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8-K - FORM 8-K - CUMULUS MEDIA INC | g25566e8vk.htm |
Exhibit 99.1
December 17, 2010 09:25 AM Eastern Time
Cumulus Media Confirms $2.1 Billion Offer for Citadel Broadcasting
Cumulus proposes cash and stock merger at $31 per Citadel share
Cumulus responds to rejection of its offer by Citadels board of directors
ATLANTA(BUSINESS WIRE)Cumulus Media Inc. (NASDAQ: CMLS) today confirmed that on
November 29, 2010, it made a proposal to the Board of Directors of Citadel Broadcasting
Corporation (OTC: CDELB.PK) to acquire all of the outstanding equity of Citadel for $31 per
share. The proposed transaction values Citadel as an enterprise at approximately $2.1 Billion.
The merger would have allowed the Citadel shareholders to elect to receive cash or Cumulus stock,
with a total of up to $1 Billion of cash to be paid, representing about 71% of the consideration
to Citadel shareholders.
On December 6, 2010, Citadel informed Cumulus that the board of directors of [Citadel]
rejected this proposal as not being in the best interests of [Citadels] shareholders.
On December 16, 2010, Cumulus delivered a letter to Citadels Board of Directors reiterating
its offer and its desire to reach agreement on a transaction that would deliver superior value and
substantial liquidity to Citadels shareholders.
Cumulus Chairman & CEO, Lew Dickey, commented, This offer continues to represent a superior
alternative in value, liquidity and potential growth for the former secured creditors of Citadel
who, post-bankruptcy, are now the owners of the company.
The full text of the letter issued by Cumulus to Citadels Board follows:
#########
December 16, 2010
Board of Directors
Citadel Broadcasting Corporation
7201 W. Lake Mead Blvd.
Suite 400
Las Vegas, NV 89128
Citadel Broadcasting Corporation
7201 W. Lake Mead Blvd.
Suite 400
Las Vegas, NV 89128
Attn: Mr. John L. Sander
Chairman of the Board of Directors
Chairman of the Board of Directors
Ladies and Gentlemen:
We reference our letter to you of November 29, 2010, containing our proposal for a merger of
Citadel Broadcasting Corporation (Citadel) with Cumulus Media Inc. (Cumulus). We do not
understand why you have been unwilling to engage with us to explore such a transaction and to
consider its benefits to Citadel and its shareholders. We had made an earlier proposal a number of
weeks prior that you also rejected.
In response to increasingly stronger encouragement that we have received from individual
Citadel shareholders who have urged us to continue our efforts to combine our companies and
thereby deliver substantial and tangible value to Citadels shareholders, we write you
again.
Our November 29 Proposal
The merger proposed in our November 29 letter would provide a premium to Citadels
shareholders, with the majority of the consideration being paid in the form of cash. Pursuant to
the transaction each Citadel shareholder could elect to receive cash in lieu of shares of Cumulus
stock, subject to a cap on the aggregate cash consideration of $1 billion. The transaction would
be structured to deliver $31.00 in value per Citadel share (and warrant), representing an
approximate 16% premium to Citadels volume weighted average price for the twenty trading days
preceding the proposal. If every Citadel shareholder would elect the cash option in full, with
pro-ration, approximately $22.16 in cash would be paid per Citadel share, and an additional $8.84
in value per Citadel share would be delivered to Citadel shareholders in shares of Cumulus stock.
Thus, each shareholder will receive a minimum of over 71% of the consideration in cash, and
depending on the stock elections of shareholders, some may receive substantially more in cash. In
summary, our proposal would deliver $2.1 billion in enterprise value for Citadel.
As we pointed out in our November 29 letter, the premium cited above does not reflect the
benefits of synergies resulting from the combination that would provide additional value to
Citadels shareholders. In the transaction, these synergies would be shared over time, on a pro
rata basis to equity ownership, with Citadels shareholders. They include station-level
synergies, overlap markets, national network expansion, corporate overhead reduction, and
increased scale.
No Further Impediments
In our November 29 letter, we urged Citadel to not complete a refinancing that:
[M]aterially reduces the benefits to [the Citadel shareholders] that would be delivered to them
in [the proposed merger].
Notwithstanding this caution, Citadel completed a note issue that requires a $31 million
make whole payment upon a refinancing of the notes in conjunction with a merger like the one
proposed by Cumulus. We are presently considering the effect on our proposal of this
incremental cost of approximately $0.65 per Citadel share.
We also note that the leverage ratio comprising the debt incurrence covenant was lowered from
5.5x in the preliminary offering memorandum used to market the notes to 4.5x under the final
terms. Before this change was made you had been informed, in our correspondence, of our
projected pro forma leverage for the combined companies of approximately 5.0x.
As a separate matter, after you were provided our proposal, the note offering terms were also
altered to expand the definition of Change of Control (which requires a mandatory offer to
repurchase the notes at a premium) to include the entry by Citadel into any merger agreement
within one year of the issuance of the notes, if upon completion Citadel or the other company
surviving the merger would have a leverage ratio greater than 3.75x. This unusual definition for
Change of Control does not require any particular minimum level of change in share ownership.
We request that no further actions be taken by Citadel that would impede our proposed transaction
until it is fully vetted.
Proposed Next Steps
To address the concerns of the Citadel shareholders, we request that we commence a process that
best serves the interests of your constituents. To begin, Citadel would provide Cumulus with
certain business and financial information of Citadel, subject to a confidentiality agreement.
This information will assist Cumulus in addressing the effect upon its proposal of the extra
notes-related cost recited above, and also to evaluate combination synergies more particularly.
It will allow Cumulus to consider if its offer can be altered to make it even more attractive to
Citadel shareholders. In addition, our financial advisors would be available to discuss the
merits of the transaction, and to address questions and be available to engage with your
financial advisors at their earliest convenience.
These initial steps would not constitute an acknowledgment by Citadel as to the sufficiency of
our proposal as it currently stands. They will, however, allow us to begin a process that will
potentially deliver to them superior value, including substantial liquidity, in conformity with
your fiduciary duties.
Until a definitive merger agreement is executed, neither party will have any obligation
with respect to the proposed transaction and, following the execution of such a merger
agreement, each partys only obligations would be set forth therein.
We look forward to hearing from you soon and to working together to deliver liquidity and value
for all Citadel shareholders.
Sincerely,
Lewis W. Dickey, Jr.
Chairman and Chief Executive Officer
#########
About Cumulus Media Inc.
Cumulus Media Inc. is the second largest radio broadcaster in the United States based on station
count, controlling approximately 345 radio stations in 67 U.S. media markets. In combination
with its affiliate, Cumulus Media Partners, LLC, the Company believes it is the fourth largest
radio broadcast company in the United States when based on net revenues. The Companys
headquarters are in Atlanta, Georgia, and its web site is www.cumulus.com.
This press release is provided for informational purposes only and is neither an offer to
purchase nor a solicitation of an offer to sell shares of Citadel or Cumulus Media Inc. Subject
to future developments, Cumulus Media may file a registration statement and/or tender offer
documents with the Securities and Exchange Commission (the SEC) in connection with the
proposed business combination. INVESTORS ARE URGED TO READ THOSE FILINGS, AND ANY OTHER FILINGS
MADE BY CUMULUS MEDIA WITH THE SEC IN CONNECTION WITH THE PROPOSED BUSINESS COMBINATION, WHEN THEY
BECOME AVAILABLE AS THEY WILL CONTAIN IMPORTANT INFORMATION ABOUT THE PROPOSED BUSINESS
COMBINATION. Those documents, if and when filed, as well as Cumulus Medias other public
filings with the SEC may be obtained without charge at the SECs website at
www.sec.gov and at Cumulus Medias website at www.cumulus.com.
Forward-Looking Statements
This press release contains forward-looking statements regarding the potential
combination of Cumulus Media and Citadel, expected future earnings, revenues, cost savings,
operations, business trends and other such items, which are based on current expectations and
estimates or assumptions. These forward-looking statements involve risks and uncertainties that
could cause actual results to differ materially from those predicted in any such forward-looking
statements. Such factors, include, but are not limited to, the possibility that the transaction
will not be pursued or consummated, failure to obtain necessary regulatory approvals or required
financing or to satisfy any other conditions to the business combination, failure to complete
the business combination, failure to realize the expected benefits of the business combination,
negative effects of the announcement or consummation of the business combination on the market
price of Cumulus Medias common stock, significant transaction costs and/or unknown liabilities
and general economic and business conditions that affect the combined companies following the
combination. For additional information regarding risks and uncertainties associated with
Cumulus Media, see Cumulus Medias filings with the SEC, including its Form 10-K for the year
ended December 31, 2009 and subsequently filed periodic reports. Cumulus Media assumes no
responsibility to update the forward-looking statements contained in this release as a result of
new information, future events or otherwise.
Contacts
Cumulus Media Inc.
J.P. Hannan, 404-260-6671
Senior Vice President, Treasurer, & Chief Financial Officer
jp.hannan@cumulus.com
J.P. Hannan, 404-260-6671
Senior Vice President, Treasurer, & Chief Financial Officer
jp.hannan@cumulus.com