Impairment | (209,939 | ) | (209,939 | ) | ||||||||
Balance as of December 31, 2009 | $ | 243,023 | $ | 3,937 | $ | 246,960 | ||||||
Acquisition | — | — | ||||||||||
Amortization | — | (520 | ) | (520 | ) | |||||||
Impairment | (3,296 | ) | — | (3,296 | ) | |||||||
Balance as of December 31, 2010 | $ | 239,727 | $ | 3,417 | $ | 243,144 | ||||||
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Table of Contents
2010 | 2009 | |||||||
Balance as of January 1: | ||||||||
Goodwill | $ | 548,378 | $ | 548,378 | ||||
Accumulated impairment losses | (468,678 | ) | (468,678 | ) | ||||
Subtotal | 79,700 | 79,700 | ||||||
Impairment losses | — | — | ||||||
Goodwill related to sale of business unit | — | — | ||||||
Balance as of December 31: | ||||||||
Goodwill | 548,378 | 548,378 | ||||||
Accumulated impairment losses | (468,678 | ) | (468,678 | ) | ||||
Total | $ | 79,700 | $ | 79,700 | ||||
Years ending December 31, | ||||
2011 | $ | 465 | ||
2012 | 461 | |||
2013 | 454 | |||
2014 | 435 | |||
2015 | 381 | |||
Thereafter | 1,221 | |||
$ | 3,417 | |||
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• | prepared a market fair value calculation using a multiple of Adjusted EBITDA as a comparative data point to validate the fair values calculated using the discounted cash-flow approach; and | |
• | performed a sensitivity analysis on the overall fair value and impairment evaluation. |
2010 | 2009 | 2008 | ||||||||||
Discount rate range | 11.8% - 12.1% | 12.5% - 12.7% | 13.0% | |||||||||
Median annual revenue growth | 3.1% | 2.0% | 2.5% | |||||||||
Median annual operating expense growth | 3.1% | 1.9% | 2.0% |
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• | in each market, the broadcast licenses were purchased to be used as one combined asset; | |
• | the combined group of licenses in a market represents the “highest and best use of the assets”; and | |
• | each market’s strategy provides evidence that the licenses are “complementary”. |
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• | the stations’ gross revenues through 2018; | |
• | the projected operating expenses and profits over the same period of time (the Company considered operating expenses, except for sales expenses, to be fixed, and assumed sales expenses to be a fixed percentage of revenues); | |
• | calculations of yearly net free cash flows to invested capital; | |
• | depreciation onstart-up construction costs and capital expenditures (the Company calculated depreciation using accelerated double declining balance guidelines over five years for the value of the tangible assets necessary for a radio station to goon-the-air); and | |
• | amortization of the intangible asset — the FCC license (the Company calculated amortization on a straight line basis over 15 years). |
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5. | Other current liabilities |
2010 | 2009 | |||||||
Accrued federal income taxes | $ | 3,114 | $ | 259 | ||||
Non-cash contract termination liability | 1,503 | 1,569 | ||||||
Accrued external commissions | 2,220 | 1,552 | ||||||
Accrued employee-related costs | 1,607 | 625 | ||||||
Other accrued expenses | 2,158 | 2,695 | ||||||
Trade expense | 768 | 1,900 | ||||||
Accrued real estate costs | 607 | 748 | ||||||
Accrued professional fees | 344 | 906 | ||||||
Deferred revenue | 34 | 122 | ||||||
Total other current liabilities | $ | 12,355 | $ | 10,376 | ||||
6. | Derivative financial instruments |
F-30
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Consolidated Balance Sheets (Dollars in thousands)
Fair value at | ||||||||||
December 31, | ||||||||||
Balance sheet location | 2010 | 2009 | ||||||||
Derivative not designated as hedging instrument: | ||||||||||
Interest rate swap | Other current liabilities | $ | 3,252 | $ | — | |||||
Interest rate swap | Other long-term liabilities | — | 7,466 | |||||||
Total | $ | 3,252 | $ | 7,466 | ||||||
Amount of expense recognized in | ||||||||||||||
income on the derivative | ||||||||||||||
Derivative | Statement of operations | for the year ended December 31, | ||||||||||||
instrument | location | 2010 | 2009 | 2008 | ||||||||||
Interest rate swap | Interest expense | $ | 4,214 | $ | 1,522 | $ | 6,856 | |||||||
Total | $ | 4,214 | $ | 1,522 | $ | 6,856 | ||||||||
7. | Fair value measurements |
Fair value measurements at reporting date using | ||||||||||||||||
Quoted prices | Significant other | Significant | ||||||||||||||
Total | in active markets | observable inputs | unobservable inputs | |||||||||||||
fair value | (Level 1) | (Level 2) | (Level 3) | |||||||||||||
Financial liabilities: | ||||||||||||||||
Other current liabilities | ||||||||||||||||
Interest rate swap(1) | $ | (3,252 | ) | $ | — | $ | (3,252 | ) | $ | — | ||||||
Total liabilities | $ | (3,252 | ) | $ | — | $ | (3,252 | ) | $ | — | ||||||
F-31
Table of Contents
(1) | The Company’s derivative financial instrument consists solely of the 2008 Swap. The fair value of the 2008 Swap is determined based on the present value of future cash flows using observable inputs, including interest rates and yield curves. In accordance withmark-to-market fair value accounting requirements, derivative valuations incorporate adjustments that are necessary to reflect the Company’s own credit risk. |
2010 | 2009 | |||||||||||||||
CMPSC | KC LLC | CMPSC | KC LLC | |||||||||||||
Term: | ||||||||||||||||
Carrying value | $ | 613,131 | $ | 69,228 | $ | 620,131 | $ | 69,047 | ||||||||
Fair value | $ | 576,077 | $ | 8,654 | $ | 462,395 | $ | 8,654 | ||||||||
Revolver: | ||||||||||||||||
Carrying value | $ | — | $ | 17,000 | $ | 92,049 | $ | 17,000 | ||||||||
Fair value(1) | $ | — | $ | 2,131 | $ | 66,275 | $ | 2,131 | ||||||||
(1) | The KC LLC revolving credit facility was not actively traded during the years ended December 31, 2010 or 2009. |
• | discount cash flow rate of 5.2% | |
• | interest rate of 2.3%; and | |
• | credit spread of 5.2%. |
8. | Long-term debt |
F-32
Table of Contents
2010 | 2009 | |||||||
Term loan facilities | $ | 682,359 | $ | 689,359 | ||||
Revolving credit facilities | 17,000 | 109,049 | ||||||
9.875% senior subordinated notes | 12,130 | 12,130 | ||||||
Variable rate senior subordinated secured second lien notes | 14,031 | 14,031 | ||||||
Total debt | 725,520 | 824,569 | ||||||
Less: Current portion of long-term debt | (109,786 | ) | (93,228 | ) | ||||
Long-term portion of debt | $ | 615,734 | $ | 731,341 | ||||
2011 | 109,786 | |||
2012 | 7,000 | |||
2013 | 582,573 | |||
2014 | 26,161 | |||
Thereafter | — | |||
$ | 725,520 | |||
F-33
Table of Contents
• | a maximum total leverage ratio; | |
• | a minimum interest coverage ratio; and | |
• | a limit on annual capital expenditures. |
F-34
Table of Contents
F-35
Table of Contents
Carrying value of exchanged notes | $ | 175,464 | ||
Less: | ||||
Preferred stock | (24,300 | ) | ||
Warrants | (45,000 | ) | ||
Adjusted carrying value | 106,164 | |||
Future cash flows of 2014 Notes | (16,500 | ) | ||
Accrued interest on exchanged notes | 2,165 | |||
Gain on troubled debt restructuring | 91,829 | |||
Deal costs on 2014 Notes | (434 | ) | ||
Amount of costs to write-off | (4,437 | ) | ||
Net gain on troubled debt restructuring | $ | 86,958 | ||
F-36
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F-37
Table of Contents
9. | Members’ deficit |
• | senior to the common stock of Radio Holdings and all other equity securities designated as ranking junior to the preferred stock; | |
• | on a parity with all equity securities designated as ranking on a parity with the preferred stock; and | |
• | junior to all equity securities designated as ranking senior to the preferred stock. |
F-38
Table of Contents
10. | Income taxes |
2010 | 2009 | 2008 | ||||||||||
Current income tax expense: | ||||||||||||
Federal | $ | 4,126 | $ | 259 | $ | 193 | ||||||
State and local | 225 | 2,159 | 1,573 | |||||||||
Total current income tax expense | 4,351 | 2,418 | 1,766 | |||||||||
Deferred tax expense (benefit): | ||||||||||||
Federal | 12,733 | (42,951 | ) | (107,308 | ) | |||||||
State and local | 1,126 | (10,974 | ) | (21,977 | ) | |||||||
Total deferred tax expense (benefit) | 13,859 | (53,925 | ) | (129,285 | ) | |||||||
Total income tax expense (benefit) | $ | 18,210 | $ | (51,507 | ) | $ | (127,519 | ) | ||||
2010 | 2009 | 2008 | ||||||||||
Pretax income (loss) at federal statutory rate | $ | 13,123 | $ | (35,265 | ) | $ | (235,562 | ) | ||||
State income tax expense (benefit), net of federal income tax expense (benefit) | 1,577 | (4,509 | ) | (12,915 | ) | |||||||
Nondeductible exchange costs | — | 1,628 | — | |||||||||
Permanent differences/other | 282 | (564 | ) | (1,012 | ) | |||||||
Reduction in net operating losses and adjustments related to the 2009 Exchange Offer | 3,347 | 17,714 | — | |||||||||
Impairment charges | — | 866 | 115,563 | |||||||||
Change in valuation allowance | (119 | ) | (31,377 | ) | 6,407 | |||||||
Net income tax expense (benefit) | $ | 18,210 | $ | (51,507 | ) | $ | (127,519 | ) | ||||
F-39
Table of Contents
2010 | 2009 | |||||||
Current deferred tax assets: | ||||||||
Accounts receivable | $ | 168 | $ | 200 | ||||
Accrued expenses and other current liabilities | 2,765 | 704 | ||||||
Current deferred tax assets | 2,933 | 904 | ||||||
Less: valuation allowance | (2,126 | ) | (126 | ) | ||||
Net current deferred tax assets | 807 | 778 | ||||||
Noncurrent deferred tax assets: | ||||||||
Intangible assets | 17,551 | 19,475 | ||||||
Other | 12,576 | 16,019 | ||||||
Net operating loss | 6,660 | 14,371 | ||||||
Noncurrent deferred tax assets | 36,787 | 49,865 | ||||||
Less: valuation allowance | (13,860 | ) | (15,979 | ) | ||||
Net noncurrent deferred tax assets | 22,927 | 33,886 | ||||||
Noncurrent deferred tax liabilities: | ||||||||
Intangible assets | 67,286 | 64,013 | ||||||
Property and equipment | 1,221 | 1,581 | ||||||
Cancelation of debt | 36,764 | 36,558 | ||||||
Other | 1,276 | 1,466 | ||||||
Noncurrent deferred tax liabilities | 106,547 | 103,618 | ||||||
Net noncurrent deferred tax liabilities | 83,620 | 69,732 | ||||||
Net deferred tax liabilities | $ | 82,813 | $ | 68,954 | ||||
Balance at | Provision for | Balance | ||||||||||||||
beginning | doubtful | at end | ||||||||||||||
Fiscal year | of year | accounts | Applications | of year | ||||||||||||
Valuation allowance on deferred taxes | ||||||||||||||||
2010 | $ | 16,105 | $ | — | $ | (119 | ) | $ | 15,986 | |||||||
2009 | 47,482 | — | (31,377 | ) | 16,105 | |||||||||||
F-40
Table of Contents
F-41
Table of Contents
11. | Lease commitments |
Years ending December 31, | ||||
2011 | $ | 4,472 | ||
2012 | 3,973 | |||
2013 | 3,876 | |||
2014 | 3,586 | |||
2015 | 2,663 | |||
Thereafter | 6,534 | |||
$ | 25,104 | |||
12. | Commitments and contingencies |
F-42
Table of Contents
13. | Restricted cash |
14. | Related party |
F-43
Table of Contents
15. | Valuation allowance |
Balance at | Provision for | Balance | ||||||||||||||
beginning | doubtful | at end | ||||||||||||||
Fiscal year | of year | accounts | Applications | of year | ||||||||||||
Allowance for doubtful accounts | ||||||||||||||||
2010 | $ | 540 | $ | 419 | $ | (511 | ) | $ | 448 | |||||||
2009 | 1,370 | 688 | (1,518 | ) | 540 | |||||||||||
16. | Subsequent events |
F-44
Table of Contents
Table of Contents
Page | ||||||
ARTICLE I. THE MERGER | A-2 | |||||
Section 1.1 | The Merger | A-2 | ||||
Section 1.2 | Closing | A-2 | ||||
Section 1.3 | Effective Time | A-2 | ||||
Section 1.4 | Effects | A-2 | ||||
Section 1.5 | Conversion of Capital Stock of Merger Sub | A-2 | ||||
Section 1.6 | Conversion of Company Capital Stock | A-2 | ||||
Section 1.7 | Certificate of Incorporation and Bylaws | A-6 | ||||
Section 1.8 | Directors | A-6 | ||||
Section 1.9 | Officers | A-6 | ||||
Section 1.10 | Dissenting Stockholders | A-6 | ||||
ARTICLE II. EXCHANGE OF CERTIFICATES AND CASH CONSIDERATION | A-7 | |||||
Section 2.1 | Exchange Agent | A-7 | ||||
Section 2.2 | Exchange Procedures | A-7 | ||||
Section 2.3 | Distributions with Respect to Unexchanged Shares of Parent Shares | A-7 | ||||
Section 2.4 | No Further Rights in Company Shares | A-8 | ||||
Section 2.5 | No Fractional Shares | A-8 | ||||
Section 2.6 | Termination of Exchange Fund | A-8 | ||||
Section 2.7 | No Liability | A-8 | ||||
Section 2.8 | Investment of Exchange Fund | A-8 | ||||
Section 2.9 | Withholding Rights | A-8 | ||||
Section 2.10 | Lost Certificates | A-9 | ||||
Section 2.11 | Company Stock Options | A-9 | ||||
Section 2.12 | Company Restricted Stock | A-9 | ||||
Section 2.13 | Company Warrants | A-10 | ||||
Section 2.14 | FCC Limitations | A-10 | ||||
ARTICLE III. REPRESENTATIONS AND WARRANTIES OF THE COMPANY | A-10 | |||||
Section 3.1 | Corporate Organization | A-11 | ||||
Section 3.2 | Capitalization | A-11 | ||||
Section 3.3 | Authority; No Violation | A-12 | ||||
Section 3.4 | Consents and Approvals | A-13 | ||||
Section 3.5 | Reports | A-13 | ||||
Section 3.6 | Financial Statements | A-15 | ||||
Section 3.7 | Absence of Material Adverse Effect | A-15 | ||||
Section 3.8 | Legal Proceedings | A-15 | ||||
Section 3.9 | Taxes and Tax Returns | A-16 | ||||
Section 3.10 | Employee Benefit Plans | A-16 | ||||
Section 3.11 | Compliance with Applicable Law | A-18 | ||||
Section 3.12 | Environmental Matters | A-19 | ||||
Section 3.13 | FCC Authorizations | A-19 | ||||
Section 3.14 | Material Contracts | A-20 |
A-i
Table of Contents
Page | ||||||
Section 3.15 | Title to Properties; Assets | A-21 | ||||
Section 3.16 | Intellectual Property | A-21 | ||||
Section 3.17 | Insurance | A-22 | ||||
Section 3.18 | State Takeover Laws | A-22 | ||||
Section 3.19 | Opinion | A-22 | ||||
Section 3.20 | Company Information | A-22 | ||||
Section 3.21 | Vote Required | A-22 | ||||
Section 3.22 | Broker’s Fees | A-22 | ||||
ARTICLE IV. REPRESENTATIONS AND WARRANTIES OF PARENT, HOLDCO AND MERGER SUB | A-23 | |||||
Section 4.1 | Corporate Organization | A-23 | ||||
Section 4.2 | Capitalization | A-23 | ||||
Section 4.3 | Authority; No Violation | A-24 | ||||
Section 4.4 | Consents and Approvals | A-25 | ||||
Section 4.5 | Reports | A-25 | ||||
Section 4.6 | Financial Statements | A-26 | ||||
Section 4.7 | Absence of Material Adverse Effect | A-27 | ||||
Section 4.8 | Legal Proceedings | A-27 | ||||
Section 4.9 | Taxes and Tax Returns | A-28 | ||||
Section 4.10 | Compliance with Applicable Law | A-28 | ||||
Section 4.11 | Environmental Matters | A-28 | ||||
Section 4.12 | FCC Authorizations | A-29 | ||||
Section 4.13 | Intellectual Property | A-29 | ||||
Section 4.14 | Financing | A-30 | ||||
Section 4.15 | Opinion | A-30 | ||||
Section 4.16 | Parent Information | A-30 | ||||
Section 4.17 | Broker’s Fees | A-31 | ||||
Section 4.18 | Vote Required | A-31 | ||||
ARTICLE V. PRE-CLOSING COVENANTS | A-31 | |||||
Section 5.1 | Conduct of Businesses Prior to the Effective Time | A-31 | ||||
Section 5.2 | Company Forbearances | A-31 | ||||
Section 5.3 | Parent, Holdco and Merger Sub Forbearances | A-33 | ||||
ARTICLE VI. ADDITIONAL AGREEMENTS | A-34 | |||||
Section 6.1 | Regulatory Matters; Third Party Consents | A-34 | ||||
Section 6.2 | Access to Information | A-37 | ||||
Section 6.3 | Stockholder Approval | A-38 | ||||
Section 6.4 | Nasdaq Stock Market Listing | A-38 | ||||
Section 6.5 | Employee Matters | A-38 | ||||
Section 6.6 | Indemnification; Directors’ and Officers’ Insurance | A-39 | ||||
Section 6.7 | Additional Agreements | A-40 | ||||
Section 6.8 | Advice of Changes | A-40 | ||||
Section 6.9 | Exemption from Liability Under Section 16(b) | A-40 |
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Section 6.10 | Company Board Recommendation; Acquisition Proposals | A-40 | ||||
Section 6.11 | Control of the Other Party’s Business | A-42 | ||||
Section 6.12 | Subsidiary Compliance | A-42 | ||||
Section 6.13 | Actions with Respect to Existing Debt | A-42 | ||||
Section 6.14 | Financing | A-44 | ||||
Section 6.15 | Subsequent Disclosures by Parent | A-47 | ||||
ARTICLE VII. CLOSING CONDITIONS | A-47 | |||||
Section 7.1 | Conditions to Each Party’s Obligation To Effect the Merger | A-47 | ||||
Section 7.2 | Conditions to Obligations of Parent, Holdco and Merger Sub | A-48 | ||||
Section 7.3 | Conditions to Obligations of the Company | A-48 | ||||
ARTICLE VIII. TERMINATION AND AMENDMENT | A-49 | |||||
Section 8.1 | Termination | A-49 | ||||
Section 8.2 | Effect of Termination | A-50 | ||||
Section 8.3 | Amendment | A-53 | ||||
Section 8.4 | Extension; Waiver | A-53 | ||||
ARTICLE IX. GENERAL PROVISIONS | A-53 | |||||
Section 9.1 | Nonsurvival of Representations, Warranties and Covenants | A-53 | ||||
Section 9.2 | Notices | A-53 | ||||
Section 9.3 | Interpretation | A-54 | ||||
Section 9.4 | Counterparts | A-54 | ||||
Section 9.5 | Entire Agreement; Third Party Beneficiaries | A-54 | ||||
Section 9.6 | Governing Law | A-55 | ||||
Section 9.7 | Jurisdiction | A-55 | ||||
Section 9.8 | Publicity | A-56 | ||||
Section 9.9 | Assignment | A-56 | ||||
Section 9.10 | Remedies | A-56 | ||||
Section 9.11 | Waivers | A-58 | ||||
Section 9.12 | Severability | A-58 | ||||
Section 9.13 | Definitions | A-59 |
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7690 West Cheyenne Avenue, Suite 220
Las Vegas, Nevada 89129
Attention: Chief Financial Officer
Fax:(702) 804-8292
767 Fifth Avenue
New York, New York 10153
Attention: Howard Chatzinoff, Esq.
Raymond O. Gietz, Esq.
Fax:(212) 310-8007
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3280 Peachtree Road, N.W
Suite 2300
Atlanta, Georgia 30305
Attention: Richard S. Denning, Esq.
Fax:(404) 949-0740
1420 Peachtree Street, N.E.
Suite 800
Atlanta, Georgia30309-3053
Attention: William B. Rowland, Esq.
Bryan E. Davis, Esq.
Fax:(404) 581-8330
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By: | /s/ Farid Suleman |
Title: | President and Chief Executive Officer |
By: | /s/ Lewis W. Dickey, Jr. |
Title: | President, Chairman and Chief Executive Officer |
By: | /s/ Lewis W. Dickey, Jr. |
Title: | President |
By: | /s/ Lewis W. Dickey, Jr. |
Title: | President |
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Citadel Broadcasting Corporation
March 9, 2011
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Citadel Broadcasting Corporation
March 9, 2011
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Very truly yours, | ||||
LAZARD FRERES & CO. LLC | ||||
By | ||||
Marc Katz | ||||
Managing Director |
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1999 AVENUE OF THE STARS 19th FLOOR LOS ANGELES, CALIFORNIA 90067 | ||
T 310.443.2300 F 310.443.8700 |
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CERTIFICATE OF INCORPORATION
OF CUMULUS MEDIA INC.
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Item 20. | Indemnification of Directors and Officers |
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Item 21. | Exhibits and Financial Statement Schedules |
2 | .1 | Exchange Agreement, dated as of January 31, 2011, by and among Cumulus Media Inc., Bain Capital Partners, LLC, The Blackstone Group L.P. and Thomas H. Lee Partners (incorporated herein by reference to Exhibit 2.1 to our quarterly report on Form 10-Q for the period ended March 31, 2011). | ||
2 | .2* | Agreement and Plan of Merger, dated as of March 9, 2011, by and among Citadel Broadcasting Corporation, Cumulus Media Inc., Cadet Holding Corporation and Cadet Merger Corporation (incorporated herein by reference to Exhibit 2.1 to our current report on Form 8-K, filed on March 10, 2011). | ||
3 | .1 | Amended and Restated Certificate of Incorporation of Cumulus Media Inc., as amended (incorporated herein by reference to Exhibit 3.1 to our current report onForm 8-K, filed on November 26, 2008). | ||
3 | .2 | Amended and Restated Bylaws of Cumulus Media Inc. (incorporated herein by reference to Exhibit 3.2 to our current report onForm 8-K, filed on November 26, 2008). | ||
4 | .1 | Form of Class A Common Stock Certificate (incorporated herein by reference to Exhibit 4.1 of our current report on Form 8-K, filed on August 2, 2002). | ||
4 | .2 | Voting Agreement, dated as of June 30, 1998, by and between NationsBanc Capital Corp., Cumulus Media Inc. and the stockholders named therein (incorporated herein by reference to Exhibit 4.2 of our quarterly report on Form 10-Q for the period ended September 30, 2001). | ||
4 | .3 | Shareholder Agreement, dated as of the March 28, 2002, by and between BancAmerica Capital Investors SBIC I, L.P. and Cumulus Media Inc. (incorporated herein by reference to Exhibit (d)(3) of our Schedule TO-I, filed on May 17, 2006). | ||
4 | .4 | Voting Agreement, dated as of January 6, 2009, by and among Cumulus Media Inc. and the Dickey stockholders (incorporated by reference to Exhibit 10.1 to our Form 8-K, filed on January 6, 2009). | ||
4 | .5 | Form of Warrant Certificate (incorporated herein by reference to Exhibit 4.1 to our current report on Form 8-K, filed on June 30, 2009). | ||
4 | .6 | Registration Rights Agreement, dated as of June 30, 1998, by and among Cumulus Media Inc., NationsBanc Capital Corp., Heller Equity Capital Corporation, The State of Wisconsin Investment Board and The Northwestern Mutual Life Insurance Company (incorporated herein by reference to Exhibit 4.1 of our quarterly report on Form 10-Q for the period ended September 30, 2001). | ||
4 | .7 | Amended and Restated Registration Rights Agreement, dated as of January 23, 2002, by and among Cumulus Media Inc., Aurora Communications, LLC and the other parties (identified herein by reference to Exhibit 2.2 of our current report on Form 8-K, filed on February 7, 2002). | ||
4 | .8 | Registration Rights Agreement, dated March 28, 2002, between Cumulus Media Inc. and DBBC, L.L.C. (incorporated herein by reference to Exhibit 10.18 of our annual report on Form 10-K for the year ended December 31, 2002). | ||
4 | .9 | Indenture, dated as of May 13, 2011, by and among Cumulus Media Inc., each of the guarantors named therein and The Bank of New York Mellon, as Trustee (incorporated herein by reference to Exhibit 4.1 to our current report on Form 8-K, filed on May 16, 2011). | ||
4 | .10 | Form of 7.75% Senior Note due 2019 (included in Exhibit 4.9) (incorporated herein by reference to Exhibit 4.2 to our current report on Form 8-K, filed on May 16, 2011). | ||
4 | .11 | Registration Rights Agreement, dated May 13, 2011, by and among Cumulus Media Inc. and the Guarantors party thereto and J.P. Morgan Securities LLC (incorporated herein by reference to Exhibit 4.3 to our current report on Form 8-K, filed on May 16, 2011). | ||
5 | .1** | Opinion of Jones Day regarding the validity of the shares of common stock and warrants to be issued in the merger. | ||
23 | .1** | Consent of PricewaterhouseCoopers LLP. | ||
23 | .2** | Consent of PricewaterhouseCoopers LLP. | ||
23 | .3** | Consent of Deloitte & Touche LLP. | ||
23 | .4** | Consent of Jones Day (included in Exhibit 5.1). | ||
24 | .1** | Powers of Attorney (included on the signature page to this registration statement). |
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99 | .1** | Form of Citadel Proxy Card — Holders of Citadel Class A Common Stock. | ||
99 | .2** | Form of Citadel Proxy Card — Holders of Citadel Class B Common Stock. | ||
99 | .3** | FCC Ownership Certification Form. | ||
99 | .4** | FCC Ownership Certification Questionnaire. | ||
99 | .5** | Consent of Lazard Frères & Co. LLC. | ||
99 | .6** | Consent of J.P. Morgan Securities LLC. | ||
99 | .7** | Consent of Moelis & Company LLC. |
* | Schedules and exhibits have been omitted from this exhibit pursuant to Item 601(b)(2) ofRegulation S-K and are not filed herewith. The Registrant agrees to furnish supplementally a copy of the omitted schedules and exhibits to the Securities and Exchange Commission upon request. | |
** | Filed herewith. |
Item 22. | Undertakings. |
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By | /s/ Joseph P. Hannan |
/s/ Lewis W. Dickey, Jr. Lewis W. Dickey, Jr. | Chairman, President, Chief Executive Officer and Director, (Principal Executive Officer) | July 11, 2011 | ||||
/s/ Joseph P. Hannan Joseph P. Hannan | Vice President and Chief Financial Officer (Principal Financial Officer) | July 11, 2011 | ||||
/s/ Linda A. Hill Linda A. Hill | Chief Accounting Officer (Corporate Controller and Principal Accounting Officer) | July 11, 2011 | ||||
/s/ Ralph B. Everett Ralph B. Everett | Director | July 11, 2011 | ||||
/s/ Eric P. Robison Eric P. Robison | Director | July 11, 2011 | ||||
/s/ Robert H. Sheridan, III Robert H. Sheridan, III | Director | July 11, 2011 | ||||
/s/ David M. Tolley David M. Tolley | Director | July 11, 2011 |
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2 | .1 | Exchange Agreement, dated as of January 31, 2011, by and among Cumulus Media Inc., Bain Capital Partners, LLC, The Blackstone Group L.P. and Thomas H. Lee Partners (incorporated herein by reference to Exhibit 2.1 to our quarterly report on Form 10-Q for the period ended March 31, 2011). | ||
2 | .2* | Agreement and Plan of Merger, dated as of March 9, 2011, by and among Citadel Broadcasting Corporation, Cumulus Media Inc., Cadet Holding Corporation and Cadet Merger Corporation (incorporated herein by reference to Exhibit 2.1 to our current report on Form 8-K, filed on March 10, 2011). | ||
3 | .1 | Amended and Restated Certificate of Incorporation of Cumulus Media Inc., as amended (incorporated herein by reference to Exhibit 3.1 to our current report onForm 8-K, filed on November 26, 2008). | ||
3 | .2 | Amended and Restated Bylaws of Cumulus Media Inc. (incorporated herein by reference to Exhibit 3.2 to our current report onForm 8-K, filed on November 26, 2008). | ||
4 | .1 | Form of Class A Common Stock Certificate (incorporated herein by reference to Exhibit 4.1 of our current report on Form 8-K, filed on August 2, 2002). | ||
4 | .2 | Voting Agreement, dated as of June 30, 1998, by and between NationsBanc Capital Corp., Cumulus Media Inc. and the stockholders named therein (incorporated herein by reference to Exhibit 4.2 of our quarterly report on Form 10-Q for the period ended September 30, 2001). | ||
4 | .3 | Shareholder Agreement, dated as of the March 28, 2002, by and between BancAmerica Capital Investors SBIC I, L.P. and Cumulus Media Inc. (incorporated herein by reference to Exhibit (d)(3) of our Schedule TO-I, filed on May 17, 2006). | ||
4 | .4 | Voting Agreement, dated as of January 6, 2009, by and among Cumulus Media Inc. and the Dickey stockholders (incorporated by reference to Exhibit 10.1 to our Form 8-K, filed on January 6, 2009). | ||
4 | .5 | Form of Warrant Certificate (incorporated herein by reference to Exhibit 4.1 to our current report on Form 8-K, filed on June 30, 2009). | ||
4 | .6 | Registration Rights Agreement, dated as of June 30, 1998, by and among Cumulus Media Inc., NationsBanc Capital Corp., Heller Equity Capital Corporation, The State of Wisconsin Investment Board and The Northwestern Mutual Life Insurance Company (incorporated herein by reference to Exhibit 4.1 of our quarterly report on Form 10-Q for the period ended September 30, 2001). | ||
4 | .7 | Amended and Restated Registration Rights Agreement, dated as of January 23, 2002, by and among Cumulus Media Inc., Aurora Communications, LLC and the other parties (identified herein by reference to Exhibit 2.2 of our current report on Form 8-K, filed on February 7, 2002). | ||
4 | .8 | Registration Rights Agreement, dated March 28, 2002, between Cumulus Media Inc. and DBBC, L.L.C. (incorporated herein by reference to Exhibit 10.18 of our annual report on Form 10-K for the year ended December 31, 2002). | ||
4 | .9 | Indenture, dated as of May 13, 2011, by and among Cumulus Media Inc., each of the guarantors named therein and The Bank of New York Mellon, as Trustee (incorporated herein by reference to Exhibit 4.1 to our current report on Form 8-K, filed on May 16, 2011). | ||
4 | .10 | Form of 7.75% Senior Note due 2019 (included in Exhibit 4.9) (incorporated herein by reference to Exhibit 4.2 to our current report on Form 8-K, filed on May 16, 2011). | ||
4 | .11 | Registration Rights Agreement, dated May 13, 2011, by and among Cumulus Media Inc. and the Guarantors party thereto and J.P. Morgan Securities LLC (incorporated herein by reference to Exhibit 4.3 to our current report on Form 8-K, filed on May 16, 2011). | ||
5 | .1** | Opinion of Jones Day regarding the validity of the shares of common stock and warrants to be issued in the merger. | ||
23 | .1** | Consent of PricewaterhouseCoopers LLP. | ||
23 | .2** | Consent of PricewaterhouseCoopers LLP. | ||
23 | .3** | Consent of Deloitte & Touche LLP. | ||
23 | .4** | Consent of Jones Day (included in Exhibit 5.1). | ||
24 | .1** | Powers of Attorney (included on the signature page to this registration statement). | ||
99 | .1** | Form of Citadel Proxy Card — Holders of Citadel Class A Common Stock. | ||
99 | .2** | Form of Citadel Proxy Card — Holders of Citadel Class B Common Stock. | ||
99 | .3** | FCC Ownership Certification Form. | ||
99 | .4** | FCC Ownership Certification Questionnaire. |
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99 | .5** | Consent of Lazard Frères & Co. LLC. | ||
99 | .6** | Consent of J.P. Morgan Securities LLC. | ||
99 | .7** | Consent of Moelis & Company LLC. |
* | Schedules and exhibits have been omitted from this exhibit pursuant to Item 601(b)(2) ofRegulation S-K and are not filed herewith. The Registrant agrees to furnish supplementally a copy of the omitted schedules and exhibits to the Securities and Exchange Commission upon request. | |
** | Filed herewith. |