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 SEPTEMBER 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
November 12, 1999.
2
REGENT COMMUNICATIONS, INC.
FORM 10-Q
FOR THE QUARTER ENDED SEPTEMBER 30, 1999
INDEX
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
Condensed Consolidated Statements of Operations for the three
months and nine months ended September 30, 1999 (unaudited)
and September 30, 1998 (unaudited)
Condensed Consolidated Balance Sheets as of September 30, 1999
(unaudited) and December 31, 1998
Condensed Consolidated Statements of Cash Flows for the nine
months ended September 30, 1999 (unaudited) and September
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 5. Other Information
Item 6. Exhibits and Reports on Form 8-K
-2-
3
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
REGENT COMMUNICATIONS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
Three Months Ended Nine Months Ended
September 30, September 30,
------------- -------------
1999 1998 1999 1998
---------------- ----------------- ---------------- ------------
Gross broadcast revenues $ 7,118,643 $5,860,649 $18,747,504 $10,339,931
Less agency commissions 488,266 439,551 1,281,834 855,630
---------- ---------- --------- ----------
Net broadcast revenues 6,630,377 5,421,098 17,465,670 9,484,301
Station operating expenses 4,919,525 4,029,194 13,066,210 6,727,843
Depreciation and amortization 1,019,482 779,010 2,838,338 1,465,946
Corporate general and
administrative expenses 540,230 499,931 1,699,360 1,360,001
---------- ---------- --------- ----------
Operating income (loss) 151,140 112,963 (138,238) (69,489)
Interest expense 942,838 942,770 2,429,645 2,029,378
Other income (expense), net 1,476 (14,035) 86,516 6,738
---------- ----------- --------- ----------
Loss before extraordinary item (790,222) (843,842) (2,481,367) (2,092,129)
Extraordinary loss from debt
extinguishment, net of taxes - - - (1,170,080)
----------- ----------- ---------- ---------
Net loss $ (790,222) $ (843,842) $(2,481,367) $(3,262,209)
=========== =========== ========== ===========
Loss applicable to common shares:
Net loss $ (790,222) $ (843,842) $(2,481,367) $(3,262,209)
Preferred stock dividend requirements
and accretion (1,415,844) ( 854,231) (3,976,844) (5,947,870)
----------- ----------- ----------- ----------
Loss applicable to common shares $(2,206,066) $(1,698,073) $(6,458,211) $(9,210,079)
=========== =========== ========== ==========
Basic and diluted net loss per common share:
Before extraordinary item $ (9.19) $ (7.08) $ (26.91) $ (33.50)
Extraordinary item - - - (4.88)
---------- ---------- --------- -----------
Net loss per common share $ (9.19) $ (7.08) $ (26.91) $ (38.38)
=========== =========== ========== ===========
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.
-3-
4
REGENT COMMUNICATIONS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
September 30, 1999 December 31, 1998
------------------ -----------------
(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents $ 2,125,187 $ 478,545
Accounts receivable, less allowance for doubtful
accounts of $203,000 in 1999 and $268,000 in 1998 4,656,492 3,439,372
Other current assets 416,670 200,828
Assets held for sale 8,713,163 7,500,000
---------- ----------
Total current assets 15,911,512 11,618,745
Property and equipment, net 12,181,936 9,303,975
Intangibles, net 59,444,957 45,023,940
Other assets, net 1,604,685 1,671,210
---------- ----------
Total assets $89,143,090 $67,617,870
========== ==========
LIABILITIES AND SHAREHOLDERS' DEFICIT
Current liabilities:
Accounts payable $ 834,270 $ 1,005,327
Accrued expenses 1,566,457 2,772,612
Interest payable 272,661 769,367
Notes payable - 7,500,000
Current portion of long-term debt 18,888,693 980,000
---------- ----------
Total current liabilities 21,562,081 13,027,306
---------- ----------
Long-term debt, less current portion 28,046,307 34,617,500
Warrants and other long-term liabilities 2,988,452 2,643,579
---------- ----------
Total liabilities 52,596,840 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:
$3,595,413 3,595,413 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: $5,708,629 5,708,629 5,372,054
Series C convertible preferred stock, $5.00 stated value, 400,640 shares
issued and outstanding-liquidation value: $2,184,915 634,974 530,094
Series D convertible preferred stock, $5.00 stated value, 1,000,000 shares
authorized; 1,000,000 shares issued and outstanding-liquidation value:
$5,493,222 5,493,222 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:
$22,484,532 22,484,532 12,839,454
Series G convertible preferred stock, $5.00 stated value, 1,800,000 shares
authorized; 372,406 shares issued and outstanding-liquidation value:
$1,999,440 1,999,440 -
Series H convertible preferred stock, $5.50 stated value, 2,200,000 shares
authorized; 2,181,818 shares issued and outstanding-liquidation value:
$12,170,232 12,170,232 -
---------- ----------
Total redeemable preferred stock 52,086,442 27,406,152
Shareholders' deficit:
Preferred stock:
Series C convertible preferred stock, $5.00 stated value, 4,000,000 shares
authorized; 3,328,440 shares issued and outstanding-liquidation value:
$18,148,762 1,131,646 1,131,561
Series E convertible preferred stock, $5.00 stated value, 5,000,000 shares
authorized; 447,842 shares issued and outstanding-liquidation value:
$2,442,334 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 889,307 3,871,549
Retained deficit (19,802,755) (17,321,387)
---------- ----------
Total shareholders' deficit (15,540,192) (10,076,667)
Total liabilities and shareholders' deficit $89,143,090 $67,617,870
========== ==========
The accompanying notes are an integral part of these
financial statements.
-4-
5
REGENT COMMUNICATIONS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
Nine Months ended September 30,
-------------------------------
1999 1998
------------ -------------
Net cash used in operating activities $ (1,383,233) $ (552,933)
----------- -----------
Cash flows from investing activities:
Acquisitions of radio stations, net of cash acquired (27,073,801) (29,263,668)
Escrow deposit - (160,000)
Capital expenditures (1,327,035) (433,373)
Proceeds from sale of radio stations 7,600,000 -
----------- -----------
Net cash used in investing activities (20,800,836) (29,857,041)
----------- -----------
Cash flows from financing activities:
Proceeds from long-term debt 16,500,000 35,500,000
Proceeds from issuance of redeemable preferred stock 22,112,024 18,150,000
Principal payments on long-term debt (5,162,500) (20,733,160)
Payment of notes payable (7,500,000) -
Payments for deferred financing costs (274,558) (1,292,042)
Payments for issuance costs (1,844,255) (1,356,393)
----------- -----------
Net cash provided by financing activities 23,830,711 30,268,405
----------- -----------
Net increase (decrease) in cash and cash equivalents 1,646,642 (141,569)
Cash at beginning of period 478,545 535,312
----------- -----------
Cash at end of period $ 2,125,187 $ 393,743
=========== ===========
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 Regent $ 1,618,681
Series A and B convertible preferred stock warrants $ 310,000
The accompanying notes are an integral part of these
financial statements.
-5-
6
REGENT COMMUNICATIONS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
1. BASIS OF PRESENTATION
Regent Communications, Inc. (including its wholly-owned
subsidiaries, "Regent") was formed to acquire, own and operate radio stations in
small and medium-sized markets in the United States. Regent 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 Regent'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 Regent
at the option of the holder subsequent to June 15, 2003 for an amount equal to
the fair value of Regent's common stock. The acquisition has been treated for
accounting purposes as the acquisition of Regent 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 has been
retroactively restated to reflect the number of common shares outstanding
subsequent to the merger, with the difference between the par value of Regent's
and Faircom's common stock recorded as an offset to additional paid-in capital.
The condensed consolidated financial statements of Regent 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. Certain prior year amounts have
been reclassified to conform to the current classification with no effect on
financial results. 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 Regent's
Form 10-K filed March 31, 1999.
2. CONSUMMATED AND PENDING ACQUISITIONS AND DIVESTITURES
On March 1, 1999, Regent sold to an unrelated third party the FCC
licenses and related assets used in the operations of WSSP(FM) in Charleston,
South Carolina for approximately $1,600,000 in cash. Regent had previously
issued to a third party a note for $1,500,000 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 Regent which has been included in other
income in the accompanying condensed consolidated statement of operations for
the nine months ended September 30, 1999.
On May 6, 1999, Regent purchased from an unrelated third party the 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 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 Regent's senior reducing
credit facility. Based on an independent valuation, approximately $9,033,000 of
the purchase price was allocated to the FCC licenses
-6-
7
and is being amortized over a 40-year period, and the remaining $3,667,000 was
allocated to property and equipment.
On August 1, 1999, Regent sold to an unrelated third party the FCC
licenses and related assets used in the operations of KCBQ(AM) in San Diego,
California for approximately $6,000,000 in cash. Regent had previously issued to
a third party a note for $6,000,000 which was collateralized by the assets of
the station. Upon consummation of the sale, the note was repaid.
On September 3, 1999, Regent purchased 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 (the "Erie Stations") for approximately $13,500,000 in
cash. The purchase was financed by approximately $6,300,000 in proceeds from the
issuance of Series H convertible preferred stock and borrowings under Regent's
senior reducing credit facility. Approximately $12,350,000 of the purchase price
was allocated to the FCC licenses and is being amortized over a 40-year period.
The remaining $1,150,000 was allocated to property and equipment and a
non-compete agreement. An independent valuation is currently being completed and
may result in adjustments to the original purchase price allocation.
The results of operations of the acquired businesses are included in
Regent's financial statements since the respective dates of acquisition.
The following unaudited pro forma data summarizes the combined results
of operations of Regent, as though all acquisitions consummated in 1998 had
occurred at the beginning of that year, and of the St. Cloud Stations and Erie
Stations, as though their acquisitions had occurred at the beginning of each
period. Regent's 1999 dispositions of WSSP(FM) and KCBQ (AM) are not material to
the results of Regent.
Nine-Month Period
Ended September 30,
---------------------------
1999 1998
---- ----
Net broadcast revenues $20,637,416 $19,391,207
Net loss before extraordinary item $(2,466,538) $(3,635,631)
Net loss $(2,466,538) $(4,805,711)
Net loss per common share before extraordinary item:
Basic and diluted $ (30.60) $ (52.24)
Net loss per common share:
Basic and diluted $ (30.60) $ (57.11)
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 30, 1999, Regent entered into an agreement to sell to an
unrelated third party the FCC licenses and related assets used in the operations
of radio stations KZGL(FM), KVNA(AM) and KVNA(FM) in Flagstaff, Arizona (the
"Flagstaff Stations") for approximately $2,425,000 in cash. Approximately
$2,375,000 of FCC licenses and related long-lived assets are classified as
assets held for sale in the
-7-
8
accompanying September 30, 1999 condensed consolidated balance sheet. The
transaction is subject to FCC consent.
On July 29, 1999, Regent 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
Regent's $7.50 Series I convertible preferred stock. The transaction is subject
to FCC consent. Regent provided a $2,200,000 letter of credit as an escrow
deposit in this transaction.
On September 14, 1999, Regent entered into an agreement to purchase
from an unrelated third party the FCC licenses and related assets used in the
operations of radio stations KLAQ-FM, KSII-FM and KROD-AM licensed to El Paso,
Texas for approximately $23,500,000 in cash. The transaction is subject to FCC
consent. Regent provided a $1,500,000 letter of credit as an escrow deposit in
this transaction.
On October 15, 1999, Regent sold 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 are
classified as assets held for sale in the accompanying September 30, 1999
condensed consolidated balance sheet.
On November 5, 1999, Regent sold the FCC licenses and related assets
used in the operations of radio stations KRLT(FM) and KOWL(AM) in South Lake
Tahoe, California (the "Lake Tahoe Stations") for approximately $1,226,000 in
cash to an unrelated third party. Approximately $1,200,000 of FCC licenses and
related long-lived assets are classified as assets held for sale in the
accompanying September 30, 1999 condensed consolidated balance sheet.
3. CAPITAL STOCK
In January 1999, Regent issued 372,406 shares of its Series G
convertible preferred stock for $5.00 per share to certain executive officers of
Regent and to 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 Regent's credit agreement and fund working capital needs.
In February 1999, Regent issued 633,652 shares of its Series F
convertible preferred stock for $5.00 per share to existing Series F holders.
The proceeds were used to finance certain capital improvements, to fund deferred
transaction costs related to the Faircom merger and the other acquisitions made
by Regent on June 15, 1998, and to fund working capital needs of Regent.
In April 1999, Regent issued 1,016,348 shares of its 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, Regent 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 Regent's
Certificate of Incorporation, and the additional shares of preferred stock have
not been designated as a specific series.
-8-
9
In June 1999, Regent issued 636,363 shares of its 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 Regent's Board
of Directors upon and subject to certain conditions.
In August 1999, Regent issued an additional 1,545,454 of Series H
convertible preferred stock at $5.50 per share to certain existing preferred
stockholders and two new investors to fund in part the purchase of the Erie
stations as well as working capital requirements (See Note 2).
On November 12, 1999, Regent had commitments for the purchase of
$22,000,000 of Series H convertible preferred stock (or a new series of
convertible preferred stock with terms substantially similar to the terms of the
Series H convertible preferred stock) at $5.50 per share, subject to certain
conditions being met. The net proceeds are to be used to reduce debt (see Note
6) and to fund a portion of the purchase price of Regent's pending acquisitions
of stations in El Paso, Texas, Utica-Rome, New York and Watertown, New York.
4. ASSETS HELD FOR SALE
As of September 30, 1999, Regent had signed definitive agreements to
sell the Flagstaff Stations, the Kingman 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. As of the date of the accompanying September 30, 1999 condensed
consolidated balance sheet, Regent expected all of these dispositions to be
completed within a year (Sales of the Kingman Stations and the Lake Tahoe
Stations were, in fact, consummated in the fourth quarter of 1999. See Note 2).
As a result, approximately $8,824,000 of long-term debt were classified as
current debt and approximately $8,713,000 in long-term assets were classified as
assets held for sale in the accompanying September 30, 1999 condensed
consolidated balance sheet. The assets classified as assets held for sale were
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.
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 Regent'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.
6. LONG-TERM DEBT
On November 11, 1999, Regent and its senior lenders amended the credit
agreement in order to cure non-compliance by Regent as of September 30, 1999
with the loan covenants.
Under the amendment, Regent agreed that it will (a) borrow no
additional funds during the balance of 1999, (b) obtain by no later than
November 30, 1999, written commitments in form and substance satisfactory to the
lenders for the issuance of at least $10 million of additional net equity and
(c) issue such equity no later than December 30, 1999. Of the net proceeds
raised, subject to the provisions of the credit agreement, the first $10 million
must be applied to reduce permanently the senior debt. To the extent Regent
raises more than $10,000,000, a substantial portion of the additional proceeds
must be applied to reduce permanently the senior debt. Regent has written equity
commitments dated November 12, 1999 in the total amount of $22,000,000, with
funding contemplated prior to December 30, 1999. See Note 3.
-9-
10
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. 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 that 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 revenues, 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 acquisitions of the St. Cloud
Stations and Erie Stations in 1999, the results of Regent's operations for the
nine months ended September 30, 1999 are not comparable to those of the same
period in 1998, nor are they necessarily indicative of results in the future.
For the three months ended September 30, 1999 compared with the same
period in 1998, Regent experienced a 22% increase in both net broadcast revenues
and station operating expenses. The additions of the St. Cloud Stations and Erie
Stations were the primary contributors to these increases.
Depreciation and amortization expense for the three months ended
September 30, 1999 increased 31% over the same period of 1998. This increase was
a direct result of the acquisitions of the St. Cloud Stations and Erie Stations
as well as other capital additions required to improve operations.
Corporate general and administrative expenses for the three months
ended September 30, 1999 increased 8% over the same period of 1998, primarily as
a result of an increase in corporate staff and facilities expense necessary to
manage the larger operations.
The performance of a radio station group, such as Regent, is
customarily measured by its ability to generate broadcast cash flow. "Broadcast
cash flow" is defined as operating income (loss) before depreciation,
amortization and corporate general and administrative expenses, excluding barter
activity. Although broadcast cash flow is not a measure of performance
calculated in accordance with generally accepted accounting principles ("GAAP"),
Regent believes that broadcast cash flow is accepted by the broadcasting
industry as a generally recognized measure of performance and is used by
analysts who report publicly on the performance of broadcasting companies.
Nevertheless, this measure should not be considered in isolation or as a
substitute for operating income, net income, net cash provided by operating
activities or any other measure for determining Regent's operating performance
or liquidity that is calculated in accordance with GAAP.
While acquisitions have affected the comparability of Regent's
operating results over the different periods, meaningful comparisons can be made
of results of operation for those markets in which Regent has been operating for
the past five full quarters, exclusive of any markets held
-11-
11
for sale. This group is currently represented by six markets and 23 stations. In
these markets, Regent's broadcast revenues (excluding barter revenues) increased
4% for the three months ended September 30, 1999 as compared to the same period
in 1998. Broadcast cash flow in these markets increased by 2% for the three
months ended September 30, 1999 as compared to the same period in 1998.
These comparative results were adversely affected by circumstances in
the Flint, Michigan market. The competitive environment of the Flint market
changed in late 1997 with the addition of a new commercial FM radio station. The
Flint school system previously owned this station and operated it as a
non-commercial facility. The school board sold the station at auction to an
experienced commercial broadcaster. In 1998, and shortly before Regent took
control of Faircom's Flint stations, the new commercial station changed formats
and became the top station in the marketplace in terms of adult listenership in
18 months. Its success impacted advertising market rates and the distribution of
advertising dollars to stations in the market, adversely affecting Regent's
market share of revenues, along with that of other competitors. It is estimated
by an industry source that in 1999, its first full year of commercial operation,
the new station will achieve approximately 17% of the market revenue. In January
of 1999, Regent made significant changes in the management structure and
personnel at its Flint stations, which had been delayed due to certain
contractual arrangements. The acclimation of the new management team and related
operational changes have taken most of 1999 to have effect. As a result of the
significant changes in the competitive structure of the market and the timing
required for Regent to be able to take full control of the stations, management
does not believe Flint will be a comparable market until January 1, 2000.
For the 20 stations in Regent's other five comparable markets,
broadcast revenues excluding barter revenues increased approximately 9% and
broadcast cash flow increased approximately 21% for the third quarter of 1999 as
compared to the same period in 1998.
LIQUIDITY AND CAPITAL RESOURCES
In the nine months ended September 30, 1999, Regent used net cash in
operating activities of $1,383,233 compared with $552,933 for 1998. In the nine
months ended September 30, 1999, proceeds from the issuance of convertible
preferred stock provided substantially all of the funds used in operating
activities, as well as the 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 (except for the borrowing of $8,500,000
which was used to help finance the purchase of the St. Cloud Stations and
$7,200,000 which was used to help finance the purchase of the Erie Stations). As
a result, there was a net increase in cash of $1,646,642 in the nine months
ended September 30, 1999 compared with a net decrease of $141,569 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 $52,937,500 at September 30, 1999). Regent's credit agreement permits the
borrowing of available credit for working capital and acquisitions, including
related acquisition expenses. In addition, subject to available credit, Regent
may request from time to time that its lenders issue letters of credit on the
same terms as the credit facility. At September 30, 1999, Regent had borrowed
$46,935,000 under its credit agreement. The remaining unused portion of the
credit facility of $6,002,500 was available to finance other acquisitions,
subject to restrictions contained in the credit agreement.
-12-
12
Under its credit agreement, 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, under its credit agreement Regent must reduce
its outstanding borrowings during the fourth quarter of 1999. It intends to do
this through proceeds from the sales of the Kingman stations and the Lake Tahoe
stations, along with the proceeds from the issuance of additional equity (see
note 6).
In an amendment to its credit agreement dated November 11, 1999, Regent
agreed that it will (a) borrow no additional funds during the balance of 1999,
(b) obtain by no later than November 30, 1999, written commitments in form and
substance satisfactory to the lenders for the issuance of at least $10,000,000
of additional net equity and (c) issue such equity no later than December 30,
1999. Of the net proceeds raised, subject to the provisions of the credit
agreement, the first $10,000,000 must be applied to reduce permanently the
senior debt. To the extent Regent raises more than $10,000,000, a substantial
portion of the additional proceeds must be applied to reduce permanently the
senior debt. To meet these requirements, as of November 12, 1999, Regent had
obtained written commitments for the investment of $22,000,000 in the existing
Series H or a new Series K convertible preferred stock to be issued by Regent at
$5.50 per share. These commitments are subject to certain conditions, including
formal documentation, the receipt by Regent of a binding commitment for a senior
credit facility sufficient to meet Regent's forseeable capital needs with at
least $65,000,000 projected at the time of the investment to be available upon
closing of pending acquisitions, and customary closing conditions. This equity
funding is expected to close before December 30, 1999.
Interest under the credit agreement is payable, at the option of
Regent, at alternative rates equal to the LIBOR rate (established September 3,
1999 at 5.56%, August 23, 1999 at 5.50% and September 17, 1999 at 5.56% and
effective at those same rates at September 30, 1999) plus 1.50% to 3.50%, or the
base rate announced by the Bank of Montreal (8.25% at September 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 is required to 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 quarter of 1999, the holders
of the Series F convertible preferred stock purchased an additional $5,081,740
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 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 $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, certain existing investors and two new investors
purchased an additional $8,500,000 of Series H convertible preferred stock in
August 1999. Of the proceeds, $1,000,000 were used to pay down borrowings under
Regent's credit facility. The balance of the proceeds, along with additional
borrowings under its credit agreement, were used to finance the acquisition and
initial capital expenditure and working capital needs of the Erie Stations.
-13-
13
Consummation of Regent's pending acquisitions in El Paso, Texas and
Utica-Rome and Watertown, New York, anticipated to take place in the first
quarter of 2000, will require cash of $67,500,000, not including transaction
fees and costs. The funds required to complete these acquisitions and to fulfill
additional working capital needs of the new stations will be provided through
borrowings under a new credit agreement and the proceeds of bridge financing,
both of which are currently being negotiated, and through a portion of the
proceeds from the issuance of more convertible preferred stock under the
commitments referred to above or additional equity or high yield debt offerings.
Based on current interest rates and accrued interest expense as of
September 30, 1999, Regent believes its interest payments for the remainder of
1999 will be approximately $1,043,000. Scheduled debt principal payments, in
addition to debt reduction out of proceeds of additional equity, are expected to
be $16,250 for the remainder of 1999. Corporate general and administrative
expense and capital expenditures for the remainder of 1999 are estimated to be
approximately $496,000 and $243,000, respectively. Professional and transaction
fees of $800,000 are expected to be paid in the remainder of 1999. For these
payments to be made over the balance of 1999, aggregating $2,598,250, Regent has
used or will utilize net cash provided by operations, current cash balances, and
a portion of the net proceeds from the issuance of its convertible preferred
stock under the commitments referred to above.
Regent believes net cash from operations, cash balances, net proceeds
from the issuance of additional shares of its convertible preferred stock and
net proceeds from the sales of its Kingman Stations and Lake Tahoe Stations will
be sufficient to reduce borrowings under its credit agreement to allow Regent to
maintain compliance with all covenants; 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; and,
when combined with borrowings available under a new credit facility and bridge
financing being negotiated, to consummate its pending acquisitions.
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 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 $46,935,000 principal amount outstanding under Regent's credit
facility at September 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 $12,535,000 would be
immaterial.
-14-
14
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 that were determined to be non-compliant
have been upgraded and tested with the exception of the network in the
Mansfield, Ohio stations which will take place in November. 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 have been completed. Some of
the necessary replacements have taken place; however, a portion will occur in
the fourth quarter.
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
-15-
15
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 complete. The costs of the upgrade project have been
included in capital expenditures. Regent has conducted and completed its own
testing of the broadcast systems at all of its stations. Costs associated with
this testing were immaterial.
The traffic scheduling and billing systems currently utilized at
Regent's stations are provided by three suppliers on a Year 2000 compliant
basis, as confirmed by Regent's tests of these systems.
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 is ongoing. At this point,
Regent is focusing its follow-up on the most critical business partners and is
incorporating follow-up into contingency planning.
With respect to the stations which Regent has agreed to acquire, the
Year 2000 assessment phase has commenced and is continuing. Regent's agreement
to acquire stations in Utica-Rome and Watertown, New York, signed on July 29,
1999, and its agreement to acquire stations in El Paso, Texas, signed on
September 14, 1999, 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 sellers have 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.
To the extent that any material Year 2000 problems are discovered at the
Utica-Rome, Watertown or El Paso stations, Regent will have a contractual claim
against the seller for any material 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 external and non-IT system risks and the testing to be undertaken by Regent,
contingency planning has commenced and is ongoing for all critical systems.
Testing of contingency plans will occur in the fourth quarter 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
-16-
16
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) On August 31, 1999, Regent issued a total of 1,545,454 shares of
its Series H convertible preferred stock at $5.50 per share to certain existing
preferred stockholders and two new investors to fund in part the purchase of the
Erie stations and working capital requirements.
This issuance of securities was a privately-negotiated transaction
based upon an exemption 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.
The Series H convertible preferred stock is 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.
-17-
17
ITEM 5. OTHER INFORMATION
On September 14, 1999, Regent entered into an agreement to purchase
from an unrelated third party the FCC licenses and related assets used in the
operations of radio stations KLAQ-FM, KSII-FM and KROD-AM licensed to El Paso,
Texas for approximately $23,500,000 in cash. 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. Regent provided a $1,500,000 letter of
credit as an escrow deposit in this transaction.
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
On September 29, 1999, Regent filed a Report on Form 8-K to report its
acquisition of radio stations WXKC(FM), WRIE(AM) and WXTA(FM), serving the Erie,
Pennsylvania market. No financial statements were filed with that report, which
indicated that the required financial information would be filed by amendment.
-18-
18
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: November 15, 1999 By: /s/ TERRY S. JACOBS
-----------------------------------------
Terry S. Jacobs, Chairman of the Board
and Chief Executive Officer
Date: November 15, 1999 By: /s/ ANTHONY A. VASCONCELLOS
----------------------------------------
Anthony A. Vasconcellos, Chief Financial
Officer and Vice President (Chief
Accounting Officer)
S-1
19
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 July 9, 1999 by and among
Commonwealth Communications, LLC, Commonwealth License Subsidiary, LLC,
Regent Broadcasting of Lake Tahoe, Inc. and Regent Licensee of Lake
Tahoe, 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:
Exhibits:
A Escrow Agreement
B General Conveyance, Bill of Sale, Assignment
and Assumption Agreement
C Opinion of Seller's Counsel
D Form of FCC Opinion
E Opinion of Buyer's Counsel
Schedules:
1.2.9 Miscellaneous Excluded Assets
7.4 Licenses
7.7 Tangible Personal Property
7.8 Real Estate
7.9 Contracts
7.11 Environmental Matters
7.12 Intellectual Property
7.13 Financials
7.14 Employees
7.17 Employee Benefit Plans
2(b) Asset Purchase Agreement dated as of September 13, 1999 by and among
New Wave Broadcasting, L.P., Regent Broadcasting of El Paso, Inc. and
Regent Licensee of El Paso, Inc.
E-1
20
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:
Exhibits:
A Indemnification Escrow Agreement
B Deposit Escrow Agreement
C Assignment and Assumption Agreement
D Seller's Opinion of Counsel
E Seller's Opinion of FCC Counsel
F Non-Competition Agreement
G Buyer's Opinion of Counsel
H Form of Letter of Credit
Schedules:
1.2.10 Excluded Assets
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
9.1 Leased Real Estate not Requiring Title Commitment
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
(previously filed as Exhibit 3(c) to the Registrant's Form 10-Q Fourth
Quarter Ended June 30, 1999 and incorporated herein by this reference)
E-2
21
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
amending the Amended and Restated Certificate of Incorporation of
Regent Communications, Inc., as amended (previously filed as Exhibit
3(d) to the Registrant's Form 10-Q for the Quarter Ended June 30, 1999
and incorporated herein by this reference)
3(e) Certificate of Decrease of Shares Designated as Series G Convertible
Preferred Stock of Regent Communications, Inc., filed with the Delaware
Secretary of State on August 23, 1999 amending the Amended and Restated
Certificate of Incorporation of Regent Communications, Inc., as amended
3(f) Certificate of Increase of Shares Designated as Series H Convertible
Preferred Stock of Regent Communications, Inc., filed with the Delaware
Secretary of State on August 23, 1999 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).
E-3
22
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).
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
E-4
23
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 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)
E-5
24
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 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) (previously filed as Exhibit 4(z) to the
Registrant's Form 10-Q for the Quarter Ended June 30, 1999 and
incorporated herein by this reference)
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) (previously filed as
Exhibit 4(aa) to the Registrant's Form 10-Q for the Quarter Ended June
30, 1999 and incorporated herein by this reference)
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) (previously filed as Exhibit 4(bb) to the Registrant's Form 10-Q
for the Quarter Ended June 30, 1999 and incorporated herein by this
reference)
E-6
25
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 (previously filed
as Exhibit 4(cc) to the Registrant's Form 10-Q for the Quarter Ended
June 30, 1999 and incorporated herein by this reference)
4(dd) Eighth Amendment, Limited Consent and Limited Waiver to Credit
Agreement, dated as of November 11, 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
4(ee) Stock Purchase Agreement dated as of August 31, 1999 among Regent
Communications, Inc., The Roman Arch Fund L.P. and The Roman Arch Fund
II L.P. relating to the purchase of 109,091 and 72,727 shares,
respectively, of Regent Communications, Inc. Series H Convertible
Preferred Stock (excluding exhibits not deemed material or filed
separately in executed form)
4(ff) Third Amendment to Second Amended and Restated Stockholders' Agreement,
dated as of August 31, 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, PNC Bank, N.A., Trustee, 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,
William H. Ingram, The Roman Arch Fund L.P. and The Roman Arch Fund II
L.P. (excluding exhibits not deemed material or filed separately in
executed form)
4(gg) First Amendment to Registration Rights Agreement dated as of August 31,
1999 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 P. Gammon
(excluding exhibits not deemed material or filed separately in executed
form)
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
E-7
26
River Cities 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.
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
E-8