Citadel is prepping for chapter 11 bankruptcy proceedings, according to this inside radio article. The gem that I most like is this:
Lenders have until Tuesday to sign the deal, which would cut its $2 billion debt to $760 million. Shareholders would see their ownership stake wiped out.
So let’s see if you kept your Citadel Broadcasting stock (CTDB: trading at $0.041 per share) because you thought it might go above $1.00 per share again, you are screwed. Notice, 60% of the debt is just going away. Amazing! How do they do that? If I decided that I didn’t want to pay my mortgage, would the bank entice me to start paying again by reducing it by 60%? No, they would not. They would simply send me a foreclosure notice and eventually some guy would stand on the county courthouse steps and read my foreclosure warrant out loud to the passers-by. If I am lucky, it will be lunchtime and somebody might actually hear it.
No, what happens when a lender writes down $1.24 billion in debt is it gets passed on to all the other bank customers in higher interest rates, larger fees, etc. After all, the CEO needs to make his margins to earn that end-of-year bonus.
To recap, shareholders are losing everything and we all are going to pay more because Citadel Broadcasting Corporation overpaid for a group of radio stations, then ran them into the ground. Fuck us all.
This blog has a crystal ball and accurately predicted the Chapter 11 filing of Citadel. More are coming; Stay Tuned!