Looking to broaden its campaign of radio station acquisitions, Radio One Inc. filed yesterday for the sale of 5 million shares of its common stock. At current prices, the issuance would raise about $225 million.
The Lanham-based company, the largest radio broadcaster primarily targeting African-Americans, described the purposes of the stock offering in a registration statement filed with the Securities and Exchange Commission.
While Radio One plans to use some of the money from the stock sale to pay down its $96.5 million debt, the company is eager to use part of the proceeds to finance more stations. Radio One has bought or agreed to buy 13 stations since the beginning of the year.
After completing the purchase of four stations in Richmond, Va., Radio One will own 26 stations. In Baltimore, Radio One owns two AM stations, WOLB (1010) and WWIN (1400), and two FM stations, WERQ (92.3) and WWIN (95.9).
In its registration statement, the company said it expects to use about $69 million from the offering to pay for the Richmond stations and to pare down its debt.
"We expect to use a substantial portion of the remaining net proceeds of this offering to acquire radio broadcasting assets and businesses. [W]e could apply all, or substantially all, of the net proceeds of this offering to such acquisitions," the statement said. The company declined to comment further on the stock sale.
Radio One's expansion strategy is not without risk. There is the debt to consider, and the company conceded in its filing that it has had net losses in three out of five years since 1994.
However, Radio One is regarded as a smart operator within the radio industry. "They've done a very good job," said one analyst who has studied the company. "They have a very successful strategy. They've proven themselves."
Possible options for Radio One include stations that are dropped by Clear Channel Communications Inc., the nation's largest radio-station owner. Regulators are requiring Clear Channel to shed more than 100 stations as a precondition of its $16.6 billion acquisition of AMFM Inc.
Upon completion of the stock offering, Radio One Chairwoman and Secretary Catherine L. Hughes and her son, Alfred C. Liggins III, the company's president, chief executive officer and treasurer, will together hold about 64 percent of the voting power of the company's common stock.
Of the 5 million shares issued, 4 million will be sold directly by Radio One, the rest offered by various shareholders.
The stock will be sold for a maximum aggregate price of $45 per share. Radio One shares closed yesterday at $45.25, down 37.5 cents.