1
FORM 10-Q
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1998
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from ______________ to _____________________
Commission file number 0-15392
REGENT COMMUNICATIONS, INC.
(Exact name of registrant as specified in its charter)
Delaware 31-1492857
(State or other jurisdiction of (I.R.S. Employer
in corporation or organization) Identification No.)
50 East RiverCenter Boulevard
Suite 180
Covington, Kentucky 41011
(Address of principal executive offices)
(Zip Code)
(606) 292-0030
(Registrant's telephone number, including area code)
--------------------
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Sections 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter periods that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
Yes No X
----- -----
Indicate the number of shares outstanding of the issuer's classes of
common stock, as of the latest practicable date.
Common Stock - $.01 Par Value - 240,000 shares as of August 18, 1998.
2
REGENT COMMUNICATIONS, INC.
FORM 10-Q
FOR THE QUARTER ENDED JUNE 30, 1998
INDEX
-----
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements*
Condensed Consolidated Balance Sheets as of
June 30, 1998 and December 31, 1997*
Condensed Consolidated Statements of Operations
for the three months and six months ended June 30, 1998
and June 30, 1997*
Condensed Consolidated Statements of Cash Flows
for the six months ended June 30, 1998
and June 30, 1997*
Notes to Consolidated Condensed Financial Statements*
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations*
*To be supplied by amendment.
PART II - OTHER INFORMATION
Item 2. Changes in Securities and Use of Proceeds
Item 4. Submission of Matters to a Vote of Security Holders
Item 6. Exhibits and Reports on Form 8-K
-2-
3
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
The information required by this item will be filed by amendment.
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations
The information required by this item will be filed by amendment.
PART II - OTHER INFORMATION
Item 2. Changes in Securities and Use of Proceeds
(c) On June 15, 1998, Regent Communications, Inc. (the "Company")
acquired control of 31 radio stations located in California, Arizona, Michigan
and Ohio through acquisitions of assets or stock for cash or by way of merger
transactions (the "June 15 Transactions"). The cash needed for the June 15
Transactions was provided by bank financing from the Company's senior credit
facility with Bank of Montreal, Chicago Branch, General Electric Capital
Corporation and Bank One, Indianapolis, NA, and by the proceeds from the sale
of shares of the Company's convertible preferred stock. Additional shares of
the Company's convertible preferred stock were issued in the merger
transactions. In addition to 3,720,796 shares of the Company's Series C
Convertible Preferred Stock, and options for the purchase of 274,045 shares
thereof, issued in the merger transaction with Faircom Inc. pursuant to a
registration statement filed under the Securities Act of 1933, convertible
preferred stock was issued by the Company on June 15, 1998, as follows, and
such stock or the proceeds thereof were used to fund the June 15 Transactions:
1. The Company issued to the purchasers set forth below a total of
2,050,000 shares of its Series F Convertible Preferred Stock at a purchase price
of $5.00 per share, and in conjunction therewith, issued to such purchasers
warrants to purchase a total of 860,000 shares of the Company's Common Stock at
an exercise price of $5.00 per share.
NUMBER OF SHARES NUMBER OF WARRANTS
NAME OF PURCHASER PURCHASED RECEIVED
Waller-Sutton Media Partners, L.P. 1,000,000 650,000
WPG Corporate Development
Associates V, L.P. 562,900 112,580
WPG Corporate Development
Associates (Overseas) V, L.P. 87,100 17,420
General Electric Capital Corporation 250,000 50,000
River Cities Capital Fund Limited
Partnership 100,000 20,000
William H. Ingram 50,000 10,000
-3-
4
The Series F Convertible Preferred Stock is convertible into shares of the
Company's Common Stock on a 1-for-1 basis at any time at the option of the
holders and under certain circumstances at the option of the Company. The
warrants are exercisable in whole or in part (but unless exercised in full,
only for whole shares of common stock) at any time on or before the tenth
anniversary of the date of issuance of the warrants.
2. General Electric Capital Corporation ("GE Capital") paid
$3,900,000 cash to complete its purchase of shares of the Company's Series B
Senior Convertible Preferred Stock, pursuant to the terms of its Stock Purchase
Agreement and Promissory Note dated December 8, 1997. The Series B Senior
Convertible Preferred Stock is convertible into shares of the Company's Common
Stock on a .5-for-1 basis at any time at the option of the holder and under
certain circumstances at the option of the Company. In addition, the Company
issued to GE Capital a warrant to purchase 50,000 shares of the Company's
Common Stock at an exercise price of $5.00 per share. The warrant is
exercisable in whole or in part (but unless exercised in full, only for whole
shares of common stock) at any time on or before the fifth anniversary of the
date of issuance of the warrant.
3. BMO Financial, Inc. paid $3,900,000 cash for 780,000 shares of
the Company's Series D Convertible Preferred Stock. The Series D Convertible
Preferred Stock is convertible into shares of the Company's Common Stock on a
1-for-1 basis at any time, subject to certain conditions, and under certain
circumstances at the option of the Company.
4. William L. Stakelin, a member of the Company's Board of
Directors, as well as its President, Chief Operating Officer and Secretary,
purchased 20,000 shares of the Company's Series A Convertible Preferred Stock at
a purchase price of $5.00 per share. The Series A Convertible Preferred Stock is
convertible into shares of the Company's Common Stock on a 1-for-1 basis at any
time at the option of the holder and under certain circumstances at the option
of the Company.
5. As part of the Company's acquisition of all of the outstanding
stock of Alta California Broadcasting, Inc. ("Alta") by virtue of a merger of
Alta into a wholly-owned subsidiary of the Company, the Company issued 205,250
shares of its Series E Convertible Preferred Stock (stated value $5.00 per
share) as follows: 194,750 shares were issued to the seller, Redwood
Broadcasting, Inc. (of which 20,000 shares are currently being held in escrow
pursuant to an indemnification agreement between the Company and the seller),
and 10,500 shares were issued to Miller Capital Corp., as partial payment of
commissions payable to it. The Series E Convertible Preferred Stock is
convertible into shares of the Company's Common Stock on a 1-for-1 basis at
the option of the holder at any time and under certain circumstances at the
option of the Company.
6. As part of the Company's acquisition of all of the outstanding
stock of Topaz Broadcasting, Inc. ("Topaz") by virtue of a merger of Topaz into
a wholly-owned subsidiary of the Company, the Company issued 242,592 shares of
the Company's Series E Convertible Preferred Stock to the seller, Thomas Gammon.
7. Effective as of June 15, 1998, the Company granted, under its
1998 Management Stock Option Plan, to each of Terry S. Jacobs (a member of the
Company's Board of Directors, as well as its Chairman, Chief Executive Officer
and Treasurer) and William L. Stakelin (a member of the Company's Board of
Directors, as well as its President, Chief Operating Officer and Secretary)
options to purchase 608,244 shares of the Company's Common Stock at a price of
$5.00 per share. Of the options granted, the maximum allowable will be treated
as incentive stock options, which vest over ten years (10% per year) and are
exercisable in equal one-tenth increments commencing on the date of grant and
continuing on each anniversary of the date of grant. The balance of the options
will be non-qualified stock options, which will vest over three years (33% each
year) and will become exercisable in equal one-third increments commencing at
the end of the first year following the date of the grant.
8. The Company issued to River Cities Capital Fund Limited
Partnership ("River Cities") a warrant to purchase 80,000 shares of the
Company's Common Stock at an exercise price of $5.00 per share. The warrant is
exercisable in whole or in part (but unless exercised in full, only for whole
shares) at any time on or before the fifth anniversary of the issuance of the
warrant. The warrant was issued as an inducement to River Cities, as an
existing holder of the Company's Series A Convertible Preferred Stock, to
approve the acquisition by the Company of all of the outstanding stock of
Faircom Inc. through a merger with the Company's wholly-owned subsidiary,
including the issuance by the Company of shares of its Series C Convertible
Preferred Stock in exchange therefor (one of the June 15 Transactions).
The foregoing securities were issued by the Company in privately
negotiated transactions based upon exemptions from registration under the
Securities Act of 1933, as amended (the "1933 Act"), claimed pursuant to Section
4(2) of the 1933 Act and the rules and regulations promulgated thereunder.
Item 4. Submission of Matters to a Vote of Security Holders
On June 15, 1998, the stockholders of the Company unanimously
consented in a writing without a meeting as permitted by the provisions of the
Delaware General Corporation Law to: (i) the issuance of shares of the
Company's Series F Convertible Preferred Stock and warrants to purchase the
Company's Common Stock pursuant to that certain Amended and Restated
Stockholders' Agreement dated as of December 8, 1997 (the "Stockholder's
Agreement"); and (ii) the adoption of the Amended and Restated Certificate of
Incorporation of the Company attached to the Stockholders' Agreement.
-4-
5
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
The following will be filed as an exhibit to Part I of this
Form 10-Q by the filing of an amendment hereto:
Exhibit No. 27 Financial Data Schedule
The exhibits identified as Part II Exhibits on the following
Exhibit Index, which is incorporated herein by this reference, are filed or
incorporated by reference as exhibits to Part II of this Form 10-Q.
(b) Reports on Form 8-K
On June 30, 1998, the Company filed a report on Form 8-K,
reporting under Items 2 and 5, disclosing the consummation of a series of
transactions on June 15, 1998 pursuant to which the Company acquired control of
31 radio stations through acquisitions of assets or stock for cash or by way of
merger transactions, the financing of said transactions through the Company's
senior credit facility and by the issuance and the proceeds of the sale of
shares of the Company's convertible preferred stock, most of which having full
voting rights, and the resulting change in control of the Company's voting stock
previously held 51.3% by Terry S. Jacobs. The historical financial statements
and the pro forma financial information required to be filed as part of this
Form 8-K was not filed with the initial report. The Company intends to file such
financial statements and information on or before August 31, 1998.
-5-
6
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
REGENT COMMUNICATIONS, INC.
Date: August 19, 1998 By: /s/ TERRY S. JACOBS
------------------------------------------
Terry S. Jacobs, Chairman of the Board and
Chief Executive Officer
Date: August 19, 1998 By: /s/ MATTHEW A. YEOMAN
------------------------------------------
Matthew A. Yeoman,
Vice President - Finance
(Principal Accounting Officer)
S-1
7
EXHIBIT INDEX
-------------
Part I Exhibits:
- -----------------
The following will be filed as an exhibit to Part I of this Form 10-Q
by an amendment hereto:
EXHIBIT
NUMBER EXHIBIT DESCRIPTION
- ------ -------------------
27# Financial Data Schedule
#To be supplied by amendment.
Part II Exhibits:
- ----------------
The following exhibits are filed, or incorporated by reference where
indicated, as part of Part II of this Report on Form 10-Q:
E-1
8
EXHIBIT
NUMBER EXHIBIT DESCRIPTION
- ------ -------------------
4(a)* Amended and Restated Certificate of Incorporation of Regent
Communications, Inc. (previously filed as Exhibit 4(a) to the
Registrant's Form 8-K filed June 30, 1998 and incorporated
herein by this reference).
4(b)* Amended and Restated By-Laws of Regent Communications, Inc.
(previously filed as Exhibit 3(b) to the Registrant's Form S-4
Registration Statement No. 333-46435 effective May 7, 1998 and
incorporated herein by this reference).
4(c)* Second Amended and Restated Stockholders' Agreement dated as
of June 15, 1998 among Regent Communications, Inc., Terry S.
Jacobs, William L. Stakelin, Waller-Sutton Media Partners,
L.P., William H. Ingram, WGP Corporate Development Associates
V, L.P., WGP Corporate Development Associates (Overseas) V,
L.P., River Cities Capital Fund Limited Partnership, BMO
Financial, Inc., General Electric Capital Corporation, Joel M.
Fairman, Miami Valley Venture Fund II Limited Partnership, and
Blue Chip Capital Fund II Limited Partnership (excluding
exhibits not deemed material or filed separately in executed
form) (previously filed as Exhibit 4(c) to the Registrant's
Form 8-K filed June 30, 1998 and incorporated herein by this
reference).
E-2
9
EXHIBIT
NUMBER EXHIBIT DESCRIPTION
- ------ -------------------
4(d)* Stock Purchase Agreement dated June 15, 1998 among Regent
Communications, Inc., Waller-Sutton Media Partners, L.P., WPG
Corporate Development Associates V, L.P., WPG Corporate
Development Associates (Overseas) V, L.P., General Electric
Capital Corporation, River Cites Capital Fund Limited
Partnership and William H. Ingram (excluding exhibits not
deemed material or filed separately in executed form)
(previously filed as Exhibit 4(d) to the Registrant's Form
8-K filed June 30, 1998 and incorporated herein by this
reference).
4(e)* Registration Rights Agreement dated June 15, 1998 among Regent
Communications, Inc., PNC Bank, N.A., Trustee, Waller-Sutton
Media Partners, L.P., WPG Corporate Development Associates V,
L.P., WPG Corporate Development Associates (Overseas) V, L.P.,
BMO Financial, Inc., General Electric Capital Corporation,
River Cites Capital Fund Limited Partnership, Terry S. Jacobs,
William L. Stakelin, William H. Ingram, Blue Chip Capital Fund
II Limited Partnership, Miami Valley Venture Fund L.P. and
Thomas Gammon (excluding exhibits not deemed material or filed
separately in executed form) (previously filed as Exhibit
4(e) to the Registrant's Form 8-K filed June 30, 1998 and
incorporated herein by this reference).
4(f)* Warrant for the Purchase of 650,000 Shares of Common Stock
issued by Regent Communications, Inc. to Waller-Sutton Media
Partners, L.P. dated June 15, 1998 (See Note 1 below)
(previously filed as Exhibit 4(f) to the Registrant's Form
8-K filed June 30, 1998 and incorporated herein by this
reference).
4(g)* Warrant for the Purchase of 50,000 Shares of Common Stock
issued by Regent Communications, Inc. to General Electric
Capital Corporation dated June 15, 1998 (previously filed as
Exhibit 4(g) to the Registrant's Form 8-K filed June 30,
1998 and incorporated herein by this reference).
4(h)* Agreement to Issue Warrant dated as of June 15, 1998 between
Regent Communications, Inc. and General Electric Capital
Corporation (excluding exhibits not deemed material or filed
separately in executed form) (previously filed as Exhibit
4(h) to the Registrant's Form 8-K filed June 30, 1998 and
incorporated herein by this reference).
4(i) Grant of Incentive Stock Option effective June 15, 1998 in
favor of Terry S. Jacobs.
4(j) Grant of Incentive Stock Option effective June 15, 1998 in
favor of William S. Stakelin.
4(k) Warrant for the Purchase of 80,000 Shares of Common Stock
issued by Regent Communications, Inc. to River Cities
Capital Fund Limited Partnership dated June 15, 1998.
4(l)* Stock Purchase Agreement dated as of May 20, 1997 between
Terry S. Jacobs and Regent Communications, Inc. (previously
filed as Exhibit 4(b) to the Registrant's Form S-4
Registration Statement No. 333-46435 effective May 7, 1998
and incorporated herein by this reference).
4(m)* Stock Purchase Agreement dated as of May 20, 1997 between
River Cities Capital Fund Limited Partnership and Regent
Communications, Inc. (previously filed as Exhibit 4(c) to the
Registrant's Form S-4 Registration Statement No. 333-46435
effective May 7, 1998 and incorporated herein by this
reference).
4(n)* Stock Purchase Agreement dated as of November 26, 1997 and
Terry S. Jacobs and Regent Communications, Inc. (previously
filed as Exhibit 4(d) to the Registrant's Form S-4
Registration Statement No. 333-46435 effective May 7, 1998
and incorporated herein by this reference).
E-3
10
4(o)* Stock Purchase Agreement dated as of December 1, 1997
between William L. Stakelin and Regent Communications,
Inc. (previously filed as Exhibit 4(e) to the Registrant's
Form S-4 Registration Statement No. 333-46435 effective
May 7, 1998 and incorporated herein by this reference).
4(p)* Stock Purchase Agreement dated as of December 8, 1997
between Regent Communications, Inc. and General Electric
Capital Corporation (previously filed as Exhibit 4(f) to
the Registrant's Form S-4 Registration Statement No.
333-46435 effective May 7, 1998 and incorporated herein by
this reference).
4(q)* Stock Purchase Agreement dated as of December 8, 1997
between Regent Communications, Inc. and BMO Financial,
Inc. (previously filed as Exhibit 4(g) to the Registrant's
Form S-4 Registration Statement No. 333-46435 effective
May 7, 1998 and incorporated herein by this reference).
4(r)* Amended and Restated Redemption and Warrant Agreement
dated as of March 31, 1998 among Regent Communications,
Inc., Blue Chip Capital Fund II Limited Partnership,
Miami Valley Venture Fund L.P. and Faircom Inc. (previously
filed as Exhibit 4(i) to the Registrant's Form S-4
Registration Statement No. 333-46435 effective May 7, 1998
and incorporated herein by this reference).
4(s)* Credit Agreement dated as of November 14, 1997 among
Regent Communications, Inc., the lenders listed therein,
as Lenders, General Electric Capital Corporation, as
Documentation Agent and Bank of Montreal, Chicago Branch,
as Agent (excluding exhibits not deemed material or filed
separately in executed form) (previously filed as Exhibit
4(j) to the Registrant's Form S-4 Registration Statement
No. 333-46435 effective May 7, 1998 and incorporated herein
by this reference).
4(t)* Revolving Note issued by Regent Communications, Inc. to
Bank of Montreal, Chicago Branch dated November 14, 1997
in the principal amount of $20,000,000 (See Note 2 below)
(previously filed as Exhibit 4(k) to the Registrant's Form
S-4 Registration Statement No. 333-46435 effective May 7,
1998 and incorporated herein by this reference).
4(u)* Agreement to Issue Warrant dated as of March 25, 1998
between Regent Communications, Inc. and River Cities
Capital Fund Limited Partnership (previously filed as
Exhibit 4(l) to the Registrant's Form S-4 Registration
Statement No. 333-46435 effective May 7, 1998 and
incorporated herein by this reference).
4(v)* Regent Communications, Inc. Faircom Conversion Stock
Option Plan (previously filed as Exhibit 4(m) to the
Registrant's Form S-4 Registration Statement No. 333-46435
effective May 7, 1998 and incorporated herein by this
reference).
10(a)* Executive Employment Agreement dated June 15, 1998 between
Regent Communications, Inc. and Joel M. Fairman (excluding
exhibits not deemed material or filed separately in
executed form) (previously filed as Exhibit 20(c) to the
Registrant's Form 8-K filed June 30, 1998 and incorporated
herein by this reference).
10(b)* Consulting and Non-Competition Agreement between Regent
Communications, Inc. and James H. Levy (previously filed as
Exhibit 20(d) to the Registrant's Form 8-K filed June 30,
1998 and incorporated herein by this reference).
E-4
11
*Incorporated by reference.
Notes:
1. Six substantially identical Warrants for the purchase of shares of
Registrant's common stock were issued as follows:
Waller-Sutton Media Partners, L.P. 650,000
WPG Corporate Development Associates V, L.P. 112,580
WPG Corporate Development Associates (Overseas) V, L.P. 17,420
General Electric Capital Corporation 50,000
River Cites Capital Fund Limited Partnership 20,000
William H. Ingram 10,000
2. Two substantially identical notes were issued to Bank of Montreal,
Chicago Branch in the principal amounts of $15,000,000 and $20,000,000.
E-5