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Filed pursuant to Rule 424(b)(3)
Registration No. 333-63778
PROSPECTUS
4,441,545 SHARES
SPANISH BROADCASTING SYSTEM, INC.
CLASS A COMMON STOCK
SBS LOGO
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Certain of the selling stockholders identified in this prospectus are
offering for sale from time to time under this prospectus up to an aggregate of
4,441,545 shares of our Class A Common Stock, which were originally issued to
the selling stockholders as partial payment for the purchase of all of the
outstanding capital stock of Rodriguez Communications, Inc. and the purchase of
radio station KTCY-FM from New World Broadcasters Corp. The selling stockholders
may sell these shares from time to time on the over-the-counter market in
regular brokerage transactions. For additional information on the methods of
sale, you should refer to the section entitled "Plan of Distribution" on page 12
of this prospectus. We will not receive any portion of the proceeds from the
sale of these shares by the selling stockholders.
We are authorized to issue Class A Common Stock and Class B Common Stock.
The rights of each class are essentially identical, except that each share of
Class A Common Stock entitles its holder to one vote per share and each share of
Class B Common Stock entitles its holder to ten votes per share.
Our shares of Class A Common Stock are quoted on The Nasdaq Stock Market's
National Market under the symbol "SBSA". The shares of our Class A Common Stock
offered for the account of the selling stockholders will be offered at the
market price on the day of sale. On June 22, 2001, the last reported sale price
of our Class A Common Stock was $6.95 per share.
INVESTING IN OUR CLASS A COMMON STOCK INVOLVES RISKS. SEE "RISK FACTORS"
BEGINNING ON PAGE 5.
This is not an underwritten offering.
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR DETERMINED IF THIS
PROSPECTUS IS TRUTHFUL OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
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The date of this prospectus is July 13, 2001.
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TABLE OF CONTENTS
PAGE
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RISK FACTORS...........................................................5
USE OF PROCEEDS.......................................................10
SELLING STOCKHOLDERS..................................................11
PLAN OF DISTRIBUTION..................................................12
LEGAL MATTERS.........................................................13
EXPERTS...............................................................13
MATERIAL CHANGES......................................................13
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE.......................13
WHERE YOU CAN FIND MORE INFORMATION...................................14
- -- Spanish Broadcasting System, Inc., founded in 1983 and incorporated in the
State of Delaware in 1994, is the largest Hispanic-controlled radio
broadcasting company in the United States. Our principal executive offices
are located at 2601 South Bayshore Drive, PH II, Coconut Grove, Florida
33133 and our telephone number is (305) 441-6901.
- -- All references to "we", "us", "our", "SBS" or "our Company" in this
prospectus mean Spanish Broadcasting System, Inc., a Delaware corporation,
and all entities owned or controlled by Spanish Broadcasting System, Inc.
- -- You should read the entire prospectus before making an investment decision.
The information in this prospectus may not contain all of the information
that may be important to you.
- -- We operate a Website at www.lamusica.com. The information on our Website is
not part of this prospectus.
- -- All references to "FCC" in this prospectus refer to the Federal
Communications Commission.
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RISK FACTORS
You should carefully consider the following factors and other information in
this prospectus before deciding to invest in our shares of Class A Common Stock.
You should rely only on the information contained in this prospectus or to
which we have referred you. We have not authorized anyone to provide you with
different information. If anyone provides you with different or inconsistent
information, you should not rely on it. We are not making an offer to sell these
securities in any jurisdiction where the offer or sale is not permitted. The
information in this prospectus may only be accurate on the date of this
prospectus.
Sections of this prospectus contain forward-looking statements, including,
without limitation, statements concerning possible or assumed future results of
operations of SBS preceded by, followed by or that include the words "believes,"
"expects," "anticipates," "estimates," "intends," "plans" or similar
expressions. For those statements, we claim the protection of the safe harbor
for forward-looking statements contained in the U.S. Private Securities
Litigation Reform Act of 1995.
Forward-looking statements are not guarantees of future performance. They
involve risks, uncertainties and assumptions. You should understand that such
statements made in this section and elsewhere in this prospectus are subject to
a number of factors and uncertainties that could cause actual results to differ
materially from those described in such forward-looking statements.
SUBSTANTIAL DEBT -- OUR SUBSTANTIAL LEVEL OF DEBT COULD LIMIT OUR ABILITY TO
GROW AND COMPETE.
Our consolidated debt is substantial. As of March 25, 2001, we had
outstanding long term debt (including current portions) of approximately $304.6
million and a stockholders' equity of $313.5 million. After giving effect to the
closing of our Rule 144A offering of $100 million of 9 5/8% senior subordinated
notes due 2009 on June 8, 2001 and the repayment of our senior credit facility,
our long term debt as of June 8, 2001 is $339.6 million (including current
portions) before giving effect to the delayed draw special fee payment and
discount given in connection with the issuance of such notes. Giving effect to
the completion of the offering, our debt to last twelve months cash flow ratio
exceeds 7.0 to 1.0, and our ability to incur additional indebtedness under the
terms of the indenture relating to these notes and the indenture relating to the
$235 million of our 9 5/8% senior subordinated notes due 2009 that were issued
in 1999 has been reduced. Since we expect our cash flow in the third and fourth
quarters of fiscal 2001 to be less than for the comparable periods last year, we
believe that our debt to last twelve months cash flow ratio will continue to
increase during the third and fourth quarters of fiscal 2001 and could reach as
high as 9.3 to 1.0. As a result, we will be unable to incur additional debt
under the indentures other than for specifically identified occurrences,
including senior debt not to exceed $175 million.
Our substantial level of debt could have several important consequences to
the holders of our securities, including the following:
- a significant portion of our cash flow from operations will be dedicated
to servicing our debt obligations and will not be available for
operations, future business opportunities or other purposes;
- our ability to obtain additional financing in the future for working
capital, capital expenditures, acquisitions, general corporate or other
purposes may be limited;
- our substantial debt could make us more vulnerable to economic
downturns, limit our ability to withstand competitive pressures and
reduce our flexibility in responding to changing business and economic
conditions; and
- our substantial debt could place us at a disadvantage compared to our
competitors that have less debt.
Our ability to satisfy all of our debt obligations depends upon our future
operating performance. Our operating performance will be affected by prevailing
economic conditions and financial, business and other factors, some of which are
beyond our control. We believe that our operating cash flow will be sufficient
to meet our operating expenses and to service our debt requirements as they
become due. However, if we are unable to pay our debts, whether upon
acceleration of our debt or in the ordinary course of business, we will be
forced to pursue alternative strategies such as selling assets, restructuring
our debt, or seeking additional equity capital. We cannot assure you that we can
successfully complete any of these strategies on satisfactory terms or that the
approval of the FCC could be obtained on a timely basis, or at all, for the
transfer of any of the stations' licenses in connection with a proposed sale of
assets.
ADDITIONAL BORROWINGS AVAILABLE -- DESPITE CURRENT INDEBTEDNESS LEVELS, WE AND
OUR SUBSIDIARIES MAY STILL BE ABLE TO INCUR SUBSTANTIALLY MORE DEBT. THIS COULD
FURTHER EXACERBATE THE RISKS DESCRIBED ABOVE.
We and our subsidiaries may be able to incur substantial additional
indebtedness in the future. Although the indentures relating to our 9 5/8%
senior subordinated notes due 2009 restrict our ability to incur additional debt
if our debt to last twelve months cash flow ratio exceeds 7.0 to 1.0, which is
currently the case, the terms of the indentures do not fully prohibit us or our
subsidiaries from incurring certain additional indebtedness and permit us, under
the more restrictive of the indentures, to incur up to $175 million of
additional indebtedness. If we or our subsidiaries incur additional debt, the
related risks that we and our subsidiaries face could intensify.
INDEBTEDNESS MAY BE ACCELERATED -- IF ANY LENDER TO US OR OUR SUBSIDIARIES
ACCELERATES ANY DEBT, WE AND OUR SUBSIDIARIES MAY NOT HAVE THE RESOURCES TO
REPAY THAT DEBT. AN EVENT OF DEFAULT UNDER ANY MATERIAL DEBT INSTRUMENTS WOULD
HARM OUR BUSINESS AND FINANCIAL CONDITION.
If there were an event of default under our or our subsidiaries'
indebtedness, the holders of the affected indebtedness could elect to declare
all of that indebtedness to be due and payable immediately, which in turn, could
cause all of our or our subsidiaries' other indebtedness to become due and
payable. We cannot assure you that we or our subsidiaries would have sufficient
funds available, or that we or our subsidiaries would have access to sufficient
capital from other sources, to repay the accelerated debt. Even if we or our
subsidiaries could obtain additional financing, we cannot assure you that the
terms would be favorable to us. Assuming that we enter into a new credit
facility, if the amounts outstanding under our indebtedness were accelerated,
we would expect our lenders to have the right to foreclose on their liens on
substantially all of our and our subsidiaries' assets, and on the stock of our
subsidiaries. As a result, any event of default could have a material adverse
effect on our business and financial condition.
RESTRICTIONS IMPOSED BY OUR DEBT -- THE TERMS OF OUR DEBT RESTRICT US FROM
ENGAGING IN MANY ACTIVITIES, REQUIRE US TO SATISFY VARIOUS FINANCIAL TESTS
AND MAY ADVERSELY AFFECT OUR BUSINESS BY LIMITING OUR FLEXIBILITY.
Indentures
The indentures governing our 9 5/8% senior subordinated notes due 2009
contain covenants that restrict, among other things, our ability to:
- incur additional debt;
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- create liens;
- pay dividends, distributions or make other specified restricted
payments;
- sell assets;
- enter into transactions with affiliates;
- sell capital stock of our subsidiaries; and
- merge or consolidate with any other person or sell, assign, transfer,
lease, convey or otherwise dispose of all or substantially all of our
assets.
If an event of default occurs under the indentures, the noteholders could
elect to declare all amounts outstanding under the indentures, together with
accrued interest, to be immediately due and payable. In addition, there is a
change of control provision in the indentures which would require us to make an
offer to repurchase all of our notes in the event that we experience a change of
control.
Senior Credit Facility
We used $66.2 million of the proceeds from our Rule 144A offering of $100
million of 9 5/8% senior subordinated notes due 2009, which closed on June 8,
2001, to pay the outstanding indebtedness under our senior credit facility and
we terminated that facility.
We are currently discussing a new revolving credit facility in the amount
of approximately $15 million with potential lenders. We expect that the
revolving credit facility will contain customary terms and covenants which may
be more restrictive than our senior subordinated debt.
HISTORY OF NET LOSSES -- WE HAVE EXPERIENCED NET LOSSES IN THE PAST AND TO
THE EXTENT THAT WE EXPERIENCE LOSSES IN THE FUTURE, THE MARKET PRICES OF OUR
SECURITIES, INCLUDING OUR COMMON STOCK, AND OUR ABILITY TO RAISE CAPITAL COULD
BE ADVERSELY AFFECTED.
We experienced a net loss in fiscal year 2000. The primary reasons for this
loss were an extraordinary loss on the early extinguishment of debt, net of
income taxes, and a non-recurring severance payment related to the purchase of
an annuity for two of our retired executives. We also experienced a net loss
for the six-month period ended March 25, 2001. The primary reasons for this
loss were the inclusion of revenues generated and operating expenses incurred
by the stations acquired in the year 2000. Operating expenses at these
stations outpaced revenues as we incurred additional expenses in order to
establish and promote our presence. These factors, combined with a decline in
same station operating results due generally to lower advertising demand, all
contributed to the net loss.
If we acquire additional stations, amortization related to the acquisition
of radio stations will probably increase. Moreover, depending on the financing
used to fund these acquisitions, interest expense may increase.
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We cannot assure you that we will achieve profitability. Failure to achieve
profitability may adversely affect the market price of our common stock, which
in turn may adversely affect our ability to raise additional equity capital and
to incur additional debt.
IMPORTANCE OF THE NEW YORK AND MIAMI MARKETS -- A LARGE PORTION OF OUR NET
BROADCAST REVENUE AND BROADCAST CASH FLOW CURRENTLY COMES FROM THESE MARKETS.
Based upon the stations we owned and operated as of March 25, 2001, our
radio stations in New York and Miami collectively accounted for 56.5% of our net
broadcast revenue and for 82.2% of our broadcast cash flow for the six-month
period ended March 25, 2001, excluding profits from a barter agreement with
America Online, Inc. A significant decline in net broadcast revenue or broadcast
cash flow from our stations in either of these markets could have a material
adverse effect on our financial position and results of operations.
DEPENDENCE ON KEY PERSONNEL -- LOSS OF KEY PERSONNEL COULD ADVERSELY AFFECT OUR
BUSINESS.
Our business depends upon the efforts, abilities and expertise of our
executive officers and other key employees, including Raul Alarcon, Jr., our
Chairman of the Board of Directors, Chief Executive Officer and President. The
loss of any of these officers and key employees could have a material adverse
effect on our business. We do not maintain key man life insurance on any of our
personnel.
INDEPENDENT DIRECTOR -- WE HAVE ONLY ONE INDEPENDENT DIRECTOR.
We currently have only one independent director on our board of directors
due to the resignation of a director on May 7, 2001. Under current Nasdaq Stock
Market rules, we were required to have three independent directors serving on
the audit committee of our board of directors no later than June 14, 2001. We
have been granted an extension from Nasdaq, which gives us until August 15,
2001 to be in compliance with the audit committee requirements. If we are
unable to appoint two additional independent directors to serve on our board of
directors and the audit committee by August 15, 2001, we may be at risk of
having our securities delisted from the Nasdaq Stock Market's National Market.
In addition, until we appoint additional independent directors to our board of
directors, our one independent director will entirely control the approval of
certain actions or transactions (such as certain transactions with affiliates)
that require the approval of independent directors under applicable corporate
law, the rules and regulations of the Nasdaq Stock Market, and the terms of the
indentures relating to our 9 5/8% senior subordinated notes due 2009. Although
we are in active discussions with individuals concerning their willingness to
serve on our board of directors, there can be no assurance as to when we will
be able to appoint suitable independent directors to our board of directors.
COMPETITION -- WE COMPETE FOR ADVERTISING REVENUE WITH OTHER RADIO GROUPS AS
WELL AS TELEVISION AND OTHER MEDIA, MANY OPERATORS OF WHICH HAVE GREATER
RESOURCES THAN WE DO.
Broadcasting is a highly competitive business. Our radio stations compete in
their respective markets for audiences and advertising revenues with other radio
stations of all formats, as well as with other media, such as newspapers,
magazines, television, cable television, outdoor advertising, the Internet and
direct mail. As a result of this competition, our stations' audience ratings and
market shares may decline and any adverse change in a particular market could
have a material adverse effect on the revenue of our stations located in that
market.
Although we believe that each of our stations is able to compete effectively
in its respective market, we cannot assure you that any station will be able to
maintain or increase its current audience ratings and advertising revenues.
Radio stations can change formats quickly. Any other radio station currently
broadcasting could shift its format to duplicate the format of any of our
stations. If a station converts its programming to a format similar to that of
one of our stations, or if one of our competitors strengthens its operations,
the ratings and broadcast cash flow of our station in that market could be
adversely affected. In addition, other radio companies which are larger and have
more resources may also enter markets in which we operate.
RISKS OF ACQUISITION STRATEGY -- OUR GROWTH DEPENDS ON SUCCESSFULLY EXECUTING
OUR ACQUISITION STRATEGY.
We have grown and intend to continue to grow by acquiring radio stations
primarily in the largest U.S. Hispanic markets. We cannot assure you that our
acquisition strategy will be successful. Our acquisition strategy is subject to
a number of risks, including, but not limited to:
- acquired stations may not increase our broadcast cash flow or yield
other anticipated benefits;
- required regulatory approvals may result in unanticipated delays in
completing acquisitions;
- we may have difficulty managing our rapid growth; and
- we may be required to raise additional financing and our ability to do
so is limited by the terms of our debt instruments.
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ADDITIONAL LOS ANGELES STATION -- WE WILL INCUR START-UP COSTS IN CONNECTION
WITH OUR TIME BROKERAGE AGREEMENT FOR KFSG-FM (OPERATING UNDER THE CALL LETTERS
KXOL-FM) AND OUR ABILITY TO FINANCE THE ACQUISITION OF THE STATION MAY BE
LIMITED.
On April 30, 2001, we commenced broadcasting our programming on radio
station KFSG-FM in Los Angeles, California (operating under the call letters
KXOL-FM) under a time brokerage agreement with the International Church of the
FourSquare Gospel ("ICFG"). We will incur start-up costs in connection with our
time brokerage agreement and we may not generate any significant revenues until
the fourth quarter of fiscal 2001. The time brokerage agreement expires in March
2002 and our right to acquire KFSG-FM also expires at such time. We can extend
the time brokerage agreement and our right to close under the asset purchase
agreement for KFSG-FM until December 2002 by making a payment to ICFG of $35
million in March 2002. Our ability to finance the acquisition of KFSG-FM through
additional debt offerings will be limited by the terms of our indentures. We may
have to raise the funds to consummate the KFSG-FM transaction through asset
sales, equity offerings, additional debt and internally generated cash. There is
no assurance that we will be able to raise sufficient funds to consummate the
acquisition of KFSG-FM. If we fail to make the $35 million payment to extend the
time brokerage agreement, or if we extend the time brokerage agreement by making
the $35 million payment in March 2002, and are then unable to finance the
balance of the purchase price for KFSG-FM, we will have lost the business
opportunity and the monies paid under the time brokerage agreement.
CONTROLLING STOCKHOLDER -- OUR CHAIRMAN, CEO AND PRESIDENT HAS MAJORITY CONTROL.
Raul Alarcon, Jr., our Chairman of the Board of Directors, Chief Executive
Officer and President, owns shares of Class B Common Stock having approximately
83% of the combined voting power of our outstanding shares of common stock, as
of the date of this prospectus. Accordingly, Mr. Alarcon, Jr. has the ability to
elect all of our directors and can effectively control our policies and affairs.
This control may discourage certain types of transactions involving an actual or
potential change of control of SBS such as a merger or sale of SBS.
TECHNOLOGY CHANGES, NEW SERVICES AND EVOLVING STANDARDS -- WE MUST BE ABLE TO
RESPOND TO RAPIDLY CHANGING TECHNOLOGY, SERVICES AND STANDARDS WHICH
CHARACTERIZE OUR INDUSTRY IN ORDER TO REMAIN COMPETITIVE.
The FCC is considering ways to introduce new technologies to the radio
broadcast industry, including satellite and terrestrial delivery of digital
audio broadcasting, and the standardization of available technologies which
significantly enhance the sound quality of AM and FM broadcasts. We cannot
predict the effect new technology of this nature will have on our financial
condition and the results of our operations. Several new media technologies are
being developed, including the following:
- cable television operators have introduced a service commonly referred
to as "cable radio" which provides cable television subscribers with
several high-quality channels of music, news and other information;
- the Internet is poised to offer new and diverse forms of program
distribution;
- direct satellite broadcast television companies are supplying
subscribers with several high quality music channels;
- the introduction of satellite digital audio radio technology could
result in new satellite radio services with sound quality equivalent to
that of compact discs; and
- the introduction of in-band on-channel digital radio could provide
multi-channel, multi-format digital radio services in the same bandwidth
currently occupied by traditional AM and FM radio services.
GOVERNMENT REGULATION -- OUR BUSINESS DEPENDS ON MAINTAINING OUR FCC LICENSES.
WE CANNOT ASSURE YOU THAT WE WILL BE ABLE TO MAINTAIN THESE LICENSES.
The domestic broadcasting industry is subject to extensive federal
regulation which, among other things, requires approval by the FCC for the
issuance, renewal, transfer and assignment of broadcasting station operating
licenses and limits the number of broadcasting properties we may acquire.
Federal regulations create significant new opportunities for broadcasting
companies but also create uncertainties as to how these regulations will be
interpreted and enforced by the courts.
Our success depends in part on acquiring and maintaining broadcast licenses
issued by the FCC, which are typically issued for a maximum term of eight years
and are subject to renewal. While we believe that the FCC will approve
applications for renewal of our existing broadcasting licenses when made, we
cannot guarantee that pending or future renewal applications submitted by us
will be approved, or that renewals will not include conditions or qualifications
that could adversely affect our operations. Although we may apply to renew our
FCC licenses, interested third parties may challenge our renewal applications.
In addition, if we or any of our officers, directors or significant
stockholders violate the FCC's rules and regulations or the Communications Act
of 1934, or are convicted of a felony, the FCC may commence a proceeding to
impose sanctions upon us. Examples of possible sanctions include the imposition
of fines; the revocation of our broadcast licenses; or the renewal of one or
more of our broadcasting licenses for a term of fewer than eight years. If the
FCC were to issue an order denying a license renewal application or revoking a
license, we would be required to cease operating the radio station covered by
the license only after we had exhausted administrative and judicial review
without success.
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The radio broadcasting industry is subject to extensive and changing federal
regulation. Among other things, the Communications Act and FCC rules and
policies limit the number of broadcasting properties that any person or entity
may own (directly or by attribution) in any market and require FCC approval for
transfers of control and assignments. The filing of petitions or complaints
against us or any FCC licensee from which we acquire a station could result in
the FCC delaying the grant of, or refusing to grant or imposing conditions on
its consent to the assignment or transfer of licenses. The Communications Act
and FCC rules also impose limitations on non-U.S. ownership and voting of our
capital stock.
Moreover, governmental regulations and policies may change over time and we
cannot assure you that those changes would not have a material impact upon our
business, financial position or results of operations.
ANTITRUST MATTERS -- WE MAY FACE REGULATORY REVIEW FOR ADDITIONAL ACQUISITIONS
IN OUR EXISTING MARKETS AND, POTENTIALLY, NEW MARKETS.
An important part of our growth strategy is the acquisition of additional
radio stations. After the passage of the Telecommunications Act of 1996, the
U.S. Department of Justice has become more aggressive in reviewing proposed
acquisitions of radio stations and radio station networks. The Justice
Department is particularly concerned when the proposed buyer already owns three
or more radio stations in the market of the station it is seeking to buy.
Recently, the Justice Department has challenged a number of radio broadcasting
transactions. Some of those challenges ultimately resulted in consent decrees
requiring, among other things, divestitures of certain stations. In general, the
Justice Department has more closely scrutinized radio broadcasting acquisitions
that result in market shares in excess of 40% of local radio advertising
revenue. Similarly, the FCC reviews proposed radio broadcasting transactions
even if the proposed acquisition otherwise complies with the FCC's ownership
limitations. In particular, the FCC may invite public comment on proposed radio
transactions that the FCC believes, based on its initial analysis, may present
ownership concentration concerns in a particular local radio market.
RECESSION OR DOWNTURN IN THE ECONOMY -- NATIONAL OR REGIONAL RECESSIONS COULD
IMPAIR OUR REVENUES.
Our broadcasting revenues could be adversely affected by a recession or
downturn in the United States economy since advertising expenditures generally
decrease as the economy slows down. In addition, our operating results in
individual geographic markets could be adversely affected by local or regional
economic downturns. Our broadcasting revenues have been materially adversely
affected by past recessions. Future economic downturns might have a material
adverse effect on our ability to generate advertising revenue and might
materially and adversely affect our financial condition and operating results.
MARKET FLUCTUATION -- THE MARKET OF OUR SHARES OF CLASS A COMMON STOCK MAY
FLUCTUATE SIGNIFICANTLY.
The stock market in general has recently experienced extreme price
fluctuations, which has often been unrelated to the operating performance of the
affected companies. We believe that the principal factors that may cause price
fluctuations in our shares of Class A Common Stock are:
- fluctuations in our financial results;
- general conditions or developments in the radio industry, television and
other media, and the worldwide economy;
- sales of our common stock into the marketplace;
- a shortfall in revenue, gross margin, earnings or other financial
results from operations or changes in analysts' expectations; and
- developments in our relationships with our customers and suppliers.
We cannot assure you that the market price of our Class A Common Stock will
not experience significant fluctuations in the future, including fluctuations
that are adverse and unrelated to our performance.
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SHARES OF COMMON STOCK ELIGIBLE FOR CURRENT OR FUTURE SALE -- CURRENT OR FUTURE
SALES BY EXISTING STOCKHOLDERS COULD DEPRESS THE MARKET PRICE OF OUR CLASS A
COMMON STOCK.
The market price of our Class A Common Stock could drop as a result of sales
of a large number of shares of Class A Common Stock by our existing stockholders
in this offering or after this offering or of Class B Common Stock (convertible
into Class A Common Stock) after this offering, or the perception that these
sales may occur. These factors could make it more difficult for us to raise
funds through future offerings of our Class A Common Stock.
As of the date of this prospectus, there are 36,856,305 shares of Class A
Common Stock and 27,801,900 shares of Class B Common Stock outstanding. The
shares of Class A Common Stock sold in this offering will be freely tradeable
without restriction, subject to the lock-up letter agreements entered into by
the selling stockholders, except for any shares acquired by one of our
affiliates, which can be sold under Rule 144 of the Securities Act of 1933
subject to certain volume and other restrictions.
The price of our Class A Common Stock could also drop if we issue warrants
to purchase shares of our Class A Common Stock to ICFG pursuant to the terms of
the time brokerage agreements entered into with ICFG. Under those agreements, we
could issue warrants exercisable for up to a maximum of 3,430,951 shares of our
Class A Common Stock at an exercise price of $6.00 per share. If issued, the
warrants are exercisable for five years. The actual number of warrants, if any,
that we will issue is dependent on when ICFG terminates its time brokerage
agreement and when we either close the asset purchase agreement for the purchase
of radio station KFSG-FM or, in the alternative, terminate such agreement.
USE OF PROCEEDS
The proceeds from the sale of shares of our Class A Common Stock under this
prospectus are solely for the account of the selling stockholders. Accordingly,
we will not receive any proceeds from the sale of the shares being sold by the
selling stockholders under this prospectus.
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SELLING STOCKHOLDERS
The following table sets forth as of the date of this prospectus certain
information known to us with respect to the beneficial ownership of the shares
of Class A Common Stock being sold by each selling stockholder. The information
is based upon information provided by the selling stockholders, as of the date
of this prospectus and is not based upon our independent information. The
following table assumes that the selling stockholders will sell all of the
shares being offered for their account by this prospectus, which were issued to
them as partial payment for our acquisition of all of the outstanding capital
stock of Rodriguez Communications, Inc. and the acquisition of KTCY-FM and
related assets from New World Broadcasters Corp. pursuant to a stock purchase
agreement and an asset purchase agreement, respectively, each entered into by us
on or about May 8, 2000. However, we are unable to determine the exact number of
shares that actually will be sold.
The number and percentage of shares beneficially owned is based on
36,856,305 shares of Class A Common Stock issued and outstanding as of the
date of this prospectus, determined in accordance with Rule 13d-3 of the
Securities Exchange Act of 1934, and the information is not necessarily
indicative of beneficial ownership for any other purpose. Under such rule,
beneficial ownership includes any shares as to which the individual has sole or
shared voting power or investment power and also any shares which the individual
has the right to acquire within 60 days from the date of this prospectus through
the exercise of any stock option or other rights.
The following table sets forth with respect to each of the selling
stockholders (1) the number of shares of Class A Common Stock owned by that
selling stockholder prior to this offering, (2) the maximum number of shares of
Class A Common Stock to be sold by that selling stockholder in this offering,
(3) the number of shares of Class A Common Stock that the selling stockholder
will own after completion of this offering if the selling stockholder sells the
maximum number of shares and (4) the percentage of the total outstanding Class A
Common Stock that the selling stockholder will own after completion of this
offering if the selling stockholder sells the maximum number of shares. Upon
completion of this offering, the selling stockholders will own those shares of
Class A Common Stock which they do not sell in this offering. Unless indicated
below, each selling stockholder listed has sole voting and sole dispositive
power with respect to all shares beneficially owned, subject to community
property laws, if applicable.
Number of Shares Maximum Number of Number of Shares of Percentage of Class
of Class A Common Shares of Class A Class A Common Stock A Common Stock Owned
Stock Owned Prior Common Stock to be Owned After Completion Upon Completion of
Name of Selling Stockholder to This Offering Sold in This Offering of This Offering(1) This Offering(1)
--------------------------- ----------------- --------------------- --------------------- ------------------
James L. Anderson(2)(3).................. 193,189(2) 193,189(2) -- --
BlueStone Capital Partners, L.P.......... 70,459 70,459 -- --
Charles J. Brooks(4)..................... 20,877 20,877 -- --
James A. Gammon(5)....................... 142,062 142,062 -- --
The Elias and Miriam Liberman Trust...... 306,722 306,722 -- --
The Julio and Ida Liberman Trust......... 310,543 310,543 -- --
The Liberman Irrevocable Trust........... 270,000 270,000 -- --
Marcos A. Rodriguez(6)................... 32,952 32,952 -- --
The Marcos and Sonya Rodriguez
Family Trust(2)(7)..................... 3,011,234(2) 3,011,234(2) -- --
Rodriquez Communications, L.P............ 83,507 83,507 -- --
Total........................... 4,441,545 4,441,545 -- --
========= =========
- -----------------
(1) Assumes the maximum number of shares registered in this offering is sold.
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(2) James L. Anderson is Trustee of the Marcos and Sonya Rodriguez Family Trust
(the "Trust") and as such he has voting and dispositive power over the
3,011,234 shares beneficially owned by the Trust.
(3) James L. Anderson was the Chief Executive Officer and a shareholder of
Rodriguez Communications, Inc. prior to the time that SBS acquired such
entity on November 10, 2000. Mr. Anderson was also the Chief Executive
Officer of RCI (Alameda) Acquisition, Inc., a wholly owned subsidiary of
Rodriguez Communications, Inc., prior to the time that SBS acquired such
entity on November 10, 2000.
(4) Since April 20, 2001, Charles J. Brooks has held the position of Management
Consultant and Advisor for SBS. From November 10, 2000 to April 20, 2001,
Mr. Brooks held the position of Vice President--Western Region for SBS.
Charles J. Brooks was the President and Chief Operating Officer and a
shareholder of Rodriguez Communications, Inc. prior to the time that SBS
acquired such entity on November 10, 2000. Mr. Brooks was also the President
and Chief Operating Officer of RCI (Alameda) Acquisition, Inc., a wholly
owned subsidiary of Rodriguez Communications, Inc., prior to the time that
SBS acquired such entity on November 10, 2000.
(5) James A Gammon was the Assistant Treasurer and a shareholder of Rodriguez
Communications, Inc. prior to the time that SBS acquired such entity on
November 10, 2000.
(6) Marcos A. Rodriguez was the Chairman of the Board and sole director of
Rodriguez Communications, Inc. prior to the time that SBS acquired such
entity on November 10, 2000. Mr. Rodriguez was also the Chairman of the
Board and sole director of RCI (Alameda) Acquisition, Inc., a wholly owned
subsidiary of Rodriguez Communications, Inc., prior to the time that SBS
acquired such entity on November 10, 2000.
(7) The Marcos and Sonya Rodriguez Family Trust was a significant shareholder of
Rodriguez Communications, Inc. prior to the time that SBS acquired such
entity on November 10, 2000.
PLAN OF DISTRIBUTION
A total of 4,441,545 shares of our Class A Common Stock may be offered and
sold from time to time by the selling stockholders under this prospectus. Each
selling stockholder will act independently from SBS in making decisions with
respect to the timing, manner and size of each sale. Each of the selling
stockholders has indicated to us that it intends to dispose of its shares of our
Class A Common Stock, being offered by this prospectus, through the open market.
Each selling stockholder may sell all or a portion of the shares of our Class A
Common Stock owned by it from time to time through the Nasdaq National Market
and may sell shares of our Class A Common Stock to or through one or more
broker-dealers at prices prevailing on the Nasdaq National Market at the times
of such sales. Broker-dealers participating in such transactions may receive
compensation in the form of discounts, concessions or commissions from the
selling stockholder effecting such sales. The selling stockholders and any
broker-dealers who act in connection with sales of our Class A Common Stock may
be deemed to be "underwriters" as that term is defined in the Securities Act of
1933, and any commissions received by them and profit on any resale of the
shares of our Class A Common Stock might be deemed to be underwriting discounts
and commissions under the Securities Act of 1933. In effecting sales,
broker-dealers engaged by a selling stockholder may arrange for other
broker-dealers to participate.
Each of the selling stockholders has entered into lock-up letter agreements
whereby each selling stockholder has agreed not to offer for sale, sell, pledge,
or otherwise dispose of any of such selling stockholder's shares of our Class A
Common Stock except as follows: (a) James L. Anderson, Charles J. Brooks, James
A. Gammon, and Marcos Rodriguez each may transfer 40% of the aggregate Class A
Common Stock held by each such selling stockholder after November 10, 2001 and
the remaining 60% of the aggregate Class A Common Stock held by it after
November 10, 2002; (b) Rodriguez Communications, L.P. may transfer 20% of the
aggregate Class A Common Stock held by it after March 15, 2001, 40% of the
aggregate Class A Common Stock held by it after November 10, 2001 and the
remaining 40% of the aggregate Class A Common Stock held by it after November
10, 2002; (c) The Marcos and Sonya Rodriguez Family Trust may transfer 77,816
shares of Class A Common Stock plus an additional 20% of the aggregate Class A
Common Stock held by it after March 15, 2001, 40% of the aggregate Class A
Common Stock held by it after November 10, 2001 and the remaining Class A
Common Stock held by it after November 10, 2002; (d) The Julio and Ida Liberman
Trust and the Elias and Miriam Liberman Trust each may transfer 6% of the
aggregate Class A Common Stock held by each such selling stockholder after
November 10, 2000, 14% of the aggregate Class A Common Stock held by each such
selling stockholder after March 15, 2001, 40% of the aggregate Class A Common
Stock held by each such selling stockholder after November 10, 2001 and the
remaining 40% of the aggregate Class A Common Stock held by each such selling
stockholder after November 10, 2002; (e) The Liberman Irrevocable Trust has the
right to transfer 6% of the aggregate Class A Common Stock held by it after
November 10, 2000, 14% of the aggregate Class A Common Stock held by it after
March 15, 2001, 40% of the aggregate Class A Common Stock held by it after
November 10, 2001 and the remaining 40% of the aggregate Class A Common Stock
held by it after November 10, 2002; and (f) BlueStone Capital Partners, L.P.
may transfer 20% of the aggregate Class A Common Stock held by it after March
15, 2001, 40% of the aggregate Class A Common Stock held by it after November
10, 2001 and the remaining 40% of the aggregate Class A Common Stock held by it
after November 10, 2002.
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The selling stockholders will pay all underwriting discounts and selling
commissions, if any, relating to the sale of the shares of Class A Common Stock
included in this prospectus. SBS will pay the registration and filing fees
payable to the SEC, fees and expenses relating to the registration or
qualification of the shares of Class A Common Stock pursuant to any applicable
state securities or "blue sky" laws, printing expenses, and the fees and
expenses of our counsel and independent accountants, and reasonable fees and
expenses of selling stockholders' counsel.
LEGAL MATTERS
The validity of the shares of Class A Common Stock being offered by this
prospectus will be passed upon for us by Kaye Scholer LLP, New York, New York.
Jason L. Shrinsky, one of our directors, is a partner of Kaye Scholer LLP, which
firm has regularly represented us as our legal counsel and will continue to do
so. Additionally, Mr. Shrinsky received options to purchase shares of our Class
A Common Stock pursuant to our 1999 Stock Option Plan for Nonemployee Directors.
Mr. Shrinsky holds his options for the benefit of his law firm, Kaye Scholer
LLP. In addition, Mr. Shrinsky shares ownership of, and voting and investment
power for, 15,000 shares of Class A Common Stock with his spouse.
EXPERTS
The consolidated financial statements and schedule of Spanish Broadcasting
System, Inc. and its subsidiaries as of September 26, 1999 and September 24,
2000, and for each of the fiscal years in the three-year period ended September
24, 2000, have been incorporated by reference herein and in the registration
statement in reliance upon the report of KPMG LLP, independent certified public
accountants, incorporated by reference herein, and upon the authority of said
firm as experts in accounting and auditing.
MATERIAL CHANGES
On June 8, 2001, we completed a Rule 144A offering of $100 million of 9 5/8%
senior subordinated notes due 2009. We used a portion of the proceeds from this
offering to pay the outstanding indebtedness under our senior credit facility
which we then terminated. We plan to use the remainder of the proceeds from this
offering for general corporate purposes. The terms of the notes are
substantially similar to the $235 million of 9 5/8% senior subordinated notes
due 2009 that we issued in 1999.
In connection with the issuance and sale of the notes in our Rule 144A
offering, we entered into a registration rights agreement with the initial
purchaser in the offering pursuant to which we have undertaken to file a
registration statement to permit holders of the notes to exchange such notes
for notes registered under the Securities Act of 1933.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The SEC allows us to incorporate by reference in this prospectus the
information we file with the SEC, which means we can disclose important
information to you by referring you to those documents. The information
incorporated by reference is considered to be a part of this prospectus, and
later information that we file with the SEC will automatically update and
supersede this information.
The following documents we have filed with the SEC are incorporated herein
by reference:
1. our Annual Report on Form 10-K for the year ended September 24, 2000, as
amended on January 24, 2001;
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2. our Current Report on Form 8-K filed on November 27, 2000, as amended on
January 24, 2001;
3. our Current Report on Form 8-K filed on December 8, 2000;
4. our Current Report on Form 8-K filed on February 9, 2001;
5. our Quarterly Report on Form 10-Q for the quarter ended December 30,
2000;
6. our Proxy Statement dated February 12, 2001;
7. our Quarterly Report on Form 10-Q for the quarter ended March 25, 2001;
and
8. the description of our Class A Common Stock, par value $.0001 per share,
included in our registration statement on Form 8-A filed with the SEC on
October 26, 1999, including any amendments or reports filed for the
purpose of updating such description.
All documents or reports we file pursuant to Section 13(a), 13(c), 14 or
15(d) of the Exchange Act after the date of this prospectus and prior to the
termination of this offering will be deemed to be incorporated by reference into
this prospectus and to be a part of this prospectus from the date of the filing
of the document or report. Any statement contained in this prospectus, or in a
document all or a portion of which is incorporated or deemed to be incorporated
by reference in this prospectus, will be deemed to be modified or superseded for
purposes of this prospectus to the extent that a statement contained in this
prospectus or in any other subsequently filed document which also is or is
deemed to be incorporated by reference in this prospectus modifies or supersedes
the statement. Any such statement so modified or superseded will not be deemed,
except as so modified or superseded, to constitute a part of the registration
statement or this prospectus.
The Company will provide without charge to any person, including any
beneficial owner, to whom this prospectus is delivered, on the written or oral
request of such person, a copy of any or all of the foregoing documents
incorporated by reference (other than exhibits not specifically incorporated by
reference into the texts of such documents). Requests for such documents should
be directed to:
Spanish Broadcasting System, Inc.
2601 South Bayshore Drive, PH II
Coconut Grove, FL 33133
Telephone: (305) 441-6901
Attention: Joseph A. Garcia
WHERE YOU CAN FIND MORE INFORMATION
We file annual, quarterly and special reports, proxy statements and other
information with the SEC under the Exchange Act. The file number of our SEC
filings is 33-82114. You may read and copy any document we file with the SEC at
the following SEC public reference rooms:
Judiciary Plaza
450 Fifth Street, N.W. 500 West Madison Street 7 World Trade Center
Room 1024 14th Floor Suite 1300
Washington, D.C. 20549 Chicago, Illinois 60601 New York, New York 10048
You may obtain information on the operation of the public reference rooms by
calling the SEC at 1-800-SEC-0330. For a fee, the SEC will send copies of any of
our filings to you. In addition, our filed reports, proxy statements and other
information are contained in the Internet website maintained by the SEC. The
address is http://www.sec.gov.
Our Class A Common Stock is quoted on the Nasdaq National Market under the
symbol "SBSA," and our SEC filings can also be read at the following address:
Nasdaq Operations
1735 K Street, N.W.
Washington, D.C. 20006
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================================================================================
SPANISH BROADCASTING
SYSTEM, INC.
4,441,545 SHARES
CLASS A COMMON STOCK
---------------
PROSPECTUS
---------------
July 13, 2001
================================================================================
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