If you’re a news/talk addict, you are likely aware that it is a fundamental principle of “News” that if you have bad news, you announce it on Friday, preferably too late for the evening News shows. Nobody pays attention to the news on the weekends, and by Monday that “bad news” is “stale news”.
Citadel made a very important announcement on Friday about their future. For the “rest of 2009”, they won’t be talking to stock analysts. This coincided with their release of their 10-Q quarterly filing with the SEC which they are required to continue to do.
Buried down in the 10-Q is the statement that it is improbable that Citadel is going to meet the month-to-month targets set by their lenders (to whom they owe $2 billion). As such, they have moved the $2 billion in debt from a long term liability to a short term liability. By doing this, they have conceded they are likely to fail and the banks are going to take them over. Canceling the routine earnings call further confirms that management has surrendered to the inevitable.
I’ve cobbled together a company profile [here]. While it is always possible that a “White Knight” could swoop in at the last moment, given the current environment in the economy, that is extremely improbable. At the outside limits, Citadel might survive until the end of May when their next goal is due.
Paging Tim Geithner. Your Toxic Asset is ready.
If/when Citadel formally goes under, that will put additional pressure on the credit risk ratings of other highly leveraged Radio Companies with large debt – Clear Channel specifically comes to mind. Rush and Sean have much bigger issues in their future than a little fairness doctrine.