Private equity firms UBS Capital Americas and Mercury Capital Partners, a media investment firm, are playing a new tune this month as they agreed to acquire three radio stations – WFPG-FM, WPUR-FM and WFPG-AM – and a time brokerage agreement for a fourth radio station, WKOE-FM, in Atlantic City, N.J. from Citadel Communications Corp.
UBS Capital led the deal with 80% of committed equity while Mercury committed the remaining equity portion. Kalil & Co. Inc. served as broker to Citadel and Peter Handy of Star Media Group Inc. served as broker to the firms. The Bank of New York provided debt financing in the transaction, which is expected to close by the third quarter.
The firms completed the transaction, which is valued at about $19.4 million, through a new partnership dubbed Millennium Radio Group LLC, which formed in the beginning of the year. The partnership was designed to build a network of well-positioned radio stations in mid-sized markets across the country.
Charles Banta, president of Mercury Capital, initiated discussions about the possible sale of the four radio properties with Citadel Communications Chairman and Chief Executive Larry Wilson, said Michael Greene, a partner at UBS Capital. In a statement, Wilson said, “Atlantic City is a great market…however, as we do not own other stations in New Jersey, we felt it was prudent to divest this market from our portfolio.”
“What we’re trying to do is find markets that are still unconsolidated where we can obtain high market share and cluster several properties together and get the operating synergies that come from that,” said Greene. “This will be the first of what we hope will be a string of acquisitions in markets in New Jersey as well as other parts of the U.S.”
The Millennium Group has about $100 million of equity to make acquisitions in the industry, added Greene.
Citadel Communications Corp., an owner of radio stations in mid-sized markets throughout the U.S., was recently taken private by Forstmann Little & Co. for $2 billion, which includes cash and assumed and refinanced debt (Buyouts Jan. 22, p. 7).