LONG-TERM DEBT

9 Months Ended

Sep. 30, 2012

Debt Disclosure [Abstract]

Debt Disclosure [Text Block]

9.  LONG-TERM DEBT:

Long-term debt consists of the following:

	September 30, 2012		December 31, 2011
	(Unaudited)
	(In thousands)
Senior bank term debt	$	378,256	$	383,105
6⅜% Senior Subordinated Notes due February 2013		747		747
12½%/15% Senior Subordinated Notes due May 2016		327,034		312,800
10% Senior Secured TV One Notes due March 2016		119,000		119,000
Total debt		825,037		815,652
Less: current portion		4,587		3,860
Less: original issue discount		5,717		6,748
Long-term debt, net	$	814,733	$	805,044

Credit Facilities

March 2011 Refinancing Transaction

On March 31, 2011, the Company entered into a new senior secured credit facility (the “2011 Credit Agreement”) with a syndicate of banks, and simultaneously borrowed $386.0 million to retire all outstanding obligations under the Company’s previous amended and restated credit agreement and to fund our obligation with respect to a capital call initiated by TV One.  The total amount available under the 2011 Credit Agreement is $411.0 million, consisting of a $386.0 million term loan facility that matures on March 31, 2016 and a $25.0 million revolving loan facility that matures on March 31, 2015. Borrowings under the credit facilities are subject to compliance with certain covenants including, but not limited to, certain financial covenants. Proceeds from the credit facilities can be used for working capital, capital expenditures made in the ordinary course of business, its common stock repurchase program, permitted direct and indirect investments and other lawful corporate purposes.

The 2011 Credit Agreement contains affirmative and negative covenants that the Company is required to comply with, including:

(a) maintaining an interest coverage ratio of no less than:

§	1.25 to 1.00 on June 30, 2011 and the last day of each fiscal quarter through September 30, 2015; and
§	1.50 to 1.00 on December 31, 2015 and the last day of each fiscal quarter thereafter.

(b)   maintaining a senior secured leverage ratio of no greater than:

§	5.25 to 1.00 on June 30, 2011;
§	5.00 to 1.00 on September 30, 2011 and December 31, 2011;
§	4.75 to 1.00 on March 31, 2012;
§	4.50 to 1.00 on June 30, 2012, September 30, 2012 and December 31, 2012;
§	4.00 to 1.00 on March 31, 2013 and the last day of each fiscal quarter through September 30, 2013;
§	3.75 to 1.00 on December 31, 2013 and the last day of each fiscal quarter through September 30, 2014;
§	3.25 to 1.00 on December 31, 2014 and the last day of each fiscal quarter through September 30, 2015; and
§	2.75 to 1.00 on December 31, 2015 and the last day of each fiscal quarter thereafter.

(c)   maintaining a total leverage ratio of no greater than:

§	9.25 to 1.00 on June 30, 2011 and the last day of each fiscal quarter through December 31, 2011;
§	9.00 to 1.00 on March 31, 2012;
§	8.75 to 1.00 on June 30, 2012;
§	8.50 to 1.00 on September 30, 2012 and December 31, 2012;
§	8.00 to 1.00 on March 31, 2013 and the last day of each fiscal quarter through September 30, 2013;
§	7.50 to 1.00 on December 31, 2013 and the last day of each fiscal quarter through September 30, 2014;
§	6.50 to 1.00 on December 31, 2014 and the last day of each fiscal quarter through September 30, 2015; and
§	6.00 to 1.00 on December 31, 2015 and the last day of each fiscal quarter thereafter.

 (d) limitations on:

§	liens;
§	sale of assets;
§	payment of dividends; and
§	mergers.

As of September 30, 2012, ratios calculated in accordance with the 2011 Credit Agreement, are as follows:

	As of September 30, 2012			Covenant Limit			Excess Coverage
Pro Forma Last Twelve Months Covenant EBITDA (In millions)	$	86.1
Pro Forma Last Twelve Months Interest Expense (In millions)	$	57.8
Senior Debt (In millions)	$	355.2
Total Debt (In millions)	$	682.9
Senior Secured Leverage
Senior Secured Debt / Covenant EBITDA		4.12	x		4.50	x		0.38	x
Total Leverage
Total Debt / Covenant EBITDA		7.93	x		8.50	x		0.57	x
Interest Coverage
Covenant EBITDA / Interest Expense		1.49	x		1.25	x		0.24	x
EBITDA - Earnings before interest, taxes, depreciation and amortization

In accordance with the 2011 Credit Agreement, the calculations for the ratios above do not include the operating results and related debt of Reach Media and TV One.

As of September 30, 2012, the Company was in compliance with all of its financial covenants under the 2011 Credit Agreement.  

Under the terms of the 2011 Credit Agreement, interest on base rate loans is payable quarterly and interest on LIBOR loans is payable monthly or quarterly. The base rate is equal to the greater of (i) the prime rate, (ii) the Federal Funds Effective Rate plus 0.50% or (iii) the LIBOR Rate for a one-month period plus 1.00%.  The applicable margin on the 2011 Credit Agreement is between (i) 4.50% and 5.50% on the revolving portion of the facility and (ii) 5.00% (with a base rate floor of 2.5% per annum) and 6.00% (with a LIBOR floor of 1.5% per annum) on the term portion of the facility. Commencing on June 30, 2011, quarterly installments of 0.25%, or $960,000, of the principal balance on the term loan are payable on the last day of each March, June, September and December.

As of September 30, 2012, the Company had approximately $23.9 million of borrowing capacity under its revolving credit facility. After taking into consideration the financial covenants under the 2011 Credit Agreement, approximately $23.9 million was available to be borrowed.

As of September 30, 2012, the Company had outstanding approximately $378.3 million on its term credit facility. During the quarter ended September 30, 2012, the Company repaid its quarterly installment of approximately $1.0 million under the 2011 Credit Agreement. In addition, on April 13, 2012, the Company made an approximately $2.0 million term loan principal repayment based on its December 31, 2011 excess cash flow calculation according to the terms of the 2011 Credit Agreement. The original issue discount is being reflected as an adjustment to the carrying amount of the debt obligation and amortized to interest expense over the term of the credit facility.

Senior Subordinated Notes

Period after the March 2011 Refinancing Transaction

As of September 30, 2012, the Company had outstanding $747,000 of its 6³/₈% Senior Subordinated Notes due February 2013 and approximately $327.0 million of our 12¹/₂%/15% Senior Subordinated Notes due May 2016. The 12¹/₂%/15% Senior Subordinated Notes due May 2016 had a carrying value of approximately $327.0 million and a fair value of approximately $281.3 million as of September 30, 2012, and the 6³/₈% Senior Subordinated Notes due February 2013 had a carrying value of $747,000 and a fair value of $642,000 as of September 30, 2012. The fair values were determined based on the trading value of the instruments as of the reporting date.

Interest payments under the terms of the 6³/₈% Senior Subordinated Notes are due in February and August.  Based on the $747,000 principal balance of the 6³/₈% Senior Subordinated Notes outstanding on September 30, 2012, interest payments of $24,000 are payable each February and August through February 2013.

Interest on the 12¹/₂%/15% Senior Subordinated Notes is payable in cash, or at our election, partially in cash and partially through the issuance of additional 12¹/₂%/15% Senior Subordinated Notes (a “PIK Election”) on a quarterly basis in arrears on February 15, May 15, August 15 and November 15, commencing on February 15, 2011.  We made a PIK Election only with respect to interest accruing up to but not including May 15, 2012, and with respect to interest accruing from and after May 15, 2012 such interest accrues at a rate of 12¹/₂% and is payable in cash.

Interest on the Exchange Notes will accrue from the date of original issuance or, if interest has already been paid, from the date it was most recently paid.  Interest will accrue for each quarterly period at a rate of 12¹/₂% if the interest for such quarterly period is paid fully in cash.  In the event of a PIK Election, including the PIK Election that was in effect through May 15, 2012, the interest paid in cash and the interest paid-in-kind by issuance of additional Exchange Notes (“PIK Notes”) accrued for such quarterly period at 6.0% cash per annum and 9.0% PIK per annum.

In the absence of an election for any interest period, interest on the Exchange Notes shall be payable according to the election for the previous interest period, provided that interest accruing from and after May 15, 2012 shall accrue at a rate of 12¹/₂% and shall be payable in cash. A PIK Election remained in effect through May 15, 2012. After May 15, 2012, interest accrues at a rate of 12¹/₂% and is payable wholly in cash and the Company no longer has an option to pay any portion of its interest through the issuance of PIK Notes.

During the quarter ended September 30, 2012, the Company paid cash interest in the amount of approximately $21.0 million. During the nine months ended September 30, 2012, the Company paid cash interest in the amount of approximately $52.0 million and issued approximately $14.2 million of additional 12¹/₂%/15% Senior Subordinated Notes in accordance with the PIK Election that was in effect through May 15, 2012.

The indentures governing the Company’s 12¹/₂%/15% Senior Subordinated Notes also contain covenants that restrict, among other things, the ability of the Company to incur additional debt, purchase common stock, make capital expenditures, make investments or other restricted payments, swap or sell assets, engage in transactions with related parties, secure non-senior debt with assets, or merge, consolidate or sell all or substantially all of its assets.

The Company conducts a portion of its business through its subsidiaries. Certain of the Company’s subsidiaries have fully and unconditionally guaranteed the Company’s 12¹/₂%/15% Senior Subordinated Notes, the 6³/₈% Senior Subordinated Notes and the Company’s obligations under the 2011 Credit Agreement.

Senior Secured Notes

      In connection with the Redemption Financing, TV One issued $119.0 million in senior secured notes on February 25, 2011. The notes were issued in connection with the repurchase of its equity interest from certain financial investors and TV One management. The notes bear interest at 10.0% per annum, which is payable monthly, and the entire principal amount is due on March 15, 2016.

Note Payable

In November 2009, Reach Media issued a $1.0 million, 7% promissory note in connection with the repurchase of certain of its common stock held by a minority shareholder, a subsidiary of Cumulus (formerly Citadel). The note was due and paid on December 30, 2011.