1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(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, 1999
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
Incorporation 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 Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
Yes X No
--- ---
Indicate the number of shares outstanding of each 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 12, 1999.
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REGENT COMMUNICATIONS, INC.
FORM 10-Q
FOR THE QUARTER ENDED JUNE 30, 1999
INDEX
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
Condensed Consolidated Statements of Operations for the three
months and six months ended June 30, 1999 (unaudited) and
June 30, 1998 (unaudited)
Condensed Consolidated Balance Sheets as of
June 30, 1999 (unaudited) and December 31, 1998
Condensed Consolidated Statements of Cash Flows for the six
months ended June 30, 1999 (unaudited) and June 30, 1998
(unaudited)
Notes to Condensed Consolidated Financial Statements (unaudited)
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations
Item 3. Quantitative and Qualitative Disclosures About Market Risk
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 5. Other Information
Item 6. Exhibits and Reports on Form 8-K
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PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
REGENT COMMUNICATIONS, INC.
CONDENSED CONSOLIDATED STATEMENTS
OF OPERATIONS
(UNAUDITED)
Three Months Ended Six Months Ended
June 30, June 30,
-------------------------------- --------------------------------
1999 1998 1999 1998
------------ ------------ ------------ ------------
Gross broadcast revenues $ 6,802,937 $ 2,866,077 $ 11,628,861 $ 4,479,282
Less agency commissions 487,634 267,951 793,568 416,079
------------ ------------ ------------ ------------
Net broadcast revenues 6,315,303 2,598,126 10,835,293 4,063,203
Station operating expenses 4,358,220 1,599,738 8,146,685 2,698,649
Depreciation and amortization 1,047,147 396,388 1,818,856 686,936
Corporate general and
administrative expenses 544,109 734,542 1,159,130 860,070
------------ ------------ ------------ ------------
Operating income (loss) 365,827 (132,542) (289,378) (182,452)
Interest expense 624,341 582,838 1,486,807 1,086,608
Other income, net 1,904 8,622 85,040 20,773
------------ ------------ ------------ ------------
Loss before extraordinary item (256,610) (706,758) (1,691,145) (1,248,287)
Extraordinary loss from debt
extinguishment, net of taxes -- (1,170,080) -- (1,170,080)
------------ ------------ ------------ ------------
Net loss $ (256,610) $ (1,876,838) $ (1,691,145) $ (2,418,367)
============ ============ ============ ============
Loss applicable to common shares:
Net loss $ (256,610) $ (1,876,838) $ (1,691,145) $ (2,418,367)
Preferred stock dividend requirements
and accretion (1,521,808) (4,814,846) (2,561,000) (5,093,639)
------------ ------------ ------------ ------------
Loss applicable to common shares $ (1,778,418) $ (6,691,684) $ (4,252,145) $ (7,512,006)
============ ============ ============ ============
Basic and diluted net loss per common share:
Before extraordinary item $ (7.41) $ (23.00) $ (17.72) $ (26.42)
Extraordinary item -- (4.88) -- (4.88)
------------ ------------ ------------ ------------
Net loss per common share $ (7.41) $ (27.88) $ (17.72) $ (31.30)
============ ============ ============ ============
Weighted average number of common shares
used in basic and diluted calculations 240,000 240,000 240,000 240,000
The accompanying notes are an integral part of these
financial statements.
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REGENT COMMUNICATIONS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
June 30, 1999 December 31, 1998
------------- -----------------
(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents $ 1,760,004 $ 478,545
Accounts receivable, less allowance for doubtful
accounts of $249,000 in 1999 and $268,000 in 1998 4,282,758 3,439,372
Other current assets 297,708 200,828
Assets held for sale 14,713,163 7,500,000
------------ ------------
Total current assets 21,053,633 11,618,745
Property and equipment, net 9,268,558 9,303,975
Intangibles, net 48,910,286 45,023,940
Other assets, net 1,715,185 1,671,210
------------ ------------
Total assets $ 80,947,662 $ 67,617,870
============ ============
LIABILITIES AND SHAREHOLDERS' DEFICIT
Current liabilities:
Accounts payable $ 501,948 $ 1,005,327
Accrued expenses 1,479,091 2,772,612
Interest payable 309,840 769,367
Notes payable 6,000,000 7,500,000
Current portion of long-term debt 8,990,000 980,000
------------ ------------
Total current liabilities 17,280,879 13,027,306
------------ ------------
Long-term debt, less current portion 32,410,000 34,617,500
Warrants and other long-term liabilities 2,391,452 2,643,579
------------ ------------
Total liabilities 52,082,331 50,288,385
Commitments and contingencies
Redeemable preferred stock:
Series A convertible preferred stock, $5.00 stated value, 620,000 shares authorized;
620,000 shares issued and outstanding-liquidation value: $3,540,717 3,540,717 3,433,109
Series B senior convertible preferred stock, $5.00 stated value, 1,000,000 shares
authorized; 1,000,000 shares issued and outstanding-liquidation value: $5,595,205 5,595,205
5,372,054
Series D convertible preferred stock, $5.00 stated value, 1,000,000 shares authorized;
1,000,000 shares issued and outstanding-liquidation value: $5,405,003 5,405,003 5,231,441
Series F convertible preferred stock, $5.00 stated value, 4,100,000 shares authorized;
4,100,000 shares issued and outstanding-liquidation value: $21,931,700 21,931,700 12,839,454
Series G convertible preferred stock, $5.00 stated value, 2,000,000 shares authorized;
372,406 shares issued and outstanding-liquidation value: $1,949,265 1,949,265 0
Series H convertible preferred stock, $5.50 stated value, 2,000,000 shares authorized;
636,363 shares issued and outstanding-liquidation value: $3,509,315 3,509,315 0
------------ ------------
Total redeemable preferred stock 41,931,205 26,876,058
Shareholders' deficit:
Preferred stock:
Series C convertible preferred stock, $5.00 stated value, 4,000,000 shares authorized;
3,729,080 shares issued and outstanding-liquidation value: $19,962,400 1,584,905 1,584,820
Series E convertible preferred stock, $5.00 stated value, 5,000,000 shares authorized;
447,842 shares issued and outstanding-liquidation value: $2,402,626 2,239,210 2,239,210
Common stock, $.01 par value, 30,000,000 shares authorized;
240,000 shares issued and outstanding 2,400 2,400
Additional paid-in capital 2,120,145 3,948,384
Retained deficit (19,012,534) (17,321,387)
------------ ------------
Total shareholders' deficit (13,065,874) (9,546,573)
------------ ------------
Total liabilities and shareholders' deficit $ 80,947,662 $ 67,617,870
============ ============
The accompanying notes are an integral part of these
financial statements.
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REGENT COMMUNICATIONS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
Six Months Ended June 30,
--------------------------------
1999 1998
------------ ------------
Net cash used in operating activities $ (1,825,876) $ (898,400)
------------ ------------
Cash flows from investing activities:
Acquisitions of radio stations, net of cash acquired (13,339,872) (29,089,991)
Capital expenditures (986,727) (62,120)
Proceeds from sale of radio station 1,600,000 --
------------ ------------
Net cash used in investing activities (12,726,599) (29,152,111)
------------ ------------
Cash flows from financing activities:
Proceeds from long-term debt 9,300,000 35,500,000
Proceeds from issuance of Series A, B, D, F, G & H
Convertible Preferred Stock 13,621,390 18,150,000
Principal payments on long-term debt (3,497,500) (20,716,660)
Payment of notes payable (1,500,000) --
Payments for deferred financing costs (274,558) (1,292,042)
Payment for issuance costs (1,815,398) (1,356,393)
------------ ------------
Net cash provided by financing activities 15,833,934 30,284,905
------------ ------------
Net increase in cash and cash equivalents 1,281,459 234,394
Cash at beginning of period 478,545 535,312
------------ ------------
Cash at end of period $ 1,760,004 $ 769,706
============ ============
Supplemental schedule of non-cash investing and financing activities:
Conversion of Faircom Inc.'s convertible subordinated
promissory notes to Faircom Inc. common stock $ 10,000,000
Liabilities assumed in acquisitions $ 11,680,322
Series E convertible preferred stock issued in conjunction with the
acquisition of Alta California Broadcasting, Inc. and Topaz
Broadcasting, Inc. $ 2,239,210
Series C convertible preferred stock issued in conjunction with the
merger between Faircom Inc. and the Company $ 1,618,681
Series A and B convertible preferred stock warrants $ 310,000
The accompanying notes are an integral part of these
financial statements.
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REGENT COMMUNICATIONS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
1. BASIS OF PRESENTATION
Regent Communications, Inc. (including its wholly-owned
subsidiaries, the "Company") was formed to acquire, own and operate radio
stations in small and medium-sized markets in the United States. The Company
acquired on June 15, 1998, pursuant to an agreement of merger, all of the
outstanding common stock of Faircom Inc. ("Faircom") for 3,720,620 shares of the
Company's Series C Convertible Preferred Stock. Approximately 400,000 of those
shares, upon conversion to common stock and subject to certain other conditions,
may be put back to the Company at the option of the holder subsequent to June
15, 2003. The acquisition has been treated for accounting purposes as the
acquisition of the Company by Faircom under the purchase method of accounting,
with Faircom as the accounting acquirer. Consequently, the historical financial
statements prior to June 15, 1998 are those of Faircom. Faircom operated radio
stations through its wholly-owned subsidiaries in Flint, Michigan and, in
Mansfield, Ohio. As a result of the Faircom merger, Faircom's historical
shareholder deficit and earnings per share information have been retroactively
restated to reflect the number of common shares outstanding subsequent to the
merger, with the difference between the par value of the Company's and Faircom's
common stock recorded as an offset to additional paid-in capital.
The condensed consolidated financial statements of the Company have
been prepared pursuant to the rules and regulations of the Securities and
Exchange Commission (SEC) and, in the opinion of management, include all
adjustments necessary for a fair presentation of the results of operations,
financial position and cash flows for each period shown. All adjustments are of
a normal and recurring nature except for those outlined in Notes 2 and 3.
Certain information and footnote disclosures normally included in financial
statements prepared in accordance with generally accepted accounting principles
have been condensed or omitted pursuant to SEC rules and regulations. Results
for interim periods may not be indicative of results for the full year. The
December 31, 1998 condensed consolidated balance sheet was derived from audited
financial statements but does not include all disclosures required by generally
accepted accounting principles. It is suggested that these financial statements
be read in conjunction with the financial statements and notes thereto included
in the Company's Form 10-K filed March 31, 1999.
2. CONSUMMATED AND PENDING ACQUISITIONS AND DIVESTITURES
On June 15, 1998, concurrent with the Faircom merger, the following
acquisitions (the "June 15 Acquisitions") were consummated:
The Company acquired all of the outstanding capital stock of The Park
Lane Group ("Park Lane") for approximately $24,038,000 in cash and assumed
liabilities. Park Lane owned 16 radio stations in California and Arizona. At the
time of the acquisition, the Company entered into a one-year consulting and
non-competition agreement with the President of Park Lane, providing for the
payment of a fee of $200,000.
The Company acquired the licenses issued by the Federal Communications
Commission ("FCC") and related assets used in the operation of radio stations
KIXW(AM) and KZXY(FM) in Apple Valley, California from Ruby Broadcasting, Inc.
("Ruby") for $5,985,000 in cash.
The Company acquired the FCC licenses and related assets used in the
operation of radio stations KFLG(AM) and KFLG(FM) in Bullhead City, Arizona from
Continental Radio Broadcasting, L.L.C. for
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approximately $3,747,000 in cash. The Company separately acquired the accounts
receivables of these stations for an additional purchase price of approximately
$130,000.
The Company acquired all of the outstanding capital stock of Alta
California Broadcasting, Inc. ("Alta") for $2,635,000 in cash and assumed
liabilities and 205,250 shares of the Company's Series E Convertible Preferred
Stock. Alta owned four radio stations in California.
The Company acquired all of the outstanding capital stock of Topaz
Broadcasting, Inc. ("Topaz"), an affiliate of Ruby, for 242,592 shares of the
Company's Series E Convertible Preferred Stock. Immediately following the
acquisition of Topaz, the Company acquired the FCC licenses and operating assets
of radio station KIXA(FM) in Lucerne Valley, California for $215,000 in cash and
assumed liabilities, pursuant to an Asset Purchase Agreement between Topaz and
RASA Communications Corp.
The June 15 Acquisitions were accounted for under the purchase method
of accounting and the fair value of the acquired assets were determined by
independent valuations.
The Company allocated the aggregate purchase price for the June 15
Acquisitions as follows:
Accounts receivable $ 143,000
Broadcasting equipment and furniture and fixtures 6,503,000
FCC licenses 30,328,000
Goodwill 1,853,000
Other 360,000
------------
$ 39,187,000
============
Goodwill and FCC licenses related to the June 15 Acquisitions are being
amortized over a 40-year period.
The sources for the cash portion of the consideration paid by the
Company for the June 15 Acquisitions and the Faircom merger, aggregating
approximately $52,900,000 (including approximately $21,100,000 of assumed debt
refinanced with borrowings under the Company's senior reducing revolving credit
facility and $3,700,000 of transaction costs), were $34,400,000 borrowed under
the Company's senior reducing revolving credit facility, $18,150,000 in
additional equity from the sale of the Company's convertible preferred stock and
approximately $350,000 of the Company's funds.
On November 30, 1998, the Company purchased substantially all of the
assets of radio station KOSS(FM) (formerly KAVC(FM)) located in Lancaster,
California from Oasis Radio, Inc. for $1,600,000 in cash. The acquisition was
financed through the issuance of additional shares of Series F convertible
preferred stock.
On March 1, 1999, the Company sold the FCC licenses and related assets
used in the operations of WSSP(FM) in Charleston, South Carolina for
approximately $1,600,000 in cash. The Company had previously issued a note for
$1,500,000 to a third party which was collateralized by the assets of the
station. Upon consummation of the sale, the note was repaid. The sale resulted
in a $100,000 gain to the Company which has been included in other income in the
accompanying condensed consolidated statement of operations.
On May 6, 1999, the Company purchased FCC licenses and related assets
used in the operations of radio stations WJON(AM), WWJO(FM) and KMXK(FM) (the
"St. Cloud Stations") in the St. Cloud, Minnesota market from WJON Broadcasting
Company for approximately $12,700,000 in cash. The purchase was financed by
approximately $5,082,000 in proceeds from the issuance of Series F Convertible
Preferred Stock (See Note 3) and borrowings under the Company's senior reducing
credit
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facility. Approximately $10,700,000 of the purchase price has been allocated to
the FCC licenses and is being amortized over a 40-year period. The remaining
$2,000,000 was allocated to property and equipment. An independent valuation is
currently being completed and may result in adjustments being made to the
original purchase price allocation.
The results of operations of the acquired businesses are included in
the Company's financial statements since the respective dates of acquisition.
The following unaudited pro forma data summarizes the combined results
of operations of the Company, Faircom, the stations acquired as part of the June
15 Acquisitions and KOSS(FM), as though the acquisitions had occurred at the
beginning of 1998, and the St. Cloud Stations, as though their acquisition had
occurred at the beginning of each period. The Company's 1999 disposition of
WSSP(FM) is not material to the results of the Company.
1999 1998
---- ----
Net broadcast revenues $11,862,006 $10,988,999
Net loss before extraordinary item $(1,702,894) $(2,414,770)
Net loss $(1,702,894) $(3,584,850)
Net loss per common share before extraordinary item:
Basic and diluted $ (18.55) $ (39.99)
Net loss per common share:
Basic and diluted $ (18.55) $ (44.86)
These unaudited pro forma amounts do not purport to be indicative of
the results that might have occurred if the foregoing transactions had been
consummated on the indicated dates.
On March 5, 1999, the Company entered into an agreement to sell the FCC
licenses and related assets used in the operations of radio stations KAAA(AM)
and KZZZ(FM) in Kingman, Arizona and KFLG(AM) and KFLG(FM) in Bullhead City,
Arizona (the "Kingman Stations") for approximately $5,400,000 in cash to an
unrelated third party. Approximately $5,138,000 of FCC licenses and related
long-lived assets have been reclassified to assets held for sale in the
accompanying June 30, 1999 condensed consolidated balance sheet. The transaction
is subject to FCC consent.
On March 30, 1999, the Company entered into an agreement to sell the
FCC licenses and related assets used in the operation of radio stations
KZGL(FM), KVNA(AM) and KVNA(FM) in Flagstaff, Arizona (the "Flagstaff Stations")
for approximately $2,425,000 in cash to an unrelated third party. Approximately
$2,375,000 of FCC licenses and related long-lived assets have been reclassified
to assets held for sale in the accompanying June 30, 1999 condensed consolidated
balance sheet. The transaction is subject to FCC consent.
On May 18, 1999, the Company entered into an agreement to purchase from
an unrelated third party the FCC licenses and related assets used in the
operations of radio stations WXKC(FM) and WRIE(AM) licensed to Erie,
Pennsylvania and WXTA(FM) licensed to Edinboro, Pennsylvania for approximately
$13,500,000 in cash. The Company provided a $675,000 letter of credit as an
escrow deposit in this transaction.
On July 9, 1999, the Company entered into an agreement to sell the FCC
licenses and related assets used in the operation of radio stations KRLT(FM) AND
KOWL(AM) in Lake Tahoe, California (the "Lake Tahoe Stations") for approximately
$1,250,000 in cash to an unrelated third party. Approximately $1,200,000 of FCC
licenses and related long-lived assets have been reclassified to assets held for
sale in the accompanying June 30, 1999 condensed consolidated balance sheet. The
transaction is subject to FCC consent.
On July 29, 1999, the Company entered into an agreement to purchase
from an unrelated third party the FCC licenses and related assets used in the
operations of radio stations WODZ-FM, WLZW-FM, WFRG-FM, WIBX-AM and WRUN-AM
licensed to Utica/Rome, New York and WCIZ-FM, WFRY-FM, WTNY-AM, and WUZZ-AM
licensed to Watertown, New York for approximately $44,000,000 in cash and
100,000 shares of the Company's $7.50 Series I Convertible Preferred Stock.
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The transaction is subject to FCC consent. The Company provided a $2,200,000
letter of credit as an escrow deposit in this transaction.
On August 1, 1999, the Company sold the FCC licenses and related assets
used in the operations of KCBQ(AM) in San Diego, California for approximately
$6,000,000 in cash. The Company had previously issued a note for $6,000,000 to a
third party which was collateralized by the assets of the station. Upon
consummation of the sale, the note was repaid.
3. CAPITAL STOCK
In January 1999, the Company issued 372,406 shares of Series G
Convertible Preferred Stock for $5.00 per share to certain executive officers of
the Company and Blue Chip Capital Fund II Limited Partnership, an existing
holder of Series C Convertible Preferred Stock. The proceeds were used to pay
down existing debt under the Credit Agreement and fund working capital needs of
the Company.
In February 1999, the Company issued 633,652 shares of Series F
Convertible Preferred Stock for $5.00 per share to existing Series F holders.
The proceeds were used to finance certain capital improvements, fund deferred
transaction costs related to the June 15 Acquisitions and the Faircom merger and
fund working capital needs of the Company.
In April 1999, the Company issued 1,016,348 shares of Series F
Convertible Preferred Stock at $5.00 per share to fund its purchase of the
St. Cloud Stations. (See Note 2)
In April 1999, the Company shareholders voted to increase the number of
authorized shares of common stock from 30,000,000 to 60,000,000 and increase the
number of authorized shares of preferred stock from 20,000,000 to 40,000,000.
These increases have not yet been implemented by an amendment to the Company's
Certificate of Incorporation, and the additional shares of preferred stock have
not been designated as a specific series.
In June 1999, the Company issued 636,363 shares of Series H Convertible
Preferred Stock at $5.50 per share to certain existing preferred stockholders to
fund a reduction in bank debt and working capital requirements. The Series H
Convertible Preferred Stock was issued with similar terms as the Series G
Convertible Preferred Stock. In addition, holders of the Series H Convertible
Preferred Stock were granted the right to elect one individual to the Company's
Board of Directors upon and subject to certain conditions.
4. ASSETS HELD FOR SALE
As of June 30, 1999, the Company had signed definitive agreements to
sell the Kingman Stations, the Flagstaff Stations and the Lake Tahoe Stations
(See Note 2). Pursuant to the terms of its credit agreement, when debt is above
certain levels, Regent is required to reduce its outstanding borrowings under
its credit agreement by an amount equal to the net proceeds received from any
stations sold. The Company expects these dispositions to be completed within one
year of June 30, 1999. As a result, the Company has reclassified approximately
$8,925,000 of long-term debt to current debt and approximately $8,713,000 in
long-term assets to assets held for sale in the accompanying June 30, 1999
condensed consolidated balance sheet. The assets classified as assets held for
sale as of June 30, 1999 have been recorded at the lower of their carrying value
or estimated fair market value less anticipated disposition costs. The results
from operations related to these properties are immaterial.
In addition, the assets of KCBQ (AM), which were sold on August 1,
1999, also have been classified as assets held for sale in the accompanying June
30, 1999 condensed consolidated balance sheet.
5. EARNINGS PER SHARE
SFAS 128 calls for the dual presentation of basic and diluted earnings
per share ("EPS"). Basic EPS is based upon the weighted average common shares
outstanding during the period. Diluted EPS reflects the potential dilution that
would occur if common stock equivalents were exercised. The effects of the
assumed conversion of the Company's convertible preferred stock and the assumed
exercise of outstanding options and warrants would not be dilutive for all
periods presented. Therefore, basic EPS and diluted EPS are the same for all
periods presented.
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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
The following discussion should be read in conjunction with the
Condensed Consolidated Financial Statements. Results for the interim periods may
not be indicative of the results for the full years.
On June 15, 1998, Regent consummated a number of mergers, acquisitions,
borrowings and issuances of additional equity. See Notes 1 and 2 to Regent's
Condensed Consolidated Financial Statements included as part of this Form 10-Q.
The historical financial statements of Faircom Inc., which was deemed the
"accounting acquirer" in the merger between Faircom and Regent completed June
15, 1998, became the historical financial statements of Regent, and accordingly,
the results of operations of Regent and of the other entities which merged with
or were acquired by Regent as part of the June 15, 1998 transactions have been
included in Regent's Condensed Consolidated Financial Statements only from June
15, 1998.
On the closing date of the June 15, 1998 transactions, Regent expanded
from being a small broadcaster (represented, from an accounting standpoint, by
Faircom's six stations in two markets) to a group broadcaster operating 33
stations in ten different markets. This significant change in size of Regent's
operations led directly to substantial increases in revenue, operating expenses,
depreciation and amortization, corporate general and administrative expenses,
and interest expense in 1999 as compared to 1998. Because of the June 15, 1998
transactions, and to a lesser extent the acquisition of the St. Cloud stations,
the results of Regent's operations in 1999 are not comparable to those of 1998,
nor are they necessarily indicative of results in the future.
The key focus from the consummation of the June 15, 1998 transactions
into 1999 was developing the platform from which Regent could carry out its
operating strategies as a much larger radio company. Development of the platform
required significant expenditures. These costs are viewed by Regent as
investment costs which will provide returns to Regent in future years.
Operationally, Regent replaced general managers in eight of its markets and
added or replaced general sales managers in six markets in order to implement
aggressive sales programs. Regent invested significantly in the hiring and
training of sales personnel and in increased promotional spending in all
markets. While many of these changes took place prior to 1999, the operational
improvements take some time to manifest even though the cost increases were
immediate.
In addition, Regent developed a corporate staff which it believes is
capable of supporting a much larger operation and now maintains primary
executive and administrative offices located in Covington, Kentucky, as well as
the New York corporate office utilized by Faircom at the time of its merger with
Regent. The cost of executive personnel and administrative expense amounted to
approximately $544,000 in the three months ended June 30, 1999, versus
approximately $735,000 in the comparable period in 1998. The 1998 costs include
$530,000 in one-time compensation expense for stock options granted June 15,
1998 to two officers of Faircom pursuant to the terms of the merger between
Faircom and Regent. Corporate general and administrative expense of $1,160,000
increased for the six months ended June 30, 1999 versus $860,000 for the
comparable period in 1998 due to the increase in corporate staff and facilities
partially offset by the one-time compensation charge in 1998.
Operating income of $515,000 for the three months ended June 30, 1999
compared favorably with an operating loss of $132,000 for the same period in
1998. Additionally, the operating loss of $140,000 for the six months ended June
30, 1999 compared favorably with an operating loss of $182,000 for the same
period in 1998.
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Interest expense of $624,000 for the three months ended June 30, 1999
and $1,487,000 for the six months ended June 30, 1999 increased versus the
comparable periods in 1998 as a result of the June 15 transactions, and to a
lesser extent, the acquisition of the St. Cloud stations. This increase in
interest expense was partially offset by a $311,000 reduction in the carrying
value of the "put" warrants classified as a long-term liability in the
accompanying June 30, 1999 condensed consolidated balance sheet.
LIQUIDITY AND CAPITAL RESOURCES
In the six months ended June 30, 1999, net cash used in operating
activities was $1,826,000 compared with net cash used in operating activities of
$898,000 for 1998. In the six months ended June 30, 1999, proceeds from the
issuance of preferred stock provided substantially all of the funds used in
operating activities, as well as funds used for capital expenditures, principal
payments on long-term debt, payment of professional fees, which were mostly
incurred in connection with the June 15, 1998 transactions, and other investing
and financing activity cash requirements (with the exception of the borrowing of
$8,500,000 which was used to help finance the purchase of the St. Cloud
stations). As a result, there was a net increase in cash of $1,281,000 in the
six months ended June 30, 1999 compared with a net increase of $234,000 in the
same period in 1998.
Regent's borrowings are made under a credit agreement with a group of
lenders which provides for a senior reducing revolving credit facility with an
original commitment of up to $55,000,000 expiring March 31, 2005 (the commitment
was $53,625,000 at June 30, 1999). Regent's credit agreement permits the
borrowing of available credit for working capital and acquisitions, including
related acquisition expenses. In addition, Regent may request from time to time
that the lenders issue letters of credit in accordance with the same provisions
as the credit facility. At June 30, 1999, Regent had borrowed $40,735,000 under
its credit agreement. The remaining unused portion of the credit facility of
$12,890,000 was available to finance other acquisitions, subject to restrictions
contained in the credit agreement.
Beginning January 1, 1999, Regent is required to maintain an interest
rate coverage ratio (EBITDA, defined as earnings before interest, taxes,
depreciation and amortization, to annual interest rate cost); a fixed charge
coverage ratio (EBITDA to annual fixed charges); and a financial leverage ratio
(total debt to Adjusted EBITDA, as defined in the credit agreement). To maintain
compliance with these covenants, Regent must reduce its outstanding borrowings
during the third quarter of 1999. It intends to do this through proceeds from
the sales of the Arizona stations and the Lake Tahoe stations. The sale of four
of the seven Arizona stations is expected to close during the third quarter of
1999. Sale of the others could be delayed into the fourth quarter, depending on
the timing of FCC consent. If these sales were to be delayed, Regent will
request waivers from its lenders to allow more time for the sales to close or
will raise additional equity to reduce its debt.
Interest under the credit agreement is payable, at the option of
Regent, at alternative rates equal to the LIBOR rate (established June 3, 1999
at 8.63% and May 21, 1999 at 8.56% and effective at those same rates at June 30,
1999) plus 1.50% to 3.50%, or the base rate announced by the Bank of Montreal
(7.75% at June 30, 1999) plus .25% to 2.25%. The spreads over the LIBOR rate and
such base rate vary from time to time, depending upon Regent's financial
leverage. Regent will pay quarterly commitment fees equal to 3/8% to 1/2% per
annum, depending upon Regent's financial leverage, on the unused portion of the
commitment under its credit agreement. Regent also is required to pay certain
other fees to the agent and the lenders for the administration and use of the
credit facility.
In the first quarter of 1999, Regent received approximately $5,030,000
in gross proceeds from the issuance of shares of its Series F and G convertible
preferred stock at $5.00 per share. In the second
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quarter of 1999, the holders of the Series F convertible preferred stock
purchased an additional 1,016,348 shares of Regent's Series F convertible
preferred stock at $5.00 per share, to finance a portion of the acquisition
price of the St. Cloud stations. In May 1999, Regent borrowed $8,500,000 in
funds under the credit agreement to finance the balance of the purchase price
of the St. Cloud stations and related transaction fees. In June 1999, three
existing shareholders purchased an additional $3,500,000 of a new series of
convertible preferred stock, Series H convertible preferred stock, at
$5.50 per share. The proceeds were used to reduce bank debt and fund working
capital requirements. Additionally, an existing investor and a new investor
have committed to purchase an additional $8,500,000 of Series H convertible
preferred stock in August 1999. Of the proceeds, $1,000,000 will be used to pay
down borrowings under Regent's credit facility. The balance of the proceeds,
along with additional borrowings under its credit agreement, will be used to
finance the acquisition and initial capital expenditure and working capital
needs of the Erie stations.
Based on current interest rates and accrued interest expense as of June
30, 1999, Regent believes its interest payments for the remainder of 1999 will
be approximately $1,925,000. Scheduled debt principal payments are expected to
be $33,000 for the remainder of 1999. Corporate general and administrative
expense and capital expenditures for the remainder of 1999 are estimated to be
approximately $1,030,000 and $530,000, respectively. Most of the planned capital
expenditures are required to be made in 1999 under the terms of the credit
agreement. During the first and second quarters of 1999, Regent paid
approximately $1,421,000 of professional fees which were mostly incurred in
connection with the June 15, 1998 transactions. Regent has paid the remaining
balance of approximately $65,000 in the third quarter. For these payments to be
made over the balance of 1999, aggregating $3,583,000, Regent has used or will
utilize net cash provided by operations, current cash balances, proceeds from
the issuance of Series F and G convertible preferred stock received in the first
quarter of 1999 and the $3,500,000 of proceeds from the sale of the Series H
convertible preferred stock received in the second quarter of 1999.
Pursuant to the terms of its credit agreement, Regent is required to
reduce its outstanding borrowings under its credit agreement by an amount equal
to the net proceeds received from the sales of its Arizona and Lake Tahoe
stations. Regent believes net cash from operations, cash balances, and the net
proceeds from the sales of its Arizona stations and Lake Tahoe stations will be
sufficient to reduce borrowings under its credit agreement to allow Regent to
maintain compliance with all covenants and to meet Regent's interest expense and
any required principal payments, corporate expenses and capital expenditures in
the foreseeable future, based on its projected operations and indebtedness.
In addition to the pending acquisition of stations in Utica-Rome and
Watertown, New York, Regent is actively pursuing a number of acquisitions of
radio stations in a number of markets. This pending acquisition and any such
additional acquisitions would be financed from borrowings against the unused
portion of the credit agreement (less any utilization of such portion for
working capital needs), and through additional equity or high yield debt
offerings. There can be no assurance, however, that any of such acquisitions
will be consummated or that all or any portion of such financing will be
available.
MARKET RISK
Regent is exposed to the impact of interest rate changes because of
borrowings under its Credit Agreement. It is Regent's policy to enter into
interest rate transactions only to the extent considered necessary to meet its
objectives and to comply with the requirements of its credit agreement. Regent
has not entered into interest rate transactions for trading purposes.
To satisfy the requirements of its credit agreement, Regent entered
into a two-year collar agreement with the Bank of Montreal effective August 17,
1998 for a notional amount of $34,400,000 to mitigate the risk of increasing
interest rates created by the borrowing under its credit agreement. This
agreement is based on the three-month LIBOR rate and has a Cap Rate, as defined,
of 6.50% and a Floor
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Rate, as defined, of 5.28%. These rates are exclusive of additional spreads over
the LIBOR rate depending upon Regent's financial leverage. Of the $40,735,000
principal amount outstanding under Regent's credit facility at June 30, 1999,
the annual interest expense would fluctuate by a maximum of $420,000 on the
$34,400,000 based on the defined Cap and Floor rates. Fluctuation in interest
expense on the remaining $6,335,000 would not be material.
YEAR 2000 COMPUTER SYSTEM COMPLIANCE
The "Year 2000" issue results from the fact that many computer programs
were written with date-sensitive codes that utilize only the last two digits
(rather than all four digits) to refer to a particular year. As the year 2000
approaches, these computer programs may be unable to process accurately certain
date-based information, as the program may interpret the year 2000 as 1900.
Regent utilizes various information technology (IT) systems in the
operation of its business, including accounting and financial reporting systems
and local and wide area networking infrastructure. In addition to IT systems,
Regent is also reliant on several non-information technology (non-IT) systems,
which could potentially pose Year 2000 issues, including traffic scheduling and
billing systems and digital audio systems providing automated broadcasting.
Finally, in addition to the risks posed by Year 2000 issues involving its own IT
and non-IT systems, Regent could also be affected by any Year 2000 problems
experienced by its key business partners, which include local and national
advertisers, suppliers of communications services, financial institutions and
suppliers of utilities. Regent is addressing the Year 2000 issue in its existing
properties in four phases: (a) assessment of the existence, nature and risk of
Year 2000 problems affecting Regent's systems; (b) remediation of Regent's
systems, whether through repair, replacement or upgrade, based on the findings
of the assessment phase; (c) testing of the enhanced or upgraded systems; and
(d) contingency planning.
In the fourth quarter of 1998, Regent engaged the services of an
independent Year 2000 consultant in order to analyze the scope of Regent's Year
2000 compliance issues and to initiate formal communications with its
advertisers, suppliers, lenders and other key business partners to determine
their exposure to the Year 2000 issue.
During the first quarter of 1999, the assessment phase was completed
with respect to the IT-systems and non-IT systems at Regent's currently owned
properties. Based on the findings of the assessment phase, a detailed plan was
developed for the remaining phases (remediation, testing and contingency
planning).
The following is a summary of the status of Regent's Year 2000 plans in
the IT and non-IT areas relative to the stations Regent currently owns and
expects to still own on January 1, 2000.
IT Systems
During the assessment phase, Regent evaluated the level of Year 2000
compliance of IT systems and hardware in its executive offices and all markets.
All financial and networking systems which have been determined to be
non-compliant will be upgraded and tested by the end of the third quarter of
1999. Costs associated with the upgrades were immaterial. Regent has assessed
several of its personal computers to be non-compliant. Several of the
non-compliant personal computers are either upgradable at a minimal cost or are
used for tasks where non-compliance will not impact their functionality. There
are personal computers which will need to be replaced in 1999 and the cost of
replacement is included in Regent's capital plan. All necessary upgrades will
occur by the end of the third quarter of 1999. Most of the replacements will
take place by the end of the third quarter; however, a portion will occur in the
fourth quarter.
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Non-IT Systems
Regent acquired all but one of its radio stations on or after June 15,
1998 from several independent operators. As part of Regent's ongoing plan to
provide its stations with a standardized digital audio broadcast system and,
thus, to realize certain of the efficiencies of operating as a larger broadcast
group, Regent has been systematically upgrading the broadcast systems and other
technical equipment at its stations. Although this upgrading plan has had a
business purpose independent of the Year 2000 compliance issue, Regent has
required, as a matter of course, written assurance from its suppliers that the
new broadcast systems are Year 2000 compliant. With respect to those properties
which Regent currently owns and expects to continue to own on January 1, 2000,
the upgrading project is 90% complete, with the installation of new Year 2000
compliant broadcast systems having been completed for Regent's stations in all
of its markets except the Redding, California market, which will occur in the
third quarter in conjunction with an expansion of Regent's facility in the
market. The costs of the upgrade project have been included in capital
expenditures. Regent plans to conduct and complete its own testing of the
broadcast systems at all of its stations by the end of the third quarter of
1999. The cost associated with this testing is expected to be immaterial.
The traffic scheduling and billing systems currently utilized at
Regent's stations are provided by two suppliers on a Year 2000 compliant basis,
with the exception of Regent's stations located in the Victorville, California
market. To confirm Year 2000 compliance of its traffic and billing systems,
Regent tested these systems during the second quarter of 1999. By the third
quarter of 1999, Regent intends to have replaced its traffic and billing systems
at the Victorville stations with a system provided by suppliers utilized by
Regent's other stations.
During the first quarter of 1999, Regent compiled a detailed inventory
of key business partners and prioritized the list based on potential impact to
Regent in the event that the business partners experienced severe operational or
financial hardship as a result of Year 2000 non-compliance. Each business
partner was contacted and asked to fill out a detailed questionnaire regarding
its own Year 2000 assessment. Follow-up on responses has begun and is ongoing.
With respect to the stations which Regent has agreed to acquire, the
Year 2000 assessment phase has been commenced and is continuing. Regent expects
its acquisition of the Erie stations to be consummated on August 31, 1999 and
believes that it will be able to complete its assessment of Year 2000 compliance
and perform all remediation and testing on those stations in the third and
fourth quarters of 1999. Regent's agreement to acquire stations in Utica-Rome
and Watertown, New York was signed on July 29, 1999 and will not be consummated
until after January 1, 2000. The Year 2000 assessment of these stations is
underway, and Regent will be monitoring all remediation and testing activities,
which the seller has agreed to complete. Regent has no reason to believe that
all systems at these stations will not be able to be brought into Year 2000
compliance in a timely manner.
Regent has budgeted $100,000 in 1999 for capital expenditures and
$50,000 for expenses involved in Year 2000 remediation of its existing stations.
Regent does not expect total expenditures to exceed the total budgeted amount.
Required capital expenditures, if any, for remediation of non-compliant systems
at the Erie stations will be funded out of the initial capital budget. Expenses
related to remediation at the Erie stations, if any, are not expected to be
material. To the extent that any material Year 2000 problems are discovered at
the Utica-Rome or Watertown stations, Regent will have a contractual claim
against the seller for any losses suffered as a result.
Although Regent has not received any information to date that would
lead it to believe its internal Year 2000 compliance issues will not be able to
be resolved on a timely basis or that the related costs will have a material
adverse effect on Regent's operations, cash flows or financial condition,
Regent's work relative to its business partner interfaces is ongoing.
Accordingly, unexpected costs associated with the interruption of operation of
Regent's stations could occur and, if significant, could have a material adverse
effect on Regent's operations, cash flows and financial condition. The most
reasonably likely worst-case scenarios include loss of power and communications
links. The impact of these uncertainties on Regent's results of operations,
liquidity and financial condition, is not determinable. Based on the assessment
of
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external and non-IT system risks and the testing to be undertaken by Regent,
contingency plans will be developed for all critical systems by the end of the
third quarter of 1999. Testing of contingency plans will occur in the third and
fourth quarters of 1999.
CAUTIONARY STATEMENT CONCERNING FORWARD-LOOKING STATEMENTS
This Form 10-Q includes certain forward-looking statements with respect
to Regent that involve risks and uncertainties. Such statements are influenced
by Regent's financial position, business strategy, budgets, projected costs, and
plans and objectives of management for future operations, and are expressed with
words such as "anticipate," "believe," "plan," "estimate," "expect," "intend,"
"project" and other similar expressions. Although Regent believes its
expectations reflected in such forward-looking statements are based on
reasonable assumptions, readers are cautioned that no assurance can be given
that such expectations will prove correct and that actual results and
developments may differ materially from those conveyed in such forward-looking
statements. For these statements, Regent claims the protections of the safe
harbor for forward-looking statements contained in the Private Securities
Litigation Reform Act of 1995.
Important factors that could cause actual results to differ materially
from the expectations reflected in the forward-looking statements herein include
changes in general economic, business and market conditions, as well as changes
in such conditions that may affect the radio broadcast industry or the markets
in which Regent operates, including, in particular, increased competition for
attractive radio properties and advertising dollars, fluctuations in the cost of
operating radio properties, and changes in the regulatory climate affecting
radio broadcast companies.
Such forward-looking statements speak only as of the date on which they
are made, and Regent undertakes no obligation to update any forward-looking
statement to reflect events or circumstances after the date of this Form 10-Q.
If Regent does update or correct one or more forward-looking statements, readers
should not conclude that Regent will make additional updates or corrections with
respect thereto or with respect to other forward-looking statements.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
The information required by this Item 3 is presented above under Item
2. Management's Discussion and Analysis of Financial Condition and Results of
Operations, and is incorporated herein by this reference.
PART II - OTHER INFORMATION
ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS
(c) During the second quarter of 1999, Regent issued additional shares
of its preferred stock as follows:
On April 29, 1999, Regent's stockholders voted to increase the number
of authorized shares of common stock from 30,000,000 to 60,000,000 and increase
the number of authorized shares of preferred stock from 20,000,000 to
40,000,000.
On April 28, 29 and 30, 1999, Regent sold 1,016,348 shares of Series F
convertible preferred stock to existing Series F holders at $5.00 per share to
fund the purchase by Regent of FCC licenses and other assets from WJON
Broadcasting Company.
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On June 21 and 23, 1999, Regent issued a total of 636,363 shares of
Series H convertible preferred stock at $5.50 per share to certain existing
preferred stockholders to fund a reduction in bank debt and working capital
requirements.
These issuances of securities were 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.
Both the Series F Convertible Preferred Stock and the Series H
Convertible Preferred Stock are convertible into shares of Regent's common stock
on a one-for-one basis at any time at the option of the holder and under certain
circumstances at the option of Regent.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
The Regent Communications, Inc. 1999 Annual Meeting of Stockholders was
held on April 29, 1999. At the annual meeting, the stockholders were asked to
vote upon (1) the election of directors, and (2) a proposal to amend Regent's
Amended and Restated Certificate of Incorporation to increase the number of
authorized shares of preferred stock from 20,000,000 to 40,000,000 and the
number of authorized shares of common stock from 30,000,000 to 60,000,000.
The results of the voting were as follows:
(1) Regent's seven incumbent directors were re-elected to serve
until the next annual meeting of stockholders and until their
successors are elected and qualified. The directors were
elected as follows:
Shares Voted Shares
Name of Director "FOR Withheld
---------------- ------------- --------
Terry S. Jacobs 6,251,157 0
William L. Stakelin 6,251,157 0
Joel M. Fairman 6,251,017 140
R. Glen Mayfield 6,251,157 0
William H. Ingram 6,251,157 0
Richard H. Patterson 6,251,157 0
John H. Wyant 6,251,157 0
(2) The proposal to amend Regent's Amended and Restated
Certificate of Incorporation to increase the number of
authorized shares of preferred stock from 20,000,000 to
40,000,000 and the number of authorized shares of common stock
from 30,000,000 to 60,000,000 was adopted by the affirmative
vote of more than the required vote necessary for approval by
Regent's outstanding shares entitled to vote thereon. The
results of the voting were as follows:
Shares Voted "FOR" - 7,249,920
Shares Voted "AGAINST" - 182
Shares "ABSTAINING" - 1,055
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ITEM 5. OTHER INFORMATION
On May 18, 1999, Regent entered into an agreement to purchase WXKC(FM),
WRIE(AM) and WXTA(FM), serving the Erie, Pennsylvania area, for a purchase price
of approximately $13.5 million payable in cash. The completion of this
transaction is subject to a number of conditions, including FCC consent, and is
expected to occur during the third quarter of 1999.
On July 29, 1999, Regent entered into an agreement to acquire WODZ(FM),
WLZW(FM), WFRG(FM), WIBX(AM), and WRUN(AM) serving the Utica-Rome, New York area
and WCIZ(FM), WFRY(FM), WTNY(AM), and WUZZ(AM) in Watertown, New York for a
purchase price of $44 million in cash and 100,000 shares of Regent's preferred
stock. The completion of this transaction is subject to a number of conditions,
including FCC consent, and is expected to occur during the first quarter of
2000.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
The following is filed herewith as an exhibit to Part I of
this Form 10-Q:
Exhibit No. 27 Financial Data Schedule
The exhibits identified as Part II Exhibits in 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
Regent did not file a Report on Form 8-K during the second
quarter of 1999.
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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 16, 1999 By: /s/ TERRY S. JACOBS
--------------------------------------------
Terry S. Jacobs, Chairman of the Board
and Chief Executive Officer
Date: August 16, 1999 By: /s/ ANTHONY A. VASCONCELLOS
-------------------------------------------
Anthony A. Vasconcellos,
Chief Financial Officer and
Vice President
(Chief Accounting Officer)
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EXHIBIT INDEX
The following exhibits are filed, or incorporated by reference where
indicated, as part of Part II of this Quarterly Report on Form 10-Q:
EXHIBIT
NUMBER EXHIBIT DESCRIPTION
2(a) Asset Purchase Agreement dated as of May 18, 1999 by and
among Media One Group-Erie, Ltd., Cuzco LLC, James T.
Embrescia and Thomas J. Embrescia, Regent Broadcasting of
Erie, Inc. and Regent Licensee of Erie, Inc.
The following exhibits and schedules to the foregoing Asset
Purchase Agreement are omitted as not material; however,
copies will be provided to the Securities and Exchange
Commission upon request:
Schedules:
1.2.8 Miscellaneous Excluded Assets
7.4 Stations Licenses, Etc.
7.7 Tangible Personal Property
7.8 Real Property
7.9 Contracts (including identification of
Material Contracts)
7.11 Environmental Matters
7.12 Intellectual Property
7.13 Financial Statements
7.14 Personnel Information
7.15 Litigation
7.16 Compliance With Laws
7.17 Employee Benefit Plans
Exhibits:
A Form of Indemnification Escrow Agreement
B Form of Letter of Credit
C Form of Deposit Escrow Agreement
D Form of Assignment and Assumption Agreement
E Form of Non-Competition Agreement
F Form of Lease Agreement
2(b) Asset Purchase Agreement dated as of July 29, 1999 by and
among Forever of NY, Inc., Forever of NY, LLC and Forever
Broadcasting, as sellers, and Regent Broadcasting of
Utica/Rome, Inc., Regent Licensee of Utica/Rome, Inc., Regent
Broadcasting of Watertown, Inc., Regent Licensee of Watertown,
Inc., as buyers, and Regent Communications, Inc.
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The following exhibits and schedules to the foregoing Asset
Purchase Agreement are omitted as not material; however,
copies will be provided to the Securities and Exchange
Commission upon request:
Schedules:
1.2.8 Excluded Real Property
6.4 Third Party Consents
7.4 Stations Licenses, Etc.
7.7 Tangible Personal Property
7.8 Real Property
7.9 Contracts (including identification
of Material Contracts)
7.11 Environmental Matters
7.12 Intellectual Property
7.13 Financial Statements
7.14 Personnel Information
7.15 Litigation
7.16 Compliance With Laws
7.17 Employee Benefit Plans
Exhibits:
A Form of Certificate of Designation
B Form of Indemnification Escrow Agreement
C Form of Deposit Escrow Agreement
D Form of Assignment and Assumption Agreement
E Form of Opinion Letter of Sellers'
Corporate Counsel
F Form of Opinion Letter of Sellers'
FCC Counsel
G Form of Non-Competition Agreement
H Form of Opinion Letter of Counsel for
Buyers and Regent
I Form of Lease Agreement
3(a)* Amended and Restated Certificate of Incorporation of Regent
Communications, Inc., as amended by a Certificate of
Designation, Number, Powers, Preferences and Relative,
Participating, Optional and Other Special Rights and the
Qualifications, Limitations, Restrictions, and Other
Distinguishing Characteristics of Series G Preferred Stock of
Regent Communications, Inc., filed January 21, 1999.
(previously filed as Exhibit 3(a) to the Registrant's Form
10-K for the year ended December 31, 1998 and incorporated
herein by this reference)
3(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)
3(c) Certificate of Decrease of Shares Designated as Series G
Convertible Preferred Stock of Regent Communications, Inc.,
filed with the Delaware Secretary of State on June 21, 1999
amending the Amended and Restated Certificate of Incorporation
of Regent Communications, Inc., as amended
3(d) Certificate of Designation, Number, Powers, Preferences and
Relative, Participating, Optional and Other Special Rights and
the Qualifications, Limitations, Restrictions, and Other
Distinguishing Characteristics of Series H Preferred Stock of
Regent Communications, Inc., filed with the Delaware Secretary
of State on June 21, 1999
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amending the Amended and Restated Certificate of Incorporation
of Regent Communications, Inc., as amended
4(a)* 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.L.C., 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).
4(b)* Stock Purchase Agreement dated June 15, 1998 among Regent
Communications, Inc., Waller-Sutton Media Partners, L.P., WPG
Corporate Development Associates V, L.C.C., 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(c)* 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.C.C., 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(d)* 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(e)* 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(f)* 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(g)* 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 (previously filed
as Exhibit 4(k) to the Form 10-Q for the Quarter Ended June
30, 1998, as amended, and incorporated herein by this
reference).
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4(h)* 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(i)* 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(j)* 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).
4(k)* 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(l)* 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(m)* 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(n)* 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(o)* 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(p)* 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(1) to the
Registrant's Form S-4 Registration Statement No. 333-46435
effective May 7, 1998 and incorporated herein by this
reference)
4(q)* First Amendment to Credit Agreement dated as of February 16,
1998 among Regent Communications, Inc., the financial
institutions listed therein, as lenders, General Electric
Capital Corporation, as Documentation Agent, and Bank of
Montreal, Chicago Branch as
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23
Agent (previously filed as Exhibit 4(w) to the Registrant's
Form 8-K/A (date of report June 15, 1998) filed September 3,
1998 and incorporated herein by reference)
4(r)* Second Amendment and Limited Waiver to Credit Agreement dated
as of June 10, 1998 among Regent Communications, Inc., the
financial institutions listed therein, as lenders, General
Electric Capital corporation, as Documentation Agent, and Bank
of Montreal, Chicago Branch, as Agent (previously filed as
Exhibit 4(x) to the Registrant's Form 8-K/A (date of report
June 15, 1998) filed September 3, 1998 and incorporated herein
by reference)
4(s)* Third Amendment to Credit Agreement dated as of August 14,
1998 among Regent Communications, Inc., the financial
institutions listed therein, as lenders, General Electric
Capital Corporation, as Documentation Agent, and Bank of
Montreal, Chicago Branch, as Agent (previously filed as
Exhibit 4(y) to the Registrant's Form 10-Q for the Quarter
Ended September 30, 1998, as amended, and incorporated herein
by this reference)
4(t)* Amendment to Second Amended and Restated Stockholders'
Agreement, dated as of January 11, 1999, 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.L.C., 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(t) to the Registrant's Form
10-K for the year ended December 31, 1998 and incorporated
herein by this reference)
4(u)* Stock Purchase Agreement dated January 11, 1999 between Regent
Communications, Inc. and Blue Chip Capital II Limited
Partnership relating to the purchase of 315,887 shares of
Regent Communications, Inc. Series G Convertible Preferred
Stock (excluding exhibits not deemed material or filed
separately in executed form) (previously filed as Exhibit 4(u)
to the Registrant's Form 10-K for the year ended December 31,
1998 and incorporated herein by this reference)
4(v)* Stock Purchase Agreement dated January 11, 1999 between Regent
Communications, Inc. and Terry S. Jacobs relating to the
purchase of 50,000 shares of Regent Communications, Inc.
Series G Convertible Preferred Stock (See Note 3) (excluding
exhibits not deemed material or filed separately in executed
form) (previously filed as Exhibit 4(v) to the Registrant's
Form 10-K for the year ended December 31, 1998 and
incorporated herein by this reference)
4(w)* Fourth Amendment, Limited Consent and Limited Waiver to Credit
Agreement, First Amendment to Subsidiary Guaranty and First
Amendment to Pledge and Security Agreement, dated as of
October 16, 1998 among Regent Communications, Inc., the
financial institutions listed therein, as lenders, General
Electric Capital Corporation, as Documentation Agent, and Bank
of Montreal, Chicago Branch, as Agent. (previously filed as
Exhibit 4(w) to the Registrant's Form 10-K for the year ended
December 31, 1998 and incorporated herein by this reference)
4(x)* Fifth Amendment to Credit Agreement, dated as of November 23,
1998, among Regent Communications, Inc., the financial
institutions listed therein, as lenders, General Electric
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24
Capital Corporation, as Documentation Agent, and Bank of
Montreal, Chicago Branch, as Agent. (previously filed as
Exhibit 4(x) to the Registrant's Form 10-K for the year ended
December 31, 1998 and incorporated herein by this reference)
4(y)* Sixth Amendment and Limited Consent to Credit Agreement, dated
as of February 24, 1999, among Regent Communications, Inc.,
the financial institutions listed therein, as lenders, General
Electric Capital Corporation, as Documentation Agent, and Bank
of Montreal, Chicago Branch, as Agent. (previously filed as
Exhibit 4(y) to the Registrant's Form 10-K for the year ended
December 31, 1998 and incorporated herein by this reference)
4(z) Second Amendment to Second Amended and Restated Stockholders'
Agreement, dated as of June 21, 1999, among Regent
Communications, Inc., Terry S. Jacobs, William L. Stakelin,
Waller-Sutton Media Partners, L.P., Joel M. Fairman, Miami
Valley Venture Fund II Limited Partnership, Blue Chip Capital
Fund II Limited Partnership and PNC Bank, N.A., Trustee
(excluding exhibits not deemed material or filed separately in
executed form)
4(aa) Stock Purchase Agreement dated June 21, 1999 between Regent
Communications, Inc. and Waller-Sutton Media Partners, L.P.
relating to the purchase of 90,909 shares of Regent
Communications, Inc. Series H Convertible Preferred Stock
(See Note 4) (excluding exhibits not deemed material or filed
separately in executed form)
4(bb) Stock Purchase Agreement dated June 21, 1999 between Regent
Communications, Inc. and WPG Corporate Development Associates
V, L.L.C. and WPG Corporate Development Associates V
(Overseas), L.L.C. relating to the purchase of 1,180,909 and
182,727 shares, respectively, of Regent Communications, Inc.
Series H Convertible Preferred Stock (excluding exhibits not
deemed material or filed separately in executed form)
4(cc) Seventh Amendment to Credit Agreement, dated as of June 30,
1999, among Regent Communications, Inc., the financial
institutions listed therein, as lenders, General Electric
Capital Corporation, as Documentation Agent, and Bank of
Montreal, Chicago Branch, as Agent
The following exhibit is filed as part of Part I of this Quarterly Report on
Form 10-Q:
27 Financial Data Schedule
- --------------------
* Incorporated by reference.
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 Cities Capital Fund Limited Partnership 20,000
William H. Ingram 10,000
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25
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.
3. Two substantially identical Stock Purchase Agreements were entered into
for the purchase of Series G Convertible Preferred Stock as follows:
Joel M. Fairman 3,319 shares
William L. Stakelin 3,200 shares
4. Two substantially identical Stock Purchase Agreements were entered into
for the purchase of Series H Convertible Preferred Stock as follows:
Blue Chip Capital Fund II Limited Partnership 363,636 shares
PNC Bank, N.A., Trustee 181,818 shares
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