NEW YORK — The stock of Citadel Communications Corp. fell nearly 5% Wednesday following the radio broadcaster’s announcement that it has filed to offer 10 million shares of common stock.
The secondary offering will consist of 5 million new shares to be sold by the company and 5 million existing shares to be sold by certain stockholders.
Citadel has yet to identify the selling shareholders, although in a separate announcement Wednesday, it said Ike Kalangis will replace Scott Smith as a board member. Smith, a partner in Baker, Fentress & Co., resigned the board after his investment firm’s recently announced decision to liquidate its portfolio of securities. That portfolio includes 1.8 million Citadel shares, at least some of which are expected to wind up in Citadel’s secondary offering.
New Citadel director Kalangis, 62, is a past chairman, president and CEO of Boatmen’s Sunwest, a bank holding company that’s now part of Bank of America.
Marked for redemption
As for proceeds from its new shares, Citadel said a portion has been earmarked for the redemption of 35% of the exchangeable preferred stock issued by its Citadel Broadcasting subsidiary. The remainder will be used to fund acquisitions and for general corporate purposes.
Citadel was described in a recent report by Lehman Brothers as “an aggressive mid-market radio consolidator with a portfolio of dominant radio clusters.”
In 22 markets
Including pending acquisitions, that portfolio consists of 83 FM and 35 AM radio stations concentrated in 22 markets.
Citadel stock, which has traded between $14.88 and $37.75 over the past year, closed Wednesday at $29 a share.
The offering underwriters are Credit Suisse First Boston; Prudential Securities; Salomon Smith Barney; Bear, Stearns & Co. Inc.; BT Alex. Brown; Donaldson, Lufkin & Jenrette; Goldman, Sachs & Co.; Lehman Brothers; Merrill Lynch & Co.; BancBoston Robertson Stephens; First Union Capital Markets Corp.; and Thomas Weisel Partners LLC.