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LONG-TERM DEBT (Block) | 12 Months Ended
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Dec. 31, 2012
Debt Disclosure [Abstract] |
Debt Disclosure Text Block | 7. LONG-TERM DEBT Long-term debt, including financ ing method lease obligations, w as comprised of the following as of the periods indicated:
|  |  | Long-Term Debt
|  |  | December 31,
|  |  | 2012 |  | 2011
|  |  |  | (amounts in thousands)
Credit Facility |  |  |  |  |  |
| Revolver, due November 23, 2016 (A) |  | $ | 5,000 |  | $ | 10,000
| Term B Loan, due November 23, 2018 (A) |  |  | 347,500 |  |  | 375,000
Senior Notes |  |  |  |  |  |
| 10.5% senior unsecured notes, due December 1, 2019 (B) |  |  | 220,000 |  |  | 220,000
Other |  |  |  |  |  |
| Financing Method Lease Obligations (C) |  |  | 12,610 |  |  | 12,610
| Other |  |  | 92 |  |  | 121
| Total |  |  | 585,202 |  |  | 617,731
| Current amount of long-term debt |  |  | (9,808) |  |  | (3,778)
| Current amount of finance method lease obligations |  |  | (12,610) |  |  | -
| Unamortized original issue discount |  |  | (2,651) |  |  | (2,897)
| Total long-term debt |  | $ | 560,133 |  | $ | 611,056
| Outstanding standby letter of credit |  | $ | 570 |  | $ | 570
(A) Senior Debt The Credit Facility On November 23, 2011, the Company entered into a credit agreement with a syndicate of lenders for a $425 million senior secured credit facility (the “Credit Facility”), that is comprised of: (a) a $50 million revolving credit facility (the “Revolver”) that matures on November 23, 2016; and (b) a $375 million term loan (the “Term B Loan”) that matures on November 23, 2018. The Company used the proceeds from the Revolver, the Term B Loan and the issuance of 10.5% senior unsecured notes (the “Senior Notes”) to pay all of the outstanding debt under its former credit agreement (the “Former Facility”), along with transaction costs for both the Credit Facility and the Senior Notes. The Company expect s to use the Revolver to: (1) provide for working capital; and (2) provide for general corporate purposes, including capital expenditures and any or all of the following (subject to certain restrictions): repurchases of Class A common stock, repurchases of the Company's Senior Notes, dividends, investments and acquisitions. The Credit Facility is secured by a pledge of 100% of the capital stock and other equity interest in all of the Company's wholly owned subsidiaries. In addition, the Credit Facility is secured by a lien on substantially all of the Company's assets, with limited exclusions (including the Company's real property). The assets securing the Credit Facility are subject to customary release provisions which would enable the Company to sell such assets free and clear of encumbrance, subject to certain conditions and exceptions. As of December 31, 2012, the amount outstanding under the Revolver was $5.0 million and the amount outstanding under the Term B Loan was $347.5 million. T he undrawn amount of the Revolver was $44.4 million as of December 31, 2012. The amount of the Revolver available to the Company is a function of covenant compliance at the time of borrowing. The Term B Loan requires mandatory prepayments equal to 50% of Excess Cash Flow, as defined within the agreement, subject to incremental step-downs to 0%, de pending on the Consolidated Leverage Ratio. T he Excess Cash Flow payment is due in the first quarter of each year and the amount of the payment is based on the Excess Cash Flow and Leverage Ratio for the prior year. The Excess Cash Flow payment due in the first quarter of 2013 will be approximately $6 million, which is net of prepayments made through December 31, 2012. This amount was classified under the current portion of long-term debt. The Excess Cash Flow payment was completed in January 2013. As of December 31, 2012, the Company is in compliance with all financial covenants and all other terms of the Credit Facility in all material respects. The Company's ability to maintain compliance with its covenants is highly dependent on its results of operations. Ma nagement believes that over the next 12 months the Company can continue to maintain compliance. The Company's operating cash flow is positive, and management believes that it is adequate to fund the Company's operating needs and mandatory debt repayments under the Company's Credit Facility. Management believes that cash on hand and cash from operating activities, together with available borrowings under the Revolver, will be sufficient to permit the Company to meet its liquidity requirements over the next 12 months, including its debt repayments. As a result, the Company has not been required to rely upon, and the Company does not anticipate being required to rely upon, the Revolver to fund its operations. The Credit Facility requires the Company to maintain compliance with certain financial covenants which are defined terms within the agreement, including: a maximum Consolidated Leverage Ratio that cannot exceed 7.0 times through December 31, 2012, 6.5 times as of December 31, 2013, which decreases over time to 4.5 times as of March 31, 2016 and thereafter; and a minimum Consolidated Interest Coverage R atio of 1.5 times through December 31, 2012, 1.6 times as of December 31, 2013, which increases over time to 2.0 times as of September 30, 2015 and thereafter. On November 27, 2012, the Term B Loan was amended, which reduced the Company's interest rates. Under the Term B Loan and d epending on the Consolidated Leverage Ratio, the Company may elect an interest rate per annum equal to: (1) the Eurodollar London Interbank Offered Rate (“LIBOR”) plus fees that can range from 3.5% to 3.75% (prior to the amendment, the fees ranged from 4.75% to 5.0%); and (2) the Base Rate plus fees that can range from 2.5% to 2.75% (prior to the amendment, the fees ranged from 3.75% to 4.0%). The Term B Loan includes a LIBOR floor of 1.25%. Under the Revolver and depending on the Consolidated Leverage Ratio, the Company may elect an interest rate per annum equal to: (1) LIBOR plus fees that can range from 4.5% to 5.0%; or (2) the Base Rate plus fees that can range from 3.5% to 4.0%, where the Base Rate is the highest of: (a) the administrative agent's prime rate; (b) the Federal Funds Rate plus 0.5%; and (c) LIBOR plus 1.0%. In addition, the Revolver requires the Company to pay a commitment fee of 0.5% per annum for the unused amount of the Revolver. Failure to comply with the Company's financial covenants or other terms of its Credit Facility and any subsequent failure to negotiate and obtain any required relief from its lenders could result in a default under the Company's Credit Facility. Any event of default could have a material adverse effect on our business and financial condition. In addition, a default under either the Company's Credit Facility or the indenture governing the Company's Senior Notes could cause a cross default in the other and result in t he acceleration of the maturity of all outstanding debt. Under these circumstances, the acceleration of the Company's debt could have a material adverse effect on its business. T he Company may seek from time to time to amend its Credit Facility or obtain other funding or additional funding, which may result in higher interest rates. As of December 31, 2012, the Company's Consolidated Leverage Ratio was 4.8 times and th e Consolidated Interest Coverage Ratio was 2.4 times. The Company treated the 2012 amendment under modification accounting and recorded deferred financing costs of: (a) $1.1 million (including the lender's legal costs) that will be amortized over the remaining life of the Term B Loan under the effective interest rate method; and (b) unamortized deferred financing costs of $9.0 million that will continue to be amortized over the remaining life of the Term B Loan under the effective interest rate method. The Company also recorded a loss on the extinguishment of debt of $0.7 million for those lenders who either participated at a reduced commitment level or for those lenders who did not agree to the terms of the amendment. We also incurred third-party costs of $0.1 million that were expensed. In connection with the debt refinancing during the fourth quarter of 2011, the Term B Loan was treated as new debt while the Revolver was treated as debt extinguishment and modification. As a result, unamortized deferred financing costs were adjusted as follows: (1) $0.3 million under the Former Facility's term loan were written off as a net loss on extinguishment of debt; and (2) $0.8 million under the Former Facility's revolving credit were written off as a net loss on extinguishment of debt and $0.3 million of unamortized deferred financing costs under the Former Facility's revolving credit were deferred (to be amortized on a straight-line basis over the term of the Revolver). In addition, the Company recorded new deferred financing costs of: (i) $12.8 million for the Term B Loan that will be amortized under the effective interest rate method over the term; and (ii) $1.2 million for the Revolver that will be amortized under the straight-line method over the term. T he Company's Former Credit Agreement The Company's Former Facility consisted of: (1) a revolving credit facility of $650 million, of which $535.5 million was outstanding and paid in full through the refinancing on November 23, 2011; and (2) a term loan of $400 million, of which $60.0 million was outstanding and paid in full through the refinancing on November 23, 2011. The Former Facility was secured by a pledge of 100% of the capital stock and other equity interest in all of the Company's wholly owned subsidiaries. Key terms of the Former Facility were as follows: Depending on the Consolidated Leverage Ratio, the Company could elect an interest rate equal to: (1) the LIBOR Rate plus fees that ranged from 0.5% to 2.5%; or (2) the Base Rate plus fees that ranged from 0% to 1.5%, where the Base Rate was the highest of: (a) the Federal Funds Rate plus 0.5%; (b) the LIBOR Rate plus 1.0%; and (c) the Prime Rate. T he a mendment in March 2010 to the Former Facility was treated as a modification to a debt instrument. As a result, in the first quarter of 2010, the Company recorded deferred financing costs of $5.2 million related to the a mendment which w ere amortized over the remaining life of the Former Facility on: (1) a straight-line basis for the revolving credit facility; and (2) an effective interest rate method for the term loan. In addition, unamortized deferred financing costs of $3.1 million as of the a mendment date were amortized over the remaining life of the Former Facility. Prior to the Amendment the interest rate was: (1) the LIBOR rate plus a rate that range d from 0.5% to 1.13%; or (2) the greater of prime rate plus a rate that range d from 0% to 0.13% or the federal funds rate plus a rate that range d from 0.50% to 0.63%. (B) Senior Unsecured Debt The Senior Notes Simultaneous ly with entering into the Credit Facility on November 23, 2011, the Company issued $220 million of 10.5% unsecured Senior Notes, which mature on December 1, 2019. The Company received net proceeds of $212.7 million, which include d a discount of $2.9 million, and incurred deferred financing costs of $6.1 million. These amounts are amortized over the term under the effective interest rate method. Interest on the Senior Notes is payable semi-annually in arrears on June 1 and December 1 of each year The Senior Notes are in minimum denominations of $2,000. The Senior Notes may be redeemed at any time on or after December 1, 2015 at a redemption price of 105.25% of principal amount plus accrued interest. The redemption price decreases to 102.625% of principal amount plus accrued interest on or after December 1, 2016 and 100% on or after December 1, 2017. The Senior Notes are unsecured and rank: (1) senior in right of payment to the Company's future subordinated debt; (2) equally in right of payment with all of the Company's existing and future senior debt; (3) effectively subordinated to the Company's existing and future secured debt (including the debt under the Company's Credit Facility), to the extent of the value of the collateral securing such debt; and (4) structurally subordinated to all of the liabilities of the Company's subsidiaries that do not guarantee the Senior Notes, to the extent of the assets of those subsidiaries. In addition to the parent, Entercom Communications Corp., all of the Company's existing subsidiaries (other than Entercom Radio, LLC (“Radio”), which is a 100% owned finance subsidiary of the parent and is the issuer of the Senior Notes), jointly and severally guaranteed the Senior Notes. Under certain covenants, the Company's subsidiary guarantors are restricted from paying dividends or distributions in excess of amounts defined under the Senior Notes, and the subsidiary guarantors are limited in their ability to incur additional indebtedness under certain restrictive covenants. See Note 19 for financial statements of parent as guarantor. A default under the Company's Senior Notes could cause a default under the Company's Credit Facility. Any event of default, therefore, could have a material adverse effect on the Company's business and financial condition. (C) Net Interest Expense The components of net interest expense are as follows:
|  | Net Interest Expense
|  | Years Ended December 31,
|  | 2012 |  | 2011 |  | 2010
|  | (amounts in thousands)
Interest expense |  | $ | 47,412 |  | $ | 14,790 |  | $ | 13,624
Amortization of deferred financing costs |  |  | 4,405 |  |  | 3,567 |  |  | 3,912
Amortization of original issue discount of senior notes |  |  | 246 |  |  | 25 |  |  | 0
Interest expense on interest rate hedging agreements |  |  | 1,392 |  |  | 6,568 |  |  | 12,974
Interest income |  |  | (9) |  |  | (31) |  |  | (19)
Total net interest expense |  | $ | 53,446 |  | $ | 24,919 |  | $ | 30,491
The weighted average interest rate under the Credit Facility was: (1) 5.01% as of December 31, 2012 (before taking into account the fees on the unused portion of the Revolver); and (2) 6.24% a s of December 31, 2011 (before taking into account the fees on the unused portion of the Revolver and (D) Financing Method Lease Obligations In September 2009, the Company entered into an agreement to sell certain tower facilities and lease back most of the se tower sites for use by the Company's radio stations. This transaction is accounted for under the financ ing method as described more fully under Note 8. (E) Interest Rate Transactions The Company enters into interest rate transactions from time to time with different lenders to diversify its risk associated with interest rate fluctuations of its variable rate debt. See Note 9 for the accounting for these transactions. Under these transactions, the Company agrees with other parties (participating members of the Company's C redit F acilit y) to exchange, at specified intervals, the difference between fixed rate and floating rate interest amounts calculated by reference to an agreed notional principal amount against the variable debt. The Company's credit exposure under these hedging agreements, or similar agreements the Company may enter into in the future, is the cost of replacing such agreements in the event of nonperformance by the Company's counterparty. For those interest rate transactions with the same counterparty, a master netting agreement exists which, under certain circumstances, allows the Company and the counterparty to settle financial assets and liabilities on a net basis. (F) Aggregate Principal Maturities The minimum a ggregate principal maturities on the Company's outstanding debt are as follow s:
| Principal Debt Maturities
|  |  |  |  |  |  | Finance |  |  |  |  |  |
|  |  |  |  |  | Method |  |  |  |  |  |
| Credit |  | Senior |  | Lease |  |  |  |  |  |
| Facility |  | Notes |  | Obligations |  | Other |  | Total
| (amounts in thousands)
Years ending December 31: |  |  |  |  |  |  |  |  |  |  |  |  |  |
2013 | $ | 3,475 |  | $ | - |  | $ | 12,610 |  | $ | 30 |  | $ | 16,115
2014 |  | 3,475 |  |  | - |  |  | - |  |  | 28 |  |  | 3,503
2015 |  | 3,475 |  |  | - |  |  | - |  |  | 5 |  |  | 3,480
2016 |  | 8,475 |  |  | - |  |  | - |  |  | 5 |  |  | 8,480
2017 |  | 3,475 |  |  | - |  |  | - |  |  | 5 |  |  | 3,480
Thereafter |  | 330,125 |  |  | 220,000 |  |  | - |  |  | 19 |  |  | 550,144
Total | $ | 352,500 |  | $ | 220,000 |  | $ | 12,610 |  | $ | 92 |  | $ | 585,202
(G) Outstanding Letters Of Credit The Company is required to maintain a standby letter of credit, in connection with insurance coverage as described in Note 19. See Note 7 for the amount of the outstanding standby letter of credit. (H) Guarantor and Non-Guarantor Financial Information Radio, which is a wholly owned subsidiary of Entercom Communications Corp., holds the ownership interest in various subsidiary companies that own the operating assets, including broadcasting licenses, permits and authorizations. Radio (1) is the borrower under the Credit Facility, as described in Note 7(A); and (2) is the issuer of the Senior Notes, as described in Note 7(B). As of December 31, 2012, Entercom Communications Corp. and each direct and indirect subsidiar y of Radio is a guarantor of Radio's obligations under both the Credit Facility and the Senior Notes. Separate condensed consolidating financial information is not included as Entercom Communications Corp. does not have independent assets or operations, Radio is a 100% owned finance subsidiary of Entercom Communications Corp., and all guarantees by Entercom Communications Corp. and its guarantor subsidiaries are full, unconditional (subject to the customary automatic release provisions), joint and several under its Credit Facility and are full, unconditional, joint and several under its Senior Notes. Under the Credit Facility, Radio is permitted to make distributions to Entercom Communications Corp. in amounts as defined, which are required to pay Entercom Communications Corp.'s reasonable overhead costs, including income taxes and other costs associated with conducting the operations of Radio and its subsidiaries. S imilar concepts applied to the Former Facility. Under the indenture governing the Senior Notes, Radio is permitted to make distributions to Entercom Communications Corp. in amounts, as defined, that are required to pay Entercom Communications Corp's overhead costs and other costs associated with conducting the operations of Radio and its subsidiaries. S imilar concepts applied to the 7.625% Notes. (I) Debt Extinguishment The following table presents for the periods indicated the amount of gain or loss recorded on debt extinguishment along with the amount of debt that was retired early:
|  | Debt Extinguishment
|  | Years Ended December 31,
|  | 2012 |  | 2011 |  | 2010
|  | (amounts in thousands)
Write-off of unamortized deferred financing costs |  | $ | 747 |  | $ | 1,144 |  | $ | 62
Amount of debt retired early |  | $ | - |  | $ | 595,500 |  | $ | 6,579

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- Definition The entire disclosure for information about short-term and long-term debt arrangements, which includes amounts of borrowings under each line of credit, note payable, commercial paper issue, bonds indenture, debenture issue, own-share lending arrangements and any other contractual agreement to repay funds, and about the underlying arrangements, rationale for a classification as long-term, including repayment terms, interest rates, collateral provided, restrictions on use of assets and activities, whether or not in compliance with debt covenants, and other matters important to users of the financial statements, such as the effects of refinancing and noncompliance with debt covenants. + References Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 210 -SubTopic 10 -Section S99 -Paragraph 1 -Subparagraph (SX 210.5-02.19,20,22) -URI http://asc.fasb.org/extlink&oid=6877327&loc=d3e13212-122682 Reference 2: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Statement of Financial Accounting Standard (FAS) -Number 129 -Paragraph 2, 4 -LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy. Reference 3: http://www.xbrl.org/2003/role/presentationRef -Publisher SEC -Name Regulation S-X (SX) -Number 210 -Section 02 -Paragraph 19, 20, 22 -Article 5 Reference 4: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 505 -SubTopic 10 -Section 50 -Paragraph 3 -URI http://asc.fasb.org/extlink&oid=6928386&loc=d3e21475-112644 + Details
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