(Adds names of nominees, quote from R2 portfolio manager.)
By Joseph Checkler
Of DOW JONES DAILY BANKRUPTCY REVIEW
Hedge-fund manager R2 Investments LDC said Tuesday it will
nominate two directors to Citadel Broadcasting Corp.'s (CDELB)
board of directors, as the investor continues to push Citadel
toward a sale to rival Cumulus Media Inc. (CMLS), the
second-largest owner of radio stations in the U.S.
R2 said in a press release that it sent Citadel a written
request for the documents it needs in order to nominate two
directors.
"R2 continues to be frustrated by the lack of meaningful
response by the company to numerous shareholder requests regarding
a potential business combination with Cumulus," R2 said in the
statement. It said that if elected, it hopes its two board members
will "help provide the board with necessary direction."
The two board nominees will be Anthony J. Bolland and Eugene I.
Davis, R2 told Dow Jones Newswires. Bolland is a co-founder of BV
Investment Partners, the successor firm of Boston Ventures
Management LLP. Davis is chief executive of Pirinate Consulting
Group LLC, and has served on many boards, including ION Media
Networks Inc. and Granite Broadcasting Corp. (GRRP).
A spokesman for Citadel didn't respond to a request for comment
Tuesday. A Cumulus spokesman said the company isn't commenting.
R2, a former Citadel bondholder that became a large equity
holder after the company's June 2010 exit from bankruptcy, in
December sent a scathing letter to Citadel's board, saying Citadel
should look into a buyout offer that Cumulus made public a few days
earlier.
At that time, Citadel said that it "carefully considered" with
its financial advisers the $31 per-share offer from Cumulus but
said it was too low a bid and wasn't a "credible" offer. Citadel
also cited Cumulus's "highly leveraged balance sheet." The company
said it thinks its current plan will generate shareholder value and
cited a recent debt refinancing.
R2 portfolio manager Scott McCarty told Dow Jones that the firm
considers itself a long-term investor in Citadel.
"We are not going to go away," McCarty said. "We will do this
each and every year until shareholders are in control and satisfied
that there has been significant change."
Dallas-based R2, a hedge fund run by Geoffrey Raynor's Q
Investments, has been grappling with Citadel for months. Citadel,
the third-largest radio-station owner in the country, in November
altered some stock awards to its executives after R2 complained
that they should have been receiving options. Judge Burton R.
Lifland of U.S. Bankruptcy Court in Manhattan called the two sides
into chambers, and Citadel later changed the awards.
Citadel, which operates 224 U.S. radio stations, filed for
Chapter 11 protection in December 2009 because of heavy debt and
plummeting advertising revenue. It emerged from bankruptcy on June
3 under the ownership of its lenders led by J.P. Morgan Chase &
Co. but with much of its top leadership intact, including Chief
Executive Farid Suleman.
(Dow Jones Daily Bankruptcy Review covers news about distressed
companies and those under bankruptcy protection.)
-By Joseph Checkler; Dow Jones Newswires; 212-416-2152;
joseph.checkler@dowjones.com