Citadel Broadcasting Prepares for Bankruptcy

Citadel Broadcasting, the third-largest radio broadcasting company in the United States, is preparing a prearranged bankruptcy filing. The Wall Street Journal and The New York Times reported that Citadel's proposal was presented to lenders this week and that major lenders JPMorgan Chase and General Electric's GE Capital are already supporting the plan.

Under the terms of the deal, Citadel would reduce its debt from $2 billion to $760 million, in exchange for handing over 99.5% of the equity in the reorganized company to its creditors. Lenders have until Tuesday to agree to the proposal, and Citadel plans to file for bankruptcy by the end of the year.

Citadel's financial problems resulted in part from its acquisition of Disney's ABC Radio stations in 2006. Another contributing factor was the death of radio legend Paul Harvey in Feb. 2009. Harvey's programs, syndicated by ABC Radio Networks, provided Citadel with steady income as it struggled with its increased debt load and declining advertising revenues.