<PAGE>
Information contained herein is subject to completion or amendment. A
registration statement relating to these securities has been filed with the
Securities and Exchange Commission. This prospectus supplement and the
prospectus shall not constitute an offer to sell or the solicitation of an offer
to buy nor shall there be any sale of these securities in any State in which
such offer, solicitation or sale would be unlawful prior to registration or
qualification under the securities laws of any such State.
<PAGE>
SUBJECT TO COMPLETION, DATED JANUARY 21, 1998
PROSPECTUS SUPPLEMENT
FEBRUARY , 1998
(TO PROSPECTUS DATED JANUARY 21, 1998)
3,800,000 SHARES
[LOGO]
[LOGO]
COMMON STOCK
All of the shares of Jacor Communications, Inc. ("Jacor") common stock, $.01
par value per share (the "Common Stock"), offered hereby (the "Offering") are
being sold by Jacor. The Common Stock is currently traded on the Nasdaq National
Market tier of The Nasdaq Stock Market (the "Nasdaq National Market") under the
symbol "JCOR." On January 20, 1998, the last reported sale price of the Common
Stock on the Nasdaq National Market was $53.25 per share.
The Common Stock is being issued to fund, in part, the acquisition of 17
radio stations from Nationwide Communications, Inc. and its affiliated entities
("Nationwide"). Alternatively and pending such uses, Jacor intends to use the
net proceeds from this Offering for general corporate purposes, including the
repayment in part of outstanding indebtedness and for other acquisitions. See
"Use of Proceeds."
Concurrently with this Offering, Jacor is offering LYONs (as defined herein)
with expected gross proceeds of $150.0 million (together with the applicable
over-allotment option, the "LYONs Offering") and Jacor Communications Company, a
wholly owned subsidiary of Jacor ("JCC"), is offering $100.0 million aggregate
principal amount of its % Senior Subordinated Notes due 2010 (the "Notes
Offering" and, together with the LYONs Offering, the "Related Offerings").
Consummation of this Offering is subject to consummation of the Related
Offerings. Consummation of this Offering is not subject to consummation of the
Nationwide Acquisition (as defined herein) or any of the other Pending
Transactions (as defined herein). See "Transactions" and "Use of Proceeds."
SEE "RISK FACTORS" BEGINNING ON PAGE 4 OF THE ACCOMPANYING PROSPECTUS FOR A
DISCUSSION OF THE RISKS THAT SHOULD BE CONSIDERED BY PROSPECTIVE INVESTORS.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS SUPPLEMENT
OR THE PROSPECTUS TO WHICH IT RELATES. ANY REPRESENTATION TO
THE CONTRARY IS A CRIMINAL OFFENSE.
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
PRICE UNDERWRITING
TO THE DISCOUNTS AND PROCEEDS
PUBLIC COMMISSIONS(1) TO JACOR(2)
- --------------------------------------------------------------------------------
Per Share.......................... $ $ $
Total (3).......................... $ $ $
- --------------------------------------------------------------------------------
</TABLE>
(1) SEE "UNDERWRITING" FOR INDEMNIFICATION ARRANGEMENTS WITH THE UNDERWRITERS
(AS DEFINED HEREIN).
(2) BEFORE DEDUCTING EXPENSES PAYABLE BY JACOR ESTIMATED AT $ .
(3) JACOR HAS GRANTED TO THE UNDERWRITERS A 30-DAY OPTION TO PURCHASE UP TO AN
AGGREGATE OF 570,000 ADDITIONAL SHARES AT THE PRICE TO THE PUBLIC, LESS
UNDERWRITING DISCOUNTS AND COMMISSIONS, SOLELY TO COVER OVER-ALLOTMENTS, IF
ANY. IF SUCH OPTION IS EXERCISED IN FULL, THE TOTAL PRICE TO THE PUBLIC,
UNDERWRITING DISCOUNTS AND COMMISSIONS, AND PROCEEDS TO JACOR WILL BE
$ , $ AND $ , RESPECTIVELY. SEE "UNDERWRITING."
The shares of Common Stock are offered by the several Underwriters, when, as
and if delivered to and accepted by the Underwriters and subject to various
prior conditions, including the right to reject orders in whole or in part. It
is expected that delivery of the Common Stock will be made in New York, New
York, on or about February , 1998.
DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION
GOLDMAN, SACHS & CO.
MORGAN STANLEY DEAN WITTER
SALOMON SMITH BARNEY
<PAGE>
The inside front cover page of the Preliminary Prospectus Supplement
consists of the heading "Company Station Portfolio" followed by a map of the
United States marked to show each broadcast area in which the Company will have
radio stations upon the completion of its pending transactions. The map further
indicates the number of AM and FM stations owned or operated by the Company, and
the 1996 radio revenue rank of those stations in the applicable broadcast area.
Under the map is the following footnote "Note: Excludes certain broadcast
signals. For a complete listing see Company and Broadcast Area Data included
elsewhere herein."
CERTAIN PERSONS PARTICIPATING IN THIS OFFERING MAY ENGAGE IN TRANSACTIONS THAT
STABILIZE, MAINTAIN OR OTHERWISE AFFECT THE PRICE OF THE COMMON STOCK.
SPECIFICALLY, THE UNDERWRITERS MAY OVERALLOT IN CONNECTION WITH THIS OFFERING
AND MAY BID FOR AND PURCHASE SHARES OF THE COMMON STOCK IN THE OPEN MARKET. FOR
A DESCRIPTION OF THESE ACTIVITIES, SEE "UNDERWRITING."
<PAGE>
PROSPECTUS SUPPLEMENT SUMMARY
THE FOLLOWING SUMMARY IS QUALIFIED IN ITS ENTIRETY BY THE MORE DETAILED
INFORMATION AND FINANCIAL STATEMENTS APPEARING ELSEWHERE IN THIS PROSPECTUS
SUPPLEMENT, IN THE ACCOMPANYING PROSPECTUS AND IN THE DOCUMENTS INCORPORATED
HEREIN BY REFERENCE. UNLESS OTHERWISE INDICATED, THE INFORMATION IN THIS
PROSPECTUS SUPPLEMENT DOES NOT GIVE EFFECT TO THE OVER-ALLOTMENT OPTION FOR THIS
OFFERING OR THE LYONS OFFERING. UNLESS THE CONTEXT OTHERWISE REQUIRES, THE TERM
(I) "JACOR" REFERS TO JACOR COMMUNICATIONS, INC. AND ITS SUBSIDIARIES AND THEIR
COMBINED OPERATIONS ON A HISTORICAL BASIS AND (II) "COMPANY" REFERS TO JACOR,
THE ENTITIES, RADIO STATIONS AND OTHER ASSETS TO BE OWNED BY JACOR ON A COMBINED
BASIS ASSUMING THE PENDING TRANSACTIONS ARE CONSUMMATED AS CURRENTLY SET FORTH
IN THE RESPECTIVE TRANSACTION AGREEMENTS. THE TERM "PENDING TRANSACTIONS" REFERS
TO THE NATIONWIDE ACQUISITION (AS DESCRIBED UNDER "TRANSACTIONS -- NATIONWIDE
ACQUISITION") AND TO THE PENDING ACQUISITIONS, DISPOSITIONS AND EXCHANGES
DESCRIBED UNDER "TRANSACTIONS -- PENDING RADIO STATION TRANSACTIONS." THE
NATIONWIDE ACQUISITION AND CERTAIN OF THE OTHER PENDING TRANSACTIONS WILL NOT BE
CONSUMMATED PRIOR TO THE CLOSING OF THIS OFFERING.
THE COMPANY
Jacor, upon consummation of the Pending Transactions, will be the second
largest radio group in the United States in terms of number of radio stations
and will be the fourth largest radio group in the nation as measured by revenue
and is the country's third largest provider of syndicated radio programming. The
Company will own and/or operate 186 radio stations and one television station in
48 broadcast areas across the United States upon consummation of the Pending
Transactions. The Company's broadcast areas, as a group, are among the most
attractive in the country, demonstrating radio revenue growth in excess of the
radio industry average over the last five years. Jacor also produces more than
50 syndicated programs and services for more than 4,000 radio stations, which
programs include RUSH LIMBAUGH, THE DR. LAURA SCHLESSINGER SHOW and DR. DEAN
EDELL, the top three rated radio programs in the United States. In 1996, the
Company would have been number one or number two in terms of radio revenue rank
in 25 of its 35 ranked broadcast areas. On a pro forma basis, the Company would
have had net revenue and broadcast cash flow of $682.2 million and $224.2
million, respectively, for the latest twelve months ("LTM") ended September 30,
1997.
BUSINESS STRATEGY
Jacor's strategic objective is to maximize revenue and broadcast cash flow
by becoming the leading radio broadcaster in geographically diverse broadcast
areas and by leveraging its expertise in programming production, syndication and
distribution. Jacor intends to acquire individual radio stations, radio groups
and/or businesses that provide radio broadcasting services that strengthen its
strategic position in the radio industry and enhance its operating performance.
Specifically, Jacor's business strategy centers upon:
BROADCAST AREA REVENUE LEADERSHIP. Jacor strives to maximize its audience
ratings in each of its broadcast areas in order to capture the largest share of
the radio advertising revenue in that area and to attract advertising away from
other media. Jacor believes that the most effective way to capture a higher
percentage of advertising revenue is to operate multiple radio stations within a
broadcast area, tailoring each station's programming to deliver highly effective
access to a target demographic. In implementing its multi-station strategy,
Jacor utilizes its programming expertise over a broad range of radio formats to
create distinct station personalities within a broadcast area. Jacor further
enhances its ability to increase its revenues through a more complete coverage
of the listener base by being an industry leader in successfully operating AM
stations.
DEVELOPMENT OF "STICK" PROPERTIES. In addition to acquiring developed, cash
flow producing stations, Jacor also strategically acquires underdeveloped
"stick" properties (I.E., properties with insignificant ratings and/or little or
no positive broadcast cash flow). Jacor believes that acquisitions of
strategically located "stick" properties often provide greater potential for
revenue and broadcast cash flow growth than do acquisitions of developed
properties. Historically, Jacor has been able to improve the ratings, revenue
and
S-3
<PAGE>
broadcast cash flow of its "stick" properties with increased marketing and
focused programming that complements its existing radio station formats and by
leveraging the management expertise and operational support of regional
clusters. Additionally, Jacor increases the revenue and broadcast cash flow of
"stick" properties by encouraging advertisers to buy advertising in a package
with its more established stations. Jacor believes that the Company's portfolio
of 99 "stick" properties creates significant potential for revenue and broadcast
cash flow growth. For example, Jacor improved the broadcast cash flow of the 47
"stick" properties it owned or operated as of May 1, 1997 from approximately
$3.4 million in 1996 to approximately $9.7 million in 1997, an increase of
approximately 185%.
DEVELOPMENT OF REGIONAL CLUSTERS AROUND CORE BROADCAST AREAS. Jacor
believes it can leverage its position as the leader in a core broadcast area to
create additional revenue and broadcast cash flow opportunities by building
regional multi-station clusters around Jacor's core broadcast areas. Utilizing
programming from its core broadcast areas, Jacor provides its regional clusters
with high quality programming which would not otherwise be economically viable
in such smaller broadcast areas, thereby spreading the costs associated with the
delivery of such programming across a greater number of stations. By improving
the ratings of its regional stations with such enhanced programming, Jacor
believes it can generate incremental revenue and broadcast cash flow. For
example, Jacor has utilized this strategy in the Denver, Colorado broadcast area
by acquiring stations in Casper and Cheyenne, Wyoming and Fort Collins/Greeley,
Colorado to develop a regional cluster.
STRATEGIC ACQUISITIONS OF COMPLEMENTARY STATIONS. Jacor focuses its
acquisition strategy on acquiring stations with powerful broadcast signals that
complement its existing portfolio and strengthen its overall competitive
position. By operating multiple stations within its broadcast areas, Jacor seeks
to position itself as the most efficient advertising medium in a geographic
location, providing advertisers with wide access to a variety of demographic
groups through a single purchase of advertising time. Through the acquisition of
additional stations within an existing broadcast area, Jacor spreads its fixed
costs over a larger base of stations and creates operating efficiencies enabling
it to generate higher broadcast cash flow. Jacor may enter additional broadcast
areas, domestic or international, through acquisitions of radio groups that have
multiple station platforms and/or through acquisitions of individual stations in
new locations where Jacor believes a revenue-leading position can be created.
Since the enactment of the Telecommunications Act of 1996 on February 8,
1996, through December 31, 1997, Jacor has acquired or entered into binding
agreements to acquire 158 radio stations and two television stations, and
entered into an exclusive sales agency agreement to provide programming to and
sell air time for two radio stations located in Baja California, Mexico. The
aggregate consideration paid and to be paid for these transactions is
approximately $2.3 billion. In addition, Jacor has exchanged one of the
television stations and seven radio stations for 17 radio stations in
transactions valued in the aggregate at approximately $315.0 million.
ACQUISITIONS OF BROADCAST RELATED BUSINESSES. Jacor strengthens its
strategic position in the radio industry through the acquisition and operation
of businesses that provide services to radio broadcasting companies. In 1997,
Jacor significantly expanded its base of syndicated radio programming available
to both Jacor's radio stations and other broadcasting companies. Jacor acquired
for approximately $340.3 million, a leading producer and distributor of radio
programming research, two leading providers of syndicated talk radio
programming, a leading provider of satellite and network services for the radio
broadcasting industry and a leading provider of traffic reporting services in
the San Diego and Los Angeles, California broadcast areas.
In addition to generating cash flow, these broadcast related services
enhance the Company's ability to (i) increase ratings for its existing stations,
(ii) transform "stick" properties into broadcast cash flow producing properties
and (iii) maintain long-term relationships with Jacor's on-air talent. For
example, Jacor increased the audience ratings of KEWS-AM in Portland, Oregon by
approximately 64% after adding the RUSH LIMBAUGH show to that station's program
line-up. By combining the national reach of the Company's
S-4
<PAGE>
radio stations with the network sales forces acquired by Jacor, the Company
seeks to maximize the value of commercial broadcast inventory that it can then
resell to national advertisers. See "Broadcasting Related Acquisitions." The
Company also will benefit from the NSN Network Services (as defined herein)
distribution network acquired by Jacor in 1997, which network will create
efficiencies and lower costs related to the distribution of programming among
the Company's radio stations.
RECENT DEVELOPMENTS
Jacor has entered into an asset purchase agreement with Nationwide to
acquire 17 radio stations for approximately $620.0 million. Upon consummation of
the other Pending Transactions, Jacor will acquire 12 radio stations for a
purchase price aggregating approximately $66.2 million. In addition, Jacor has
entered into seven non-binding letters of intent pursuant to which Jacor and the
prospective sellers have agreed to negotiate exclusively the terms and
conditions of definitive acquisition agreements. If such negotiations and
transactions are successfully completed, the Company would acquire an additional
nine radio stations for an aggregate purchase price of approximately $24.4
million. Jacor is currently negotiating additional possible acquisitions.
However, there can be no assurance that Jacor will successfully complete all or
any such transactions or what the consequences thereof would be. For more
information about Jacor's recent acquisitions and dispositions, see
"Transactions" and "Broadcasting Related Acquisitions."
During 1997, Jacor increased its senior credit facility from up to $600.0
million of availability, consisting of a revolving credit facility of up to
$200.0 million and term loans of up to $400.0 million, to up to $1.15 billion of
availability, consisting of a revolving credit facility of up to $750.0 million
and a term loan of up to $400.0 million. The average interest rate on the senior
credit facility through December 31, 1997 was approximately 6.5% compared to an
average interest rate of approximately 7.4% on Jacor's senior credit facility in
effect on January 1, 1997. As of September 30, 1997, on a pro forma basis the
Company would have had approximately $436.5 million of availability under its
revolving credit facility.
For a discussion of the risks associated with Jacor's growth strategy, see
"Risk Factors" beginning on page 4 of the accompanying Prospectus.
MARKET DATA AND CERTAIN DEFINITIONS
All rankings by revenue or billings that are contained in this Prospectus
Supplement are based on 1996 information contained in Duncan's Radio Market
Guide (1997 ed.), Duncan's American Radio (Small Market Edition 1997), Duncan's
American Radio (Spring 1997 and Summer 1997), Duncan's Radio Group Directory
(1996-1997 ed.) and/or Broadcast Investment Analyst: Radio '97 Market Report.
Except where otherwise specified, all information concerning ratings and
audience listening information is derived from the Summer 1997 Arbitron Metro
Area Ratings Survey (the "Summer 1997 Arbitron"). All Designated Market Area
("DMA") information is derived from the Nielsen Station Index, November 1997
("Nielsen"). "FCC" means the Federal Communications Commission. The term "LMAS"
means local marketing agreements which would be considered time brokerage
agreements ("TBAS") for FCC purposes. The term "JSAS" means joint sales
agreements pursuant to which a company sells advertising time on stations owned
by third parties. A Jacor affiliate owns a 40% interest in a limited liability
company that purchased the assets formerly owned by Duncan American Radio, Inc.
for $0.5 million.
S-5
<PAGE>
COMPANY AND BROADCAST AREA DATA
The following table sets forth certain information that, as of January 19,
1998, was the most recently available information regarding the Company and its
broadcast areas:
<TABLE>
<CAPTION>
COMPANY DATA
---------------------------------------------------- BROADCAST AREA DATA
NO. OF STATIONS ------------------------
1996 RADIO 1997 RADIO 1997 1996 RADIO
REVENUE AUDIENCE ------------------------ ARBITRON REVENUE
BROADCAST AREA RANK SHARE % AM FM RANK RANK
- ---------------------------------------------- ----------- ------------- --- --- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
Los Angeles, California....................... 6 3.9 1 1 2 1
Dallas, Texas*................................ 4 7.7 -- 2 6 5
Houston, Texas*............................... 5 7.3 -- 2 9 7
Atlanta, Georgia.............................. 1 13.7 1 3 12 10
Minneapolis, Minnesota*....................... 6 2.9 1 1 14 16
San Diego, California (1)..................... 1 27.3 3 5 15 14
Phoenix, Arizona*............................. 6 6.5 -- 2 17 17
St. Louis, Missouri........................... 4 11.1 1 3 18 18
Baltimore, Maryland*.......................... 4 6.4 -- 1 19 21
Tampa, Florida................................ 1 37.8 2 5 21 19
Denver, Colorado (2).......................... 1 30.6 3 4 22 15
Cleveland, Ohio............................... 1 35.6 2 4 23 23
Portland, Oregon.............................. 1 23.2 2 2 24 22
Cincinnati, Ohio (3).......................... 1 37.4 4 4 25 20
San Jose, California.......................... 3 2.9 -- 1 28 43
Columbus, Ohio................................ 1 42.8 2 7 32 30
Salt Lake City, Utah.......................... 2 19.9 3 4 35 33
Las Vegas, Nevada............................. 1 20.1 -- 4 43 39
Rochester, New York........................... 2 25.9 2 5 47 53
Jacksonville, Florida......................... 2 23.4 2 3 51 47
Louisville, Kentucky (2)...................... 2 24.5 1 4 52 51
Dayton, Ohio.................................. 1 32.4 1 5 54 58
Toledo, Ohio.................................. 1 32.7 2 3 76 73
Sarasota/Bradenton, Florida................... 1 13.8 1 2 79 176
Des Moines, Iowa.............................. 1 17.9 1 1 88 67
Youngstown, Ohio.............................. 2 22.7 2 2 91 87
Charleston, South Carolina.................... 2 23.5 -- 4 97 94
Lexington, Kentucky........................... 1 36.7 2 4 108 79
Boise, Idaho.................................. 2 30.6 2 4 126 102
Santa Barbara, California..................... 1 19.9 2 3 187 147
Cedar Rapids, Iowa............................ 1 18.2 1 1 199 121
Lima, Ohio.................................... 1 36.7 1 3 221 247
Cheyenne, Wyoming............................. 1 40.0 1 3 266 220
Casper, Wyoming............................... 3 28.8 1 1 268 249
Findlay, Ohio (4)............................. N/A N/A -- 2 N/A N/A
Fort Collins/Greeley, Colorado (4)............ N/A N/A 1 2 N/A N/A
Idaho Falls, Idaho (4)........................ N/A N/A 1 1 N/A N/A
Iowa City, Iowa (4)........................... N/A N/A 1 1 N/A N/A
Marion, Ohio (4).............................. N/A N/A 1 2 N/A N/A
Pocatello, Idaho (4).......................... N/A N/A 1 1 N/A N/A
Sandusky, Ohio (4)............................ N/A N/A 1 2 N/A N/A
Twin Falls, Idaho (4)......................... N/A N/A 1 2 N/A N/A
Venice/Englewood, Florida (4)................. N/A N/A 1 2 N/A N/A
Washington Court House, Ohio (4).............. N/A N/A 1 1 N/A N/A
Other (5)..................................... N/A N/A 7 4 N/A N/A
--
---
Total 63 123
--
--
---
---
<CAPTION>
1991-1996
REVENUE CAGR
BROADCAST AREA %
- ---------------------------------------------- -------------
<S> <C>
Los Angeles, California....................... 4.3
Dallas, Texas*................................ 10.6
Houston, Texas*............................... 9.6
Atlanta, Georgia.............................. 13.3
Minneapolis, Minnesota*....................... 8.4
San Diego, California (1)..................... 6.2
Phoenix, Arizona*............................. 8.2
St. Louis, Missouri........................... 7.7
Baltimore, Maryland*.......................... 8.3
Tampa, Florida................................ 9.5
Denver, Colorado (2).......................... 10.9
Cleveland, Ohio............................... 8.1
Portland, Oregon.............................. 12.3
Cincinnati, Ohio (3).......................... 9.4
San Jose, California.......................... 7.5
Columbus, Ohio................................ 7.6
Salt Lake City, Utah.......................... 13.3
Las Vegas, Nevada............................. 15.2
Rochester, New York........................... 6.2
Jacksonville, Florida......................... 8.6
Louisville, Kentucky (2)...................... 5.9
Dayton, Ohio.................................. 7.2
Toledo, Ohio.................................. 9.3
Sarasota/Bradenton, Florida................... N/A
Des Moines, Iowa.............................. 10.7
Youngstown, Ohio.............................. 6.6
Charleston, South Carolina.................... 5.3
Lexington, Kentucky........................... 6.9
Boise, Idaho.................................. 10.9
Santa Barbara, California..................... 3.6
Cedar Rapids, Iowa............................ 8.4
Lima, Ohio.................................... N/A
Cheyenne, Wyoming............................. N/A
Casper, Wyoming............................... N/A
Findlay, Ohio (4)............................. N/A
Fort Collins/Greeley, Colorado (4)............ N/A
Idaho Falls, Idaho (4)........................ N/A
Iowa City, Iowa (4)........................... N/A
Marion, Ohio (4).............................. N/A
Pocatello, Idaho (4).......................... N/A
Sandusky, Ohio (4)............................ N/A
Twin Falls, Idaho (4)......................... N/A
Venice/Englewood, Florida (4)................. N/A
Washington Court House, Ohio (4).............. N/A
Other (5)..................................... N/A
Total
</TABLE>
- ------------------------------
* New broadcast areas to be entered upon consummation of the Nationwide
Acquisition.
(1) Assumes the disposition of the two FM radio stations currently owned by
Nationwide. See "Transactions -- Nationwide Acquisition." Also, excludes
two radio stations located in Baja California, Mexico which Jacor provides
programming to and sells air time for under an exclusive sales agency
agreement.
(2) Excludes one station in each of Denver, Colorado and Louisville, Kentucky
on which Jacor sells advertising time pursuant to joint sales agreements
(see "Business -- Radio Station Overview").
(3) Jacor also owns and operates television station WKRC, a CBS affiliate.
(4) These broadcast areas do not have Arbitron ranks.
(5) Includes the two radio stations in Baja California, Mexico referenced in
note 1, the two radio stations referenced in note 2, three radio stations
in Sebring, Florida, one radio station in each of Thousand Oaks,
California, Santa Rosa, California, Morro Bay, California and one pending
application for a construction permit in Casper, Wyoming.
S-6
<PAGE>
THE OFFERING
<TABLE>
<S> <C>
Common Stock offered by Jacor..... 3,800,000 shares
Common Stock to be outstanding
immediately after this
Offering......................... 49,461,588 shares(1)
Use of proceeds................... Jacor intends to use the net proceeds from this Offering
and the net proceeds from the Related Offerings to fund,
in part, the consideration to be paid by Jacor in the
Nationwide Acquisition. Alternatively and pending such
uses, Jacor intends to use the net proceeds from this
Offering and the net proceeds from the Related Offerings
for general corporate purposes, including acquisitions
of other broadcast properties and broadcast related
businesses and for the repayment in part of outstanding
indebtedness under the revolving credit component of the
Credit Facility (as defined herein). See "Use of
Proceeds."
Voting rights of Common Stock..... The Common Stock is the only authorized class of Jacor
common stock and each share is entitled to one vote per
share.
Nasdaq National Market symbol..... JCOR
</TABLE>
- ------------------------------
(1) Excludes (i) options outstanding on the date hereof to purchase
approximately 4,002,629 shares of Common Stock at a weighted average
exercise price of $25.40, (ii) the Citicasters Warrants (as defined herein),
(iii) the Regent Warrants (as defined herein), (iv) units granted to Jacor's
non-employee directors in July 1996 to acquire 18,700 shares of Common
Stock, (v) units granted to certain Jacor executive officers in November
1996 to acquire 22,487 shares of Common Stock, (vi) units granted to Jacor's
non-employee directors in July 1997 to acquire 10,010 shares of Common Stock
and (vii) up to 2,456,101 shares of Common Stock reserved for issuance
pursuant to Jacor's existing stock purchase and employee incentive
compensation plans. The Jacor Board of Directors has authorized Jacor to
purchase from time-to-time in open-market transactions up to 1,000,000
shares of Common Stock.
THE NOTES OFFERING
Concurrently with and as a condition to consummation of this Offering and
the LYONs Offering, JCC will consummate the Notes Offering. The Notes will be
offered by JCC exclusively pursuant to a separate Prospectus Supplement.
THE LYONS OFFERING
Concurrently with and as a condition to consummation of this Offering and
the Notes Offering, Jacor will consummate the LYONs Offering. The LYONs will be
offered by Jacor exclusively pursuant to a separate Prospectus Supplement.
S-7
<PAGE>
SUMMARY UNAUDITED PRO FORMA FINANCIAL INFORMATION
(DOLLARS IN THOUSANDS)
The following sets forth summary unaudited pro forma financial information
derived from the Unaudited Pro Forma Financial Information included elsewhere in
this Prospectus Supplement. The unaudited pro forma condensed consolidated
statements of operations for the year ended December 31, 1996 and the LTM ended
September 30, 1997, give effect to each of the following transactions and
related financings as if such transactions and financings had been completed
January 1, 1996: (i) the Nationwide Acquisition, (ii) the transactions described
under "Transactions--Pending Radio Station Transactions" and "--Recent Radio
Station Acquisitions and Dispositions" and "Broadcasting Related Acquisitions"
and (iii) other transactions entered into in 1996 and completed in 1996 or 1997.
The pro forma condensed consolidated balance sheet as of September 30, 1997 has
been prepared as if each of the following transactions and related financings
had occurred on September 30, 1997: (i) the Nationwide Acquisition, (ii) the
other Pending Transactions and (iii) any other transaction consummated after
September 30, 1997.
The Summary Unaudited Pro Forma Financial Information does not purport to
present the actual financial position or results of operations of Jacor had the
transactions and events assumed therein in fact occurred on the dates specified,
nor are they necessarily indicative of the results of operations that may be
achieved in the future. The Summary Unaudited Pro Forma Financial Information is
based on certain assumptions and adjustments described in the notes to the
Unaudited Pro Forma Financial Information and should be read in conjunction
therewith. See "Consolidated Financial Statements" and the notes thereto for
Jacor and Nationwide, incorporated by reference in this Prospectus Supplement.
<TABLE>
<CAPTION>
YEAR ENDED LTM ENDED
DECEMBER 31, 1996 SEPTEMBER 30, 1997
----------------- ------------------
<S> <C> <C>
STATEMENT OF OPERATIONS DATA:
Net revenue.............................................................. $ 641,775 $ 682,162
Broadcast operating expenses............................................. 439,400 457,928
Depreciation and amortization............................................ 119,495 119,574
Corporate general and administrative expenses............................ 9,108 12,789
Operating income......................................................... 71,469 89,568
Interest expense......................................................... 108,110 108,110
OTHER FINANCIAL DATA:
Broadcast cash flow (1).................................................. $ 202,375 $ 224,234
Broadcast cash flow margin (2)........................................... 31.5% 32.9%
EBITDA (1)............................................................... $ 193,267 $ 211,445
Cash interest expense.................................................... 92,245 92,245
Capital expenditures..................................................... 14,818 21,616
</TABLE>
<TABLE>
<CAPTION>
AS OF
SEPTEMBER 30, 1997
------------------
<S> <C>
BALANCE SHEET DATA:
Working capital............................................................................. $ 83,192
Intangible assets........................................................................... 2,728,451
Total assets................................................................................ 3,151,282
Long-term debt, including current portion................................................... 1,233,500
Liquid Yield Option Notes................................................................... 273,619
Total shareholders' equity.................................................................. 1,104,433
</TABLE>
S-8
<PAGE>
- ------------------------
(1) "Broadcast cash flow" means operating income before depreciation and
amortization, and corporate general and administrative expenses. "EBITDA"
means operating income before depreciation and amortization. Broadcast cash
flow and EBITDA should not be considered in isolation from, or as a
substitute for, operating income, net income or cash flow and other
consolidated income or cash flow statement data computed in accordance with
generally accepted accounting principles or as a measure of a company's
profitability or liquidity. Although these measures of performance are not
calculated in accordance with generally accepted accounting principles, they
are widely used in the broadcasting industry as a measure of a company's
operating performance because they assist in comparing station performance
on a consistent basis across companies without regard to depreciation and
amortization, which can vary significantly depending on accounting methods
(particularly where acquisitions are involved) or non-operating factors such
as historical cost bases. Broadcast cash flow also excludes the effect of
corporate general and administrative expenses, which generally do not relate
directly to station performance. Pro forma EBITDA excludes $2,303 of special
bonuses.
(2) Broadcast cash flow margin equals broadcast cash flow as a percentage of net
revenue.
S-9
<PAGE>
TRANSACTIONS
NATIONWIDE ACQUISITION
In December 1997, Jacor entered into an Agreement of Sale ("Sale Agreement")
with Nationwide to purchase the assets of 17 radio stations for a purchase price
of approximately $620.0 million in cash (the "Nationwide Acquisition"). These
stations are KDMX-FM and KEGL-FM in Dallas, Texas (KEGL-FM to be acquired upon
consummation of a pending exchange entered into by Nationwide); KHMX-FM and
KTBZ-FM in Houston, Texas; KMJZ-FM and KSGS-AM in Minneapolis, Minnesota;
KGLQ-FM and KZZP-FM in Phoenix, Arizona; WPOC-FM in Baltimore, Maryland;
WGAR-FM, WMJI-FM and WMMS-FM in Cleveland, Ohio; WCOL-FM, WFII-AM and WNCI-FM in
Columbus, Ohio; and KXGL-FM and KMCG-FM in San Diego, California (collectively,
the "Nationwide Stations"). Of the purchase price, $30.0 million has been placed
in escrow pending the closing of the Nationwide Acquisition.
Jacor anticipates that the sources of the cash to be used to satisfy the
purchase price will be obtained from a combination of borrowing under its Credit
Facility and the net proceeds from this Offering and the Related Offerings.
The closing of the Nationwide Acquisition is subject to certain conditions,
including expiration of the applicable waiting period under the
Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended
("Hart-Scott-Rodino") and the consent of the FCC to the assignment of the FCC
licenses of the Nationwide Stations to Jacor. Because the Nationwide Acquisition
would result in the Company owning 10 stations in San Diego, in which the
maximum number of stations allowed to be owned pursuant to FCC rules is eight,
Jacor will divest two of the Company's radio stations in San Diego. Jacor has
not yet determined which two stations it will divest. In addition, Jacor has had
discussions with the Antitrust Division of the Department of Justice regarding
the effect of the Nationwide Acquisition in Columbus, Cleveland and San Diego
and has received an investigative demand from the Ohio Attorney General
regarding the effect of the Nationwide Acquisition in Columbus and Cleveland. No
determinations have been made as to whether the Antitrust Division or the Ohio
Attorney General will raise any objections to the Nationwide Acquisition that
would require changes in the terms of the Nationwide Acquistion. See "Risk
Factors--Risks of Acquisition Strategy," "--Increased Antitrust Scrutiny" and
"--FCC Regulation of Broadcasting Industry" of the accompanying Prospectus. The
Hart-Scott-Rodino and the FCC applications for the Nationwide Acquisition were
filed in January 1998 and November 1997, respectively.
The Sale Agreement also provides that, after April 1, 1998, at the option of
Jacor, the closing of the Nationwide Acquisition may occur before the FCC
consent has become a final order. In addition to options to terminate for
various matters including a breach of the Sale Agreement, if the parties to the
Sale Agreement shall have materially satisfied all of their respective
obligations under the Sale Agreement and, nevertheless, the closing of the
Nationwide Acquisition has not taken place prior to December 31, 1998, either
party may terminate the Sale Agreement. Jacor anticipates that the closing will
occur during the second quarter of 1998.
PENDING RADIO STATION TRANSACTIONS
All of the following pending radio station transactions are subject to
various conditions, including approval by the FCC. There can be no assurance
that Jacor will be successful in consummating all such transactions in a timely
manner or on the terms described herein. See "Risk Factors--Increased Antitrust
Scrutiny" and "--FCC Regulation of Broadcasting Industry" in the accompanying
Prospectus.
In March 1997, Jacor entered into a binding agreement with Criterion Media
Group, Inc. to purchase the assets of radio station KLDZ-FM in Santa Barbara,
California, upon completion of its construction, for a purchase price of $1.5
million. The FCC application for this transaction will not be filed until
KLDZ-FM is operating.
S-10
<PAGE>
In April 1997, Jacor entered into a binding agreement with General
Broadcasting, Inc. to purchase the assets of radio station KWLW-AM (formerly
KFAM-AM) in North Salt Lake City, Utah for a purchase price of $1.2 million, of
which approximately $0.1 million has been placed in escrow pending the closing
of the transaction. The FCC has granted its final order to this transaction, but
closing has been delayed pending receipt of approval in a bankruptcy proceeding
involving the majority owner of the seller.
Also, in April 1997, Jacor entered into a binding agreement with LMS of
Boise, Inc. ("LMSB") to purchase the assets of radio stations KXLT-FM and
KCIX-FM in Boise, Idaho for a purchase price of approximately $8.0 million. Upon
signing the agreement, Jacor loaned $8.0 million to LMSB in order to finance
LMSB's purchase of such stations from the prior owner. The FCC has granted its
final order to this transaction, but closing has been delayed pending the
satisfaction of other closing conditions to be performed by the seller.
In June 1997, Jacor entered into a binding agreement with WKBN Broadcasting
Corp. to purchase the assets of radio stations WKBN-FM and WKBN-AM in
Youngstown, Ohio for a purchase price of approximately $11.0 million, of which
$2.5 million has been placed in escrow pending the closing of the transaction.
These stations will be operated pursuant to an LMA until the closing, which is
expected to occur in 1999.
In July 1997, Jacor entered into a binding agreement with KISN-AM Broadcast
L.P. and KISN-AM License L.P., both of which are affiliates of Trumper
Communications, Inc., to effect a tax-free like-kind exchange of the assets of
radio station KOSY-FM (formerly KBKK-FM) in Salt Lake City, Utah for the assets
of radio station KNRS-AM (formerly KISN-AM) in Salt Lake City, Utah. The assets
to be exchanged in this transaction are valued at approximately $4.5 million for
tax purposes. The FCC applications for this exchange were filed in September
1997 and the FCC granted its initial consent in December 1997.
In October 1997, Jacor entered into a binding agreement with American Radio
Systems Corporation and American Radio Systems License Corp. (together "ARS") to
purchase the assets of radio station KSJO-FM in San Jose, California for a
purchase price of approximately $30.0 million, of which $1.5 million has been
placed in escrow pending the closing of the transaction. The FCC application for
this transaction was filed in October 1997. The Hart-Scott-Rodino application
for this transaction was filed in October 1997 and early termination of the
waiting period was granted in November 1997.
Also, in October 1997, Jacor entered into a binding agreement with Marion
Radio Company to purchase the assets of radio stations WMRN-FM, WMRN-AM and
WDIF-FM in Marion, Ohio, and of WHMQ-FM and WQTL-FM in Findlay, Ohio for a
purchase price of approximately $14.5 million, of which approximately $0.7
million has been placed in escrow pending the closing of the transaction. The
FCC application for this transaction was filed in October 1997 and the FCC
granted its initial consent in January 1998.
Also, in October 1997, Jacor entered into a binding agreement with WLOH,
Inc. to sell the assets of radio station WLOH-AM in Lancaster, Ohio for
approximately $0.1 million. The FCC application for this transaction was filed
in December 1997.
In January 1998, Jacor entered into a binding agreement with Royce Radio,
Inc. to sell the assets of radio stations WMCC-FM and WLOC-AM in Munfordville,
Kentucky for approximately $0.2 million. The FCC application for this
transaction was filed in January 1998.
RECENT RADIO STATION ACQUSITIONS AND DISPOSITIONS
In January 1997, Jacor entered into an agreement with The Great Lakes
Wireless Talking Machine, LLP to acquire the assets of radio station WNVE-FM in
Rochester, New York for a purchase price of $5.5 million in cash. This
transaction was consummated in April 1997.
S-11
<PAGE>
Also, in January 1997, Jacor entered into three separate agreements with
entities affiliated with James E. Champlin to acquire the assets of radio
stations WLRS-FM in Louisville, Kentucky, WMCC-FM and WLOC-AM in Munfordville,
Kentucky and WLKT-FM in Lexington, Kentucky. In April 1997, Jacor consummated
the Louisville acquisition for a purchase price of $5.1 million. In May 1997,
Jacor consummated the Munfordville acquisition for a purchase price of $0.3
million. In July 1997, Jacor consummated the Lexington acquisition for a
purchase price of $5.1 million.
Also, in January 1997, Jacor entered into an agreement to purchase (i) the
assets of radio stations WIMA-AM, WIMT-FM and WBUK-FM in Lima, Ohio; and (ii)
the construction permit for radio station WMLX-FM (formerly WLVZ-FM), in Lima,
Ohio, from Lima Broadcasting Co. for an aggregate purchase price of $6.5
million. This transaction was consummated in May 1997.
In February 1997, Jacor entered into an agreement to purchase the assets of
radio station KEWS-AM (formerly KOTK-AM) in Portland, Oregon, from EXCL
Communications, Inc. and Portland Radio, Inc. for a purchase price of $8.3
million. This transaction was consummated in May 1997.
Also, in February 1997, Jacor entered into three separate agreements to
purchase from Auburn Cablevision, Inc. and certain of its subsidiaries the
assets of radio stations WMAX-FM, WMHX-FM and WRCD-FM in Rochester, New York for
an aggregate purchase price of $7.0 million. These transactions were consummated
in June 1997.
In March 1997, Jacor entered into an agreement to purchase the assets of
radio stations KQSB-AM, KTYD-FM and KSBL-FM in Santa Barbara, California from
Criterion Media Group, Inc. for a purchase price of $13.5 million. This
transaction was consummated in May 1997.
Also, in March 1997, Jacor entered into an agreement to purchase the assets
of radio station KOSY-FM (formerly KBKK-FM) in Salt Lake City, Utah, from Garcia
Broadcasting, L.L.C. for a purchase price of $4.5 million. This transaction was
consummated in July 1997.
Also, in March 1997, Jacor entered into an agreement with BuenaVentura
Communications, Inc. to purchase the assets of radio station KAHS-AM in Thousand
Oaks, California for a purchase price of $0.4 million. This transaction was
consummated in September 1997.
In April 1997, Jacor entered into an agreement to acquire the assets of
radio stations WLEC-AM and WCPZ-FM in Sandusky, Ohio from Erie Broadcasting II,
Inc., for a purchase price of approximately $7.7 million. This transaction was
consummated in July 1997.
Also, in April 1997, Jacor entered into an agreement to sell the assets of
radio station WXZZ-FM in Lexington, Kentucky to JS Communications, Inc. (which
subsequently changed its name to Regent Communications, Inc.) for a sale price
of $3.5 million. This transaction was consummated in August 1997.
Also, in April 1997, Jacor entered into an agreement to purchase the assets
of radio stations KIGN-FM, KOLZ-FM, KGAB-AM and KLEN-FM in Cheyenne, Wyoming
from Magic City Media, Inc. for a purchase price of approximately $5.5 million.
This transaction was consummated in October 1997.
Also, in April 1997, Jacor entered into an agreement with Secret
Communications Limited Partnership to purchase the assets of radio stations
WMVX-FM (formerly WLTF-FM) and WTAM-AM in Cleveland, Ohio for a purchase price
of approximately $45.0 million, of which approximately $24.0 million was paid in
cash and the remainder was paid in 750,000 shares of Common Stock valued at
approximately $21.0 million as of the signing of the agreement. This transaction
was consummated in July 1997.
In May 1997, Jacor entered into an agreement with LMS of Twin Falls, Inc.
("LMST") and LMS Licenses, Inc. ("LMSL") to acquire LMST's and LMSL's rights to
acquire radio stations KEZJ-FM, KLIX-FM and KLIX-AM in Twin Falls, Idaho
pursuant to an Asset Purchase Agreement entered in January 1997
S-12
<PAGE>
by Lartique Multimedia Systems, Inc. (predecessor in interest to LMST and LMSL)
and B&B Broadcasting, Inc. for a purchase price of approximately $9.0 million.
This transaction was consummated in October 1997.
Also, in May 1997, Jacor entered into two agreements with LMS of Pocatello,
Inc. to purchase the assets of (i) radio stations KPKY-FM and KWIK-AM in
Pocatello, Idaho, for a purchase price of approximately $2.0 million and (ii)
radio stations KID-FM and KID-AM in Idaho Falls, Idaho for a purchase price of
approximately $1.6 million. This transaction was consummated in November 1997.
Also, in May 1997, Jacor entered into an agreement with Iowa City
Broadcasting Company, Inc. to purchase the assets of radio stations KXIC-AM and
KKRQ-FM in Iowa City, Iowa, for a purchase price of $8.0 million. This
transaction was consummated in October 1997.
Also, in May 1997, Jacor entered into an agreement with each of Cardinal
Communications, Inc. and Revival II, Inc. to purchase the assets of radio
station KMXN-AM in Santa Rosa, California for a purchase price of $0.1 million.
This transaction was consummated in August 1997.
Also, in May 1997, Jacor entered into an agreement with Outback
Broadcasting, Inc. to purchase the assets of radio stations WITS-AM and WYMR-FM
in Sebring, Florida for a purchase price of $0.7 million. This transaction was
consummated in August 1997.
In June 1997, Jacor entered into an agreement with ARS to effect a tax-free
like-kind exchange of Jacor's assets of radio stations WDAF-AM, KYYS-FM and
KMXV-FM in Kansas City, Missouri and KUDL-FM in Kansas City, Kansas for the
assets of WMMX-FM, WTUE-FM, WLQT-FM, WXEG-FM, WBTT-FM and WONE-AM in Dayton,
Ohio. Jacor and ARS valued the exchanged assets at $70.0 million for tax
purposes. This exchange was consummated in January 1998.
In July 1997, Jacor entered into an agreement with Continental Broadcast
Group, Inc. to purchase the assets of radio station KMJM-FM (formerly WCBW-FM)
in St. Louis, Missouri for a purchase price of $13.2 million. This transaction
was consummated in September 1997.
Also, in July 1997, Jacor entered into an agreement with the shareholders of
WN Broadcasting Corp. ("WN") to purchase all of the outstanding shares of WN for
approximately $3.4 million. WN owns the FCC licenses and assets of radio
stations WNCD-FM and WNIO-AM in Niles, Ohio. This transaction was consummated in
October 1997.
In August 1997, Jacor entered into an agreement with Regent Communications,
Inc. ("RCI") to purchase all of the outstanding capital stock of Regent
Broadcasting of Charleston, Inc. ("RBCI") for approximately $4.5 million. RBCI
was a party to an agreement whereby RBCI would acquire the assets of radio
stations WLLC-FM (formerly WSUY-FM) and WRFQ-FM in Charleston, South Carolina.
The acquisition of the stock of RBCI and the acquisition of WSUY-FM and WRFQ-FM
by RBCI were consummated in December 1997.
Also, in August 1997, Jacor entered into an agreement with CV Radio
Associates, L.P. to purchase the assets of radio station WKNR-AM in Cleveland,
Ohio for a purchase price of approximately $8.4 million. This transaction was
consummated in January 1998.
Also, in August 1997, Jacor entered into an agreement with Engles
Enterprises, Inc. to purchase the assets of radio station KIST-AM in Santa
Barbara, California for a purchase price of approximately $0.9 million. This
transaction was consummated in January 1998.
In September 1997, Jacor entered into an agreement with S&S Communications
Group, Inc. to purchase the assets of radio station WNCG-FM in Sandusky, Ohio
for a purchase price of approximately $2.2 million. This transaction was
consummated in November 1997.
Also, in September 1997, Jacor entered into an agreement with Rodgers
Broadcasting Corp. to purchase the assets of radio stations WOFR-AM and WCHO-FM
in Washington Court House, Ohio for a
S-13
<PAGE>
purchase price of approximately $2.3 million. This transaction was consummated
in December 1997 upon receipt of initial consent from the FCC, which consent has
not yet become a final order.
Also, in September 1997, Jacor entered into an agreement to donate the FCC
licenses and assets of radio station KBCO-AM in Denver, Colorado to the
University of Colorado Foundation. This transaction was consummated in December
1997.
In October 1997, Jacor entered into an agreement with DoubleDee Broadcast
Group to purchase the assets of radio station KFXD-AM in Boise, Idaho for a
purchase price of approximately $1.8 million. This transaction was consummated
in January 1998 upon receipt of an initial consent from the FCC, which consent
has not yet become a final order.
S-14
<PAGE>
BROADCASTING RELATED ACQUISITIONS
Jacor is a broadcasting company primarily engaged in radio broadcasting and
providing related services to radio broadcasting companies. Jacor's recent
acquisitions of radio broadcasting related businesses and services are described
below.
SYNERGY BROADCASTING/MULTIVERSE ACQUISITION
In November 1997, Jacor acquired the rights to THE DR. LAURA SCHLESSINGER
SHOW from Synergy Broadcasting, Inc. and substantially all of the assets of
MultiVerse Networks, L.L.C. (together "Synergy Broadcasting") for $71.5 million
in cash. THE DR. LAURA SCHLESSINGER SHOW is the second highest rated radio talk
show in the country. Jacor's MultiVerse subsidiary is one of the top three
independent network radio sales representation firms and is the outside sales
representative of THE DR. LAURA SCHLESSINGER SHOW. In addition to THE DR. LAURA
SCHLESSINGER SHOW, MultiVerse markets such other well known radio programs as
COUNTRY HEARTLINES WITH JOHN CRENSHAW and BEYOND THE BELTWAY WITH BRUCE DUMONT.
PREMIERE MERGER
In June 1997, Jacor acquired by merger (the "Premiere Merger") Premiere
Radio Networks, Inc. ("Premiere"), a company that produces syndicated network
radio programs and services which it distributes in exchange for commercial
broadcast time that it then resells to national advertisers. The total
consideration paid by Jacor, including payment for certain Premiere warrants and
stock options, was approximately $189.8 million inclusive of the amounts paid to
facilitate the Premiere Merger by purchasing all of the outstanding shares of
common stock of Archon Communications, Inc., the largest holder of Premiere
stock at the time of the Premiere Merger. Of such amount, approximately $138.8
million was paid in cash and the remainder was paid in 1,416,886 shares of
Common Stock and 303,000 shares of Common Stock reserved for issuance pursuant
to option agreements with certain members of Premiere's management. The total
consideration paid by Jacor, net of Premiere's cash on hand and excess working
capital acquired by Jacor in the Premiere Merger, was approximately $169.0
million.
EFM COMPANIES
In April 1997, Jacor acquired substantially all of the assets pertaining to
the broadcast distribution and related print and electronic media publishing
businesses (the "EFM Acquisition") of EFM Media Management, Inc., EFM
Publishing, Inc. and PAM Media, Inc. (collectively, the "EFM Companies"). The
business of the EFM Companies included the ownership and distribution of the
RUSH LIMBAUGH and DR. DEAN EDELL syndicated radio talk programs. Jacor paid
$50.0 million in cash for the assets of the EFM Companies.
The RUSH LIMBAUGH program, a nationally syndicated talk radio program, is
broadcast on more than 600 radio stations and is the highest rated radio talk
show in the country. The DR. DEAN EDELL program, a health care and medicine talk
radio program, is broadcast on more than 300 radio stations and is the third
highest rated radio talk show in the country.
NSN NETWORK SERVICES
Also, in April 1997, Jacor acquired the assets of Standard Broadcast
Service, Inc., which conducted business under the trade name NSN Network
Services, Ltd. ("NSN Network Services"). The purchase price paid by Jacor for
the assets of NSN Network Services was $11.0 million, of which approximately
$9.3 million was paid in cash and approximately $1.7 million was paid in 59,540
shares of Common Stock.
The principal products and services of NSN Network Services include
satellite audio systems for radio
broadcasting, Wide Area Network business connectivity, satellite remote
telephone systems and paging systems, and communications consulting. These
technologies will create efficiencies and lower costs related
S-15
<PAGE>
to the distribution of programming among Jacor's radio stations. Further, these
technologies will continue to enhance Jacor's back-office backbone to facilitate
the sharing of financial data and other communications.
AIRWATCH ACQUISITION
Also, in April 1997, Jacor acquired the assets of Airwatch Communications,
Inc. ("Airwatch") and Airtraffic Communications, Inc. ("Airtraffic") for a
purchase price of approximately $18.0 million in cash. Airwatch and Airtraffic
provide traffic reporting services to radio and television stations in the San
Diego and Los Angeles, California broadcast areas.
S-16
<PAGE>
USE OF PROCEEDS
The net proceeds (after deducting estimated expenses and underwriting
discounts and commissions) to Jacor from the sale of the shares of Common Stock
offered hereby are estimated to be $ million ($ million if the
Underwriters' over-allotment option is exercised in full). The net proceeds to
Jacor from the Related Offerings will be approximately $ million ($
million if the underwriter's over-allotment option for the LYONs Offering is
exercised in full). Jacor intends to use the net proceeds from this Offering and
the net proceeds from the Related Offerings to fund, in part, the consideration
to be paid by Jacor in the Nationwide Acquisition. Alternatively and pending
such uses, Jacor intends to use the net proceeds from this Offering and the net
proceeds from the Related Offerings for general corporate purposes, including
acquisitions of other broadcast properties and broadcast related businesses and
for the repayment in part of outstanding indebtedness under the revolving credit
component of the Credit Facility.
The Nationwide Acquisition will not be and some of the other Pending
Transactions may not be consummated prior to the closing of this Offering. There
can be no assurance that Jacor will be successful in consummating the Nationwide
Acquisition or the other Pending Transactions on terms acceptable to Jacor. See
"Transactions." To the extent the amount of net proceeds from this Offering plus
the net proceeds from the Related Offerings is not sufficient to fund any cash
component of the Pending Transactions, Jacor intends to fund the remaining cash
component with cash from operations and borrowings under its Credit Facility.
Jacor's senior credit facility, as amended and restated as of September 16,
1997 (the "Credit Facility"), with certain banks and other financial
institutions provides availability of $1.15 billion of loans in two components:
(i) a revolving credit facility of up to $750.0 million with mandatory
semi-annual commitment reductions beginning June 30, 2000 and a final maturity
date of December 31, 2004 and (ii) a term loan of $400.0 million with scheduled
semi-annual reductions beginning December 31, 1999 and a final maturity date of
December 31, 2004. The Credit Facility bears interest at a rate that fluctuates
with an applicable margin based on the Company's leverage ratio plus a bank base
rate or a Eurodollar base rate, as applicable. Through December 31, 1997, the
year to date average interest rate on the Credit Facility was approximately
6.5%. Outstanding indebtedness under the Credit Facility has been incurred to
pay for acquisitions.
S-17
<PAGE>
CAPITALIZATION
The following sets forth the capitalization of Jacor on an actual basis as
of September 30, 1997 and pro forma as adjusted to give effect to each of the
following transactions and related financings as if such transactions and
financings had been completed on September 30, 1997: (i) the Nationwide
Acquisition, (ii) the other Pending Transactions and (iii) any other transaction
consummated after September 30, 1997.
<TABLE>
<CAPTION>
AS OF SEPTEMBER 30,
1997
--------------------
PRO FORMA
AS
ACTUAL ADJUSTED
--------- ---------
(DOLLARS IN
THOUSANDS)
<S> <C> <C>
Cash.............................................................. $ 18,779 $ 18,779
--------- ---------
--------- ---------
Long-term debt, including current portion:(1)
Credit Facility................................................. $ 414,500 $ 713,500
8 3/4% Senior Subordinated Notes due 2007....................... 150,000 150,000
9 3/4% Senior Subordinated Notes due 2006....................... 170,000 170,000
10 1/8% Senior Subordinated Notes due 2006...................... 100,000 100,000
% Senior Subordinated Notes due 2010.......................... -- 100,000
Liquid Yield Option Notes due 2011(2)........................... 123,619 123,619
Liquid Yield Option Notes due 2018(3)........................... -- 150,000
--------- ---------
Total long-term debt........................................ 958,119 1,507,119
--------- ---------
Shareholders' equity:
Common Stock, $.01 par value(4)................................. 455 495
Additional paid-in capital...................................... 860,530 1,052,490
Citicasters Warrants............................................ 26,500 26,500
Regent Warrants................................................. 5,000 5,000
Retained earnings............................................... 19,948 19,948
--------- ---------
Total shareholders' equity.................................. 912,433 1,104,433
--------- ---------
Total capitalization.............................................. $1,870,552 $2,611,552
--------- ---------
--------- ---------
</TABLE>
- ------------------------------
(1) See Notes 6 and 7 of Notes to Jacor's consolidated financial statements
which are incorporated herein by reference from Jacor's Annual Report on
Form 10-K for the year ended December 31, 1996 for additional information
regarding the components and terms of Jacor's long-term debt.
(2) The Liquid Yield Option Notes due 2011 (the "LYONs due 2011") are
convertible at any time on or prior to maturity into Common Stock at a
conversion rate of 13.412 shares per LYON due 2011, are not redeemable by
Jacor prior to June 12, 2001 and are subject to mandatory redemption at the
option of the holders on June 12, 2001 and June 12, 2006. No cash interest
or similar payment is required in connection with the LYONs due 2011. The
LYONs due 2011 are obligations of Jacor but not of JCC. See "Description of
Indebtedness--The Liquid Yield Option Notes due 2011" in the accompanying
Prospectus.
(3) The Liquid Yield Option Notes due 2018 (the "LYONs") are convertible at any
time on or prior to maturity into Common Stock at a conversion rate of
shares per LYON, are not redeemable by Jacor prior to February , 2003 and
are subject to mandatory redemption at the option of the holders on February
, 2003, February , 2008 and February , 2013. No cash interest or
similar payment is required in connection with the LYONs. The LYONs are
obligations of Jacor but not of JCC.
(4) Excludes (i) options outstanding on the date hereof to purchase
approximately 4,002,629 shares of Common Stock at a weighted average
exercise price of $25.40, (ii) warrants issued in connection with Jacor's
1996 acquisition of Citicasters, Inc. to purchase an aggregate of 4,400,000
shares of Common Stock at an exercise price of $28.00 per full share (the
"Citicasters Warrants"), (iii) warrants issued in connection with Jacor's
1997 acquisition of Regent Communications, Inc. to acquire 500,000 shares of
Common Stock at $40.00 per full share (the "Regent Warrants"), (iv) units
granted to Jacor's non-employee directors in July 1996 to acquire 18,700
shares of Common Stock, (v) units granted to certain Jacor executive
officers in November 1996 to acquire 22,487 shares of Common Stock, (vi)
units granted to Jacor's non-employee directors in July 1997 to acquire
10,010 shares of Common Stock and (vii) up to 2,456,101 shares of Common
Stock reserved for issuance pursuant to Jacor's existing stock option
purchase and employee incentive compensation plans. The Jacor Board of
Directors has authorized Jacor to purchase from time-to-time in open-market
transactions up to 1,000,000 shares of Common Stock.
S-18
<PAGE>
COMMON STOCK MARKET PRICE INFORMATION
The following sets forth, for the calendar quarters indicated, the reported
high and low sales prices of the Common Stock as reported on the Nasdaq National
Market.
<TABLE>
<CAPTION>
COMMON STOCK
--------------------
HIGH LOW
--------- ---------
<S> <C> <C>
1996
First Quarter................................................................................ $ 22.25 $ 16.00
Second Quarter............................................................................... 31.25 19.50
Third Quarter................................................................................ 35.00 24.75
Fourth Quarter............................................................................... 36.38 23.75
1997
First Quarter................................................................................ $ 31.75 $ 25.63
Second Quarter............................................................................... 38.63 26.50
Third Quarter................................................................................ 46.25 37.25
Fourth Quarter............................................................................... 55.63 36.50
1998
First Quarter (through January 20, 1998)..................................................... $ 54.25 $ 46.00
</TABLE>
On January 20, 1998, there were approximately 1,650 holders of record of
Common Stock.
DIVIDEND POLICY
Jacor intends to retain future earnings for use in its business and does not
anticipate paying any dividends on shares of its Common Stock in the foreseeable
future. Under the Credit Facility, Jacor is prohibited from paying dividends on
its Common Stock except as provided therein. Jacor has neither declared nor paid
any dividends on its Common Stock to date. Jacor has no current intent to pay
dividends on its Common Stock.
S-19
<PAGE>
UNAUDITED PRO FORMA FINANCIAL INFORMATION
The following unaudited pro forma financial information, which is based on
the historical financial statements of Jacor and Nationwide, has been prepared
to illustrate the effects of the acquisitions and related financings described
below.
The unaudited pro forma condensed consolidated statements of operations for
the nine months ended September 30, 1997, the nine months ended September 30,
1996, the LTM ended September 30, 1997 and the year ended December 31, 1996 give
effect to each of the following transactions as if such transactions had been
completed January 1, 1996: (i) the Nationwide Acquisition, (ii) the acquisitions
described under "Transactions--Pending Radio Station Transactions" and "--Recent
Radio Station Acquisitions and Dispositions" and "Broadcasting Related
Acquisitions" and (iii) other transactions entered into in 1996 and completed in
1996 or 1997. The pro forma condensed consolidated balance sheet as of September
30, 1997 has been prepared as if each of the following transactions and related
financings had occurred on September 30, 1997: (i) the Nationwide Acquisition,
(ii) the other Pending Transactions and (iii) any other transaction consummated
after September 30, 1997.
The Pending Transactions will be accounted for using the purchase method of
accounting. The total purchase costs of the Pending Transactions will be
allocated to the tangible and intangible assets and liabilities acquired based
upon their respective fair values. The allocation of the aggregate purchase
price reflected in the Unaudited Pro Forma Financial Information is preliminary.
The final allocation of the purchase price will be contingent upon the receipt
of final appraisals of the acquired assets. The Unaudited Pro Forma Financial
Information is not necessarily indicative of either future results of operations
or the results that might have occurred if the foregoing transactions had been
consummated on the indicated dates.
The Unaudited Pro Forma Financial Information should be read in conjunction
with Jacor's Consolidated Financial Statements and notes thereto incorporated by
reference in this Prospectus Supplement and Nationwide's Consolidated Financial
Statements and notes thereto incorporated by reference in this Prospectus
Supplement.
S-20
<PAGE>
JACOR COMMUNICATIONS, INC. AND SUBSIDIARIES
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
LTM ENDED
YEAR ENDED DECEMBER 31, 1996 SEPTEMBER 30,
-------------------------------------------------------------------------------------------------- 1997
OTHER JACOR -------------
ACQUISITIONS OTHER NATIONWIDE ACQUISITION TOTAL TOTAL
HISTORICAL PRO FORMA ACQUISITIONS HISTORICAL PRO FORMA PRO FORMA COMBINED COMBINED
JACOR ADJUSTMENTS PRO FORMA NATIONWIDE ADJUSTMENTS ADJUSTMENTS PRO FORMA PRO FORMA
---------- ------------ ------------ ---------- ------------ ------------ ------------ -------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Net revenue..... $223,761 $335,209(a) $558,970 $73,760 $ 13,059(e) $ (4,014)(h) $641,775 $682,162
Broadcast
operating
expenses...... 151,065 235,630(a) 386,695 58,596 8,739(e) (14,630)(h) 439,400 457,928
Depreciation and
amortization... 23,404 79,870(a) 103,274 7,356 4,306(e) 4,559(i) 119,495 119,574
Corporate
general and
administrative
expenses...... 7,629 1,479(a) 9,108 3,282 (3,282)(h) 9,108 12,789
Special
bonuses....... 2,303 2,303 2,303 2,303
---------- ------------ ------------ ---------- ------------ ------------ ------------ -------------
Operating
income.... 39,360 18,230 57,590 4,526 14 9,339 71,469 89,568
Interest
expense....... (32,244) (51,467)(b) (83,711) 4,373 (13,401)(e) (15,371)(j) (108,110) (108,110)
Gain on sale of
radio stations
and other
assets........ 2,539 2,539 5,948 (6,203)(f) 2,284 10,543
Other income
(expense),
net........... 5,716 1,073(c) 6,789 (485) 6,304 5,413
---------- ------------ ------------ ---------- ------------ ------------ ------------ -------------
Income
(loss)
before
income
taxes and
extraordinary
items..... 15,371 (32,164) (16,793) 14,362 (19,590) (6,032) (28,053) (2,586)
---------- ------------ ------------ ---------- ------------ ------------ ------------ -------------
Income tax
(expense)
benefit....... (7,300) 11,528(d) 4,228 (5,310) 7,559(g) 2,413(k) 8,890 (1,369)
---------- ------------ ------------ ---------- ------------ ------------ ------------ -------------
Income
(loss)
before
extraordinary
items..... $ 8,071 $(20,636) $(12,565) $ 9,052 $(12,031) $ (3,619) $(19,163) $ (3,955)
---------- ------------ ------------ ---------- ------------ ------------ ------------ -------------
---------- ------------ ------------ ---------- ------------ ------------ ------------ -------------
Income
(loss) per
common
share
before
extraordinary
items..... $ 0.30 $ (0.39) $ (0.08)
---------- ------------ -------------
---------- ------------ -------------
Number of common
shares used in
per share
computations... 26,830 49,462(l) 49,462
---------- ------------ -------------
---------- ------------ -------------
</TABLE>
See accompanying notes to unaudited pro forma condensed consolidated financial
statements.
S-21
<PAGE>
JACOR COMMUNICATIONS, INC. AND SUBSIDIARIES
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
NINE MONTHS
ENDED
NINE MONTHS ENDED SEPTEMBER 30, 1997 SEPTEMBER 30,
------------------------------------------------------------------------------------------------- 1996
OTHER JACOR -------------
ACQUISITIONS OTHER NATIONWIDE ACQUISITION TOTAL TOTAL
HISTORICAL PRO FORMA ACQUISITIONS HISTORICAL PRO FORMA PRO FORMA COMBINED COMBINED
JACOR ADJUSTMENTS PRO FORMA NATIONWIDE ADJUSTMENTS ADJUSTMENTS PRO FORMA PRO FORMA
---------- ----------- ------------ ---------- ------------ ------------ ------------ -------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Net revenue..... $368,941 $70,972(a) $439,913 $71,149 $ 565(e) $ (2,176)(h) $509,451 $469,065
Broadcast
operating
expenses...... 251,513 47,524(a) 299,037 61,717 (1,699)(e) (15,946)(h) 343,109 324,582
Depreciation and
amortization... 53,097 23,363(a) 76,460 6,948 1,812(e) 3,406(i) 88,626 88,546
Corporate
general and
administrative
expenses...... 9,240 9,240 2,657 (2,657)(h) 9,240 5,559
---------- ----------- ------------ ---------- ------------ ------------ ------------ -------------
Operating
income
(loss).... 55,091 85 55,176 (173) 452 13,021 68,476 50,378
Interest
expense....... (57,348) (7,677)(b) (65,025) (3,052) (3,197)(e) (12,051)(j) (83,325) (83,325)
Gain on sale of
radio stations
and other
assets........ 10,801 10,801 44,132 (44,132)(f) 10,801 2,542
Other income
(expense),
net........... 298(c) 298 (56) 242 1,133
---------- ----------- ------------ ---------- ------------ ------------ ------------ -------------
Income
(loss)
before
income
taxes and
extraordinary
items..... 8,544 (7,294) 1,250 40,851 (46,877) 970 (3,806) (29,272)
---------- ----------- ------------ ---------- ------------ ------------ ------------ -------------
Income tax
(expense)
benefit....... (6,500) 3,825(d) (2,675) (13,665) 15,714(g) (388)(k) (1,014) 9,244
---------- ----------- ------------ ---------- ------------ ------------ ------------ -------------
Income
(loss)
before
extraordinary
items..... $ 2,044 $(3,469) $ (1,425) $27,186 $(31,163) $ 582 $ (4,820) $(20,028)
---------- ----------- ------------ ---------- ------------ ------------ ------------ -------------
---------- ----------- ------------ ---------- ------------ ------------ ------------ -------------
Income
(loss) per
common
share
before
extraordinary
items..... $ 0.05 $ (0.10) $ (0.40)
---------- ------------ -------------
---------- ------------ -------------
Number of common
shares used in
per share
computations.. 41,647 49,462(l) 49,462
---------- ------------ -------------
---------- ------------ -------------
</TABLE>
See accompanying notes to unaudited pro forma condensed consolidated financial
statements.
S-22
<PAGE>
JACOR COMMUNICATIONS, INC. AND SUBSIDIARIES
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
(IN THOUSANDS)
<TABLE>
<CAPTION>
AS OF SEPTEMBER 30, 1997
--------------------------------------------------------------------------------
OTHER JACOR NATIONWIDE
ACQUISITION OTHER ACQUISITION TOTAL
HISTORICAL PRO FORMA ACQUISITIONS AND RELATED SAN DIEGO COMBINED
JACOR ADJUSTMENTS PRO FORMA FINANCINGS DISPOSITION PRO FORMA
---------- ------------ ------------ ----------- ------------ ----------
<S> <C> <C> <C> <C> <C> <C>
Current assets:
Cash and cash equivalents....................... $ 18,779 $ 18,779 $ 18,779
Accounts receivable............................. 118,500 118,500 118,500
Prepaid expenses and other current assets....... 32,417 32,417 32,417
---------- ------------ ------------ ----------- ------------ ----------
Total current assets........................ 169,696 169,696 169,696
Property and equipment............................ 175,567 $ 20,050(m) 195,617 $ 28,000 (p) $ (2,000)(r) 221,617
Intangible assets................................. 2,003,526 183,925(m) 2,187,451 604,000 (p) (63,000)(r) 2,728,451
Other assets...................................... 57,743 (26,225)(n) 31,518 31,518
---------- ------------ ------------ ----------- ------------ ----------
Total assets................................ $2,406,532 $177,750 $2,584,282 $ 632,000 $(65,000) $3,151,282
---------- ------------ ------------ ----------- ------------ ----------
---------- ------------ ------------ ----------- ------------ ----------
Current liabilities:
Accounts payable, accrued expenses and other
current liabilities........................... $ 86,504 $ 86,504 $ 86,504
Long-term debt, current portion................. -- -- --
---------- ------------ ------------ ----------- ------------ ----------
Total current liabilities................... 86,504 86,504 86,504
Long-term debt.................................... 834,500 $174,000(o) 1,008,500 $ 290,000 (q) $(65,000)(q) 1,233,500
Liquid Yield Option Notes......................... 123,619 123,619 150,000 (q) 273,619
Other liabilities................................. 114,927 3,750(m) 118,677 118,677
Deferred tax liability............................ 334,549 334,549 334,549
Shareholders' equity:
Common stock.................................... 455 455 40 (q) 495
Additional paid-in capital...................... 860,530 860,530 191,960 (q) 1,052,490
Common stock warrants........................... 31,500 31,500 31,500
Retained earnings............................... 19,948 19,948 19,948
---------- ------------ ------------ ----------- ------------ ----------
Total shareholders' equity.................. 912,433 912,433 192,000 1,104,433
---------- ------------ ------------ ----------- ------------ ----------
Total liabilities and shareholders'
equity..................................... $2,406,532 $177,750 $2,584,282 $ 632,000 $(65,000) $3,151,282
---------- ------------ ------------ ----------- ------------ ----------
---------- ------------ ------------ ----------- ------------ ----------
</TABLE>
See accompanying notes to unaudited pro forma condensed consolidated financial
statements.
S-23
<PAGE>
JACOR COMMUNICATIONS, INC. AND SUBSIDIARIES
NOTES TO UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(IN THOUSANDS)
(a) These adjustments reflect additional revenues and expenses related to the
following acquisitions and other individually immaterial acquisitions both
completed during 1996 and 1997 and pending as of December 31, 1997
(collectively, the "Other Acquisitions").
<TABLE>
<CAPTION>
NINE MONTHS ENDED
SEPTEMBER 30, 1997
------------------------------------
BROADCAST DEPRECIATION
NET OPERATING AND
REVENUE EXPENSES AMORTIZATION
--------- ----------- ------------
<S> <C> <C> <C>
Regent (completed February 1997)........................................ $ -- $ 233 $ 1,061
Premiere (completed June 1997).......................................... 14,130 9,276 4,347
EFM Companies (completed April 1997).................................... 11,191 7,484 3,834
Synergy Broadcasting (completed October 1997)........................... 11,445 4,179 6,589
Other (various)......................................................... 34,206 26,352 7,532
--------- ----------- ------------
Total............................................................... $ 70,972 $ 47,524 $ 23,363
--------- ----------- ------------
--------- ----------- ------------
</TABLE>
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31, 1996
-------------------------------------------------------
BROADCAST GENERAL
NET OPERATING DEPRECIATION AND AND
REVENUE EXPENSES AMORTIZATION ADMINISTRATIVE
---------- ---------- ---------------- -------------
<S> <C> <C> <C> <C>
Noble (February and July 1996)..................... $ 10,721 $ 8,872 $ 2,665
Citicasters (September 1996)....................... 101,806 58,543 21,913 $ 1,479
Gannett (December 1996)............................ 2,503 6,828 --
Regent (February 1997)............................. 33,797 26,447 6,369
Premiere (June 1997)............................... 31,678 22,465 9,486
EFM Companies (April 1997)......................... 47,357 32,144 15,336
Synergy Broadcasting (October 1997)................ 7,444 2,832 8,786
Other (various).................................... 99,903 77,499 15,315
---------- ---------- ------- ------
Total.......................................... $ 335,209 $ 235,630 $ 79,870 $ 1,479
---------- ---------- ------- ------
---------- ---------- ------- ------
</TABLE>
(b) The adustment represents additional interest expense associated with Jacor's
borrowings under the Credit Facility and the issuance of various debt
securities in 1996 and 1997. The assumed weighted average interest rate
associated with the borrowings is 7.3%.
(c) The adjustment represents miscellaneous income generated primarily by
Premiere for periods prior to the acquisition.
(d) To provide for the tax effect of pro forma adjustments. The acquisition
adjustments described in Note (a) include non-deductible goodwill
amortization estimated to be approximately $1,350 for the nine months ended
September 30, 1997 and $7,600 for the year ended December 31, 1996.
(e) The adjustments represent additional revenues and expenses related primarily
to Nationwide's acquisitions of radio stations in the Dallas, Phoenix and
San Diego broadcast areas. Nationwide has operated a majority of the
stations acquired in 1997 under local marketing agreements since January 1,
1997, therefore a significant amount of the revenues and operating expenses
related to these stations are included in Nationwide's historical financial
statements for the nine months ended September 30, 1997. The adjustments
for the year ended December 31, 1996 represent additional revenues and
expenses related to Nationwide's acquisitions of radio stations in the
Dallas, Houston,
S-24
<PAGE>
JACOR COMMUNICATIONS, INC. AND SUBSIDIARIES
NOTES TO UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(IN THOUSANDS)
Phoenix, San Diego, Minneapolis and Cleveland broadcast areas. These
adjustment amounts are net of stations divested in the Las Vegas, Orlando
and Seattle broadcast areas.
(f) The adjustment represents elimination of Nationwide's gain on the sale and
exchange of certain radio stations in 1996 and 1997.
(g) To provide for the tax effect of Nationwide's pro forma adjustments relating
to their 1996 and 1997 acquisitions and divestitures at statutory rates.
(h) The adjustments represent revenue and expense eliminations from the assumed
divestitures of two San Diego stations (see Note (r)) and projected expense
savings of $10,476 and $13,707 for the nine months ended September 30, 1997
and the year ended December 31, 1996, respectively. Expense savings will
result from the elimination of redundant broadcast operating expenses
arising from the operation of multiple stations in certain broadcast areas,
changes in benefit plan and compensation structures to conform with Jacor's
and the elimination of Nationwide's corporate office function. Estimated
savings are as follows:
<TABLE>
<CAPTION>
NINE MONTHS ENDED YEAR ENDED
SEPTEMBER 30, 1997 DECEMBER 31, 1996
------------------ -----------------
<S> <C> <C>
Corporate general and administrative................... $ 2,657 $ 3,282
Benefit Plan expenses.................................. 2,138 2,850
Commissions............................................ 506 675
Promotion and programing............................... 1,875 2,500
Personnel reductions................................... 2,400 3,200
Other.................................................. 900 1,200
------- -------
$ 10,476 $ 13,707
------- -------
------- -------
</TABLE>
(i) The adjustment reflects the additional depreciation and amortization expense
resulting from the allocation of Jacor's purchase price to the assets
acquired including an increase in property and equipment and identifiable
intangible assets to their estimated fair market values.
(j) The adjustment reflects additional interest expense related to additional
borrowings under the Credit Facility and the Related Offerings to finance,
in part, the acquisition of Nationwide.
(k) To provide for the tax effect of pro forma adjustments.
(l) The pro forma weighted average shares outstanding includes all shares
outstanding as of September 30, 1997 and the shares to be issued in this
Offering. The pro forma weighted average shares outstanding of Jacor do not
reflect any outstanding options and warrants as they are antidilutive. The
LYONs are not common stock equivalents and are, therefore, excluded from the
computation.
(m) The adjustments represent the allocation of Jacor's purchase price for the
Other Acquisitions to the estimated fair value of the assets acquired and
certain liabilities assumed.
(n) The adjustment represents the application of funded escrow deposits to the
purchase price of the Other Acquisitions.
(o) The adjustment represents incremental Credit Facility borrowings to finance
the Other Acquisitions.
(p) The adjustment represents the allocation of Jacor's purchase price for
Nationwide, including estimated expenses of $12,000, to the estimated fair
value of the assets acquired and the recording of goodwill associated with
the acquisition.
S-25
<PAGE>
JACOR COMMUNICATIONS, INC. AND SUBSIDIARIES
NOTES TO UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(IN THOUSANDS)
(q) The adjustment represents the assumed proceeds from the Common Stock
offering, LYONs offering, Notes offering and incremental borrowings under
the Credit Facility to finance the acquisition of Nationwide's radio
stations. The estimated sale price for two San Diego stations is $65,000
(see Note (r)).
<TABLE>
<S> <C>
Common Stock Offering (net proceeds).............................. $ 192,000
Notes Offering.................................................... 100,000
LYONs Offering.................................................... 150,000
Credit Facility borrowings........................................ 190,000
Credit Facility repayments........................................ (65,000)
---------
$ 567,000
---------
---------
</TABLE>
(r) Upon completion of the Nationwide Acquisition, Jacor's station ownership in
the San Diego broadcast area would exceed FCC ownership limits. The
adjustment assumes Jacor will divest two Nationwide radio stations currently
operating in the San Diego broadcast area. The sale price is management's
estimate based on currently available information.
S-26
<PAGE>
BUSINESS
GENERAL
Jacor, upon consummation of the Pending Transactions, will be the second
largest radio group in the United States in terms of number of stations and will
be the fourth largest radio group in the nation as measured by revenue and is
the country's third largest provider of syndicated radio programming. The
Company will own and/or operate 186 radio stations and one television station in
48 broadcast areas across the United States upon consummation of the Pending
Transactions. The Company's broadcast areas, as a group, are among the most
attractive in the country, demonstrating radio revenue growth in excess of the
radio industry average over the last five years. Jacor also produces more than
50 syndicated programs and services for more than 4,000 radio stations, which
programs include RUSH LIMBAUGH, THE DR. LAURA SCHLESSINGER SHOW and DR. DEAN
EDELL, the top three rated radio programs in the United States. In 1996, the
Company would have been number one or number two in terms of radio revenue rank
in 25 of its 35 ranked broadcast areas. On a pro forma basis, the Company would
have had net revenue and broadcast cash flow of $682.2 million and $224.2
million, respectively, for the LTM ended September 30, 1997.
Jacor's principal executive offices are located at 50 East RiverCenter
Boulevard, 12th Floor, Covington, Kentucky 41011 and its telephone number is
(606) 655-2267.
BUSINESS STRATEGY
Jacor's strategic objective is to maximize revenue and broadcast cash flow
by becoming the leading radio broadcaster in geographically diverse broadcast
areas and by leveraging its expertise in programming production, syndication and
distribution. Jacor intends to acquire individual radio stations, radio groups
and/or businesses that provide radio broadcasting services that strengthen its
strategic position in the radio industry and enhance its operating performance.
Specifically, Jacor's business strategy centers upon:
BROADCAST AREA REVENUE LEADERSHIP. Jacor strives to maximize its audience
ratings in each of its broadcast areas in order to capture the largest share of
the radio advertising revenue in each such area and to attract advertising away
from other media. Jacor believes that the most effective way to capture a higher
percentage of advertising revenue is to operate multiple radio stations within a
broadcast area, tailoring each station's programming to deliver highly effective
access to a target demographic. In implementing its multi-station strategy,
Jacor utilizes its programming expertise over a broad range of radio formats to
create distinct station personalities within a broadcast area. Jacor further
enhances its ability to increase its revenues through a more complete coverage
of the listener base by being an industry leader in successfully operating AM
stations.
DEVELOPMENT OF "STICK" PROPERTIES. In addition to acquiring developed, cash
flow producing stations, Jacor also strategically acquires underdeveloped
"stick" properties (I.E., properties with insignificant ratings and/or little or
no positive broadcast cash flow). Jacor believes that acquisitions of
strategically located "stick" properties often provide greater potential for
revenue and broadcast cash flow growth than do acquisitions of developed
properties. Historically, Jacor has been able to improve the ratings, revenue
and broadcast cash flow of its "stick" properties with increased marketing and
focused programming that complements its existing radio station formats and by
leveraging the management expertise and operational support of regional
clusters. Additionally, Jacor increases the revenue and broadcast cash flow of
"stick" properties by encouraging advertisers to buy advertising in a package
with its more established stations. Jacor believes that the Company's portfolio
of 99 "stick" properties creates significant potential for revenue and broadcast
cash flow growth. For example, Jacor improved the broadcast cash flow of the 47
"stick" properties it owned or operated as of May 1, 1997 from approximately
$3.4 million in 1996 to approximately $9.7 million in 1997, an increase of
approximately 185%.
DEVELOPMENT OF REGIONAL CLUSTERS AROUND CORE BROADCAST AREAS. Jacor
believes it can leverage its position as the leader in a core broadcast area to
create additional revenue and broadcast cash flow
S-27
<PAGE>
opportunities by building regional multi-station clusters around Jacor's core
broadcast areas. Utilizing programming from its core broadcast areas, Jacor
provides its regional clusters with high quality programming which would not
otherwise be economically viable in such smaller broadcast areas, thereby
spreading the costs associated with the delivery of such programming across a
greater number of stations. By improving the ratings of its regional stations
with such enhanced programming, Jacor believes it can generate incremental
revenue and broadcast cash flow. For example, Jacor has utilized this strategy
in the Denver, Colorado broadcast area by acquiring stations in Casper and
Cheyenne, Wyoming and Fort Collins/Greeley, Colorado to develop a regional
cluster.
STRATEGIC ACQUISITIONS OF COMPLEMENTARY STATIONS. Jacor focuses its
acquisition strategy on acquiring stations with powerful broadcast signals that
complement its existing portfolio and strengthen its overall competitive
position. By operating multiple stations within its broadcast areas, Jacor seeks
to position itself as the most efficient advertising medium in a geographic
location, providing advertisers with wide access to a variety of demographic
groups through a single purchase of advertising time. Through the acquisition of
additional stations within an existing broadcast area, Jacor spreads its fixed
costs over a larger base of stations and creates operating efficiencies enabling
it to generate higher broadcast cash flow. Jacor may enter additional broadcast
areas, domestic or international, through acquisitions of radio groups that have
multiple station platforms and/or through acquisitions of individual stations in
new locations where Jacor believes a revenue-leading position can be created.
Since the enactment of the Telecommunications Act of 1996 on February 8,
1996, through December 31, 1997, Jacor has acquired or entered into binding
agreements to acquire 158 radio stations and two television stations, and
entered into an exclusive sales agency agreement to provide programming to and
sell air time for two radio stations located in Baja California, Mexico. The
aggregate consideration paid and to be paid for these transactions is
approximately $2.3 billion. In addition, Jacor has exchanged one of the
television stations and seven radio stations for 17 radio stations in
transactions valued in the aggregate at approximately $315.0 million.
ACQUISITIONS OF BROADCAST RELATED BUSINESSES. Jacor strengthens its
strategic position in the radio industry through the acquisition and operation
of businesses that provide services to radio broadcasting companies. In 1997,
Jacor significantly expanded its base of syndicated radio programming available
to both Jacor's radio stations and other broadcasting companies. Jacor acquired
for approximately $340.3 million, a leading producer and distributor of radio
programming research, two leading providers of syndicated talk radio
programming, a leading provider of satellite and network services for the radio
broadcasting industry and a leading provider of traffic reporting services in
the San Diego and Los Angeles, California broadcast areas.
In addition to generating cash flow, these broadcast related services
enhance the Company's ability to (i) increase ratings for its existing stations
(ii) transform "stick" properties into broadcast cash flow producing properties
and (iii) maintain long-term relationships with Jacor's on-air talent. For
example, Jacor increased the audience ratings of KEWS-AM in Portland, Oregon by
approximately 64% after adding the RUSH LIMBAUGH show to that station's program
line-up. By combining the national reach of the Company's radio stations with
the network sales forces acquired by Jacor, the Company seeks to maximize the
value of commercial broadcast inventory that it can then resell to national
advertisers. See "Broadcasting Related Acquisitions." The Company also will
benefit from the NSN Network Services distribution network acquired by Jacor in
1997, which network will create efficiencies and lower costs related to the
distribution of programming among the Company's radio stations.
S-28
<PAGE>
COMPANY AND BROADCAST AREA DATA
The following table sets forth certain information that, as of January 19,
1998, was the most recently available information regarding the Company and its
broadcast areas:
<TABLE>
<CAPTION>
COMPANY DATA
---------------------------------------------------- BROADCAST AREA DATA
NO. OF STATIONS ------------------------
1996 RADIO 1997 RADIO 1997 1996 RADIO
REVENUE AUDIENCE ------------------------ ARBITRON REVENUE
BROADCAST AREA RANK SHARE % AM FM RANK RANK
- ---------------------------------------------- ----------- ------------- --- --- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
Los Angeles, California....................... 6 3.9 1 1 2 1
Dallas, Texas*................................ 4 7.7 -- 2 6 5
Houston, Texas*............................... 5 7.3 -- 2 9 7
Atlanta, Georgia.............................. 1 13.7 1 3 12 10
Minneapolis, Minnesota*....................... 6 2.9 1 1 14 16
San Diego, California (1)..................... 1 27.3 3 5 15 14
Phoenix, Arizona*............................. 6 6.5 -- 2 17 17
St. Louis, Missouri........................... 4 11.1 1 3 18 18
Baltimore, Maryland*.......................... 4 6.4 -- 1 19 21
Tampa, Florida................................ 1 37.8 2 5 21 19
Denver, Colorado (2).......................... 1 30.6 3 4 22 15
Cleveland, Ohio............................... 1 35.6 2 4 23 23
Portland, Oregon.............................. 1 23.2 2 2 24 22
Cincinnati, Ohio (3).......................... 1 37.4 4 4 25 20
San Jose, California.......................... 3 2.9 -- 1 28 43
Columbus, Ohio................................ 1 42.8 2 7 32 30
Salt Lake City, Utah.......................... 2 19.9 3 4 35 33
Las Vegas, Nevada............................. 1 20.1 -- 4 43 39
Rochester, New York........................... 2 25.9 2 5 47 53
Jacksonville, Florida......................... 2 23.4 2 3 51 47
Louisville, Kentucky (2)...................... 2 24.5 1 4 52 51
Dayton, Ohio.................................. 1 32.4 1 5 54 58
Toledo, Ohio.................................. 1 32.7 2 3 76 73
Sarasota/Bradenton, Florida................... 1 13.8 1 2 79 176
Des Moines, Iowa.............................. 1 17.9 1 1 88 67
Youngstown, Ohio.............................. 2 22.7 2 2 91 87
Charleston, South Carolina.................... 2 23.5 -- 4 97 94
Lexington, Kentucky........................... 1 36.7 2 4 108 79
Boise, Idaho.................................. 2 30.6 2 4 126 102
Santa Barbara, California..................... 1 19.9 2 3 187 147
Cedar Rapids, Iowa............................ 1 18.2 1 1 199 121
Lima, Ohio.................................... 1 36.7 1 3 221 247
Cheyenne, Wyoming............................. 1 40.0 1 3 266 220
Casper, Wyoming............................... 3 28.8 1 1 268 249
Findlay, Ohio (4)............................. N/A N/A -- 2 N/A N/A
Fort Collins/Greeley, Colorado (4)............ N/A N/A 1 2 N/A N/A
Idaho Falls, Idaho (4)........................ N/A N/A 1 1 N/A N/A
Iowa City, Iowa (4)........................... N/A N/A 1 1 N/A N/A
Marion, Ohio (4).............................. N/A N/A 1 2 N/A N/A
Pocatello, Idaho (4).......................... N/A N/A 1 1 N/A N/A
Sandusky, Ohio (4)............................ N/A N/A 1 2 N/A N/A
Twin Falls, Idaho (4)......................... N/A N/A 1 2 N/A N/A
Venice/Englewood, Florida (4)................. N/A N/A 1 2 N/A N/A
Washington Court House, Ohio (4).............. N/A N/A 1 1 N/A N/A
Other (5)..................................... N/A N/A 7 4 N/A N/A
--
---
Total 63 123
--
--
---
---
<CAPTION>
1991-1996
REVENUE CAGR
BROADCAST AREA %
- ---------------------------------------------- -------------
<S> <C>
Los Angeles, California....................... 4.3
Dallas, Texas*................................ 10.6
Houston, Texas*............................... 9.6
Atlanta, Georgia.............................. 13.3
Minneapolis, Minnesota*....................... 8.4
San Diego, California (1)..................... 6.2
Phoenix, Arizona*............................. 8.2
St. Louis, Missouri........................... 7.7
Baltimore, Maryland*.......................... 8.3
Tampa, Florida................................ 9.5
Denver, Colorado (2).......................... 10.9
Cleveland, Ohio............................... 8.1
Portland, Oregon.............................. 12.3
Cincinnati, Ohio (3).......................... 9.4
San Jose, California.......................... 7.5
Columbus, Ohio................................ 7.6
Salt Lake City, Utah.......................... 13.3
Las Vegas, Nevada............................. 15.2
Rochester, New York........................... 6.2
Jacksonville, Florida......................... 8.6
Louisville, Kentucky (2)...................... 5.9
Dayton, Ohio.................................. 7.2
Toledo, Ohio.................................. 9.3
Sarasota/Bradenton, Florida................... N/A
Des Moines, Iowa.............................. 10.7
Youngstown, Ohio.............................. 6.6
Charleston, South Carolina.................... 5.3
Lexington, Kentucky........................... 6.9
Boise, Idaho.................................. 10.9
Santa Barbara, California..................... 3.6
Cedar Rapids, Iowa............................ 8.4
Lima, Ohio.................................... N/A
Cheyenne, Wyoming............................. N/A
Casper, Wyoming............................... N/A
Findlay, Ohio (4)............................. N/A
Fort Collins/Greeley, Colorado (4)............ N/A
Idaho Falls, Idaho (4)........................ N/A
Iowa City, Iowa (4)........................... N/A
Marion, Ohio (4).............................. N/A
Pocatello, Idaho (4).......................... N/A
Sandusky, Ohio (4)............................ N/A
Twin Falls, Idaho (4)......................... N/A
Venice/Englewood, Florida (4)................. N/A
Washington Court House, Ohio (4).............. N/A
Other (5)..................................... N/A
Total
</TABLE>
- ------------------------------
* New broadcast areas to be entered upon consummation of the Nationwide
Acquisition.
(1) Assumes the disposition of the two FM radio stations currently owned by
Nationwide. See "Transactions -- Nationwide Acquisition." Also, excludes two
radio stations located in Baja California, Mexico which Jacor provides
programming to and sells air time for under an exclusive sales agency
agreement.
(2) Excludes one station in each of Denver, Colorado and Louisville, Kentucky on
which Jacor sells advertising time pursuant to joint sales agreements (see
"Business -- Radio Station Overview").
(3) Jacor also owns and operates television station WKRC, a CBS affiliate.
(4) These broadcast areas do not have Arbitron ranks.
(5) Includes the two radio stations in Baja California, Mexico referenced in
note 1, the two radio stations referenced in note 2, three radio stations in
Sebring, Florida, one radio station in each of Thousand Oaks, California,
Santa Rosa, California, Morro Bay, California and one pending application
for a construction permit in Casper, Wyoming.
S-29
<PAGE>
RADIO STATION OVERVIEW
The following table sets forth certain information that, as of January 19,
1998, was the most recently available information regarding the Company's radio
stations:
<TABLE>
<CAPTION>
TARGET
1996 COMBINED DEMOGRAPHIC
BROADCAST AREA/ PENDING ACQUISITION RADIO REVENUE TARGET SHARE
STATION (1) (P) RANK FORMAT DEMOGRAPHIC %/RANK
- ----------------- ------------------- ----------------- -------------------------------------- ---------------- ------------
<S> <C> <C> <C> <C> <C>
LOS ANGELES (2) 6
KIIS-FM Contemporary Hit Radio Adults 18-34 4.5/7
KXTA-AM (3) Sports Men 25-54 --
DALLAS 4
KDMX-FM P Hot Adult Contemporary Adults 18-34 7.9/3
KEGL-FM P Album Oriented Rock Men 18-34 8.4/2
HOUSTON 5
KHMX-FM P Hot Adult Contemporary Adults 25-54 5.2/4
KTBZ-FM P Alternative Men 18-34 5.9/4(T)
ATLANTA (2) 1
WPCH-FM Adult Contemporary Women 25-54 6.9/5
WGST-AM News Talk Men 25-54 1.5/17
WGST-FM (4) News Talk Men 25-54 2.4/15(T)
WKLS-FM Album Oriented Rock Men 18-34 10.4/3
MINNEAPOLIS 6
KMJZ-FM P Smooth Jazz Adults 25-54 3.7/11
KSGS-AM P Urban Adults 25-54 .7/14
SAN DIEGO (2)(5) 1
KHTS-FM Rhythmic Hits Adults 18-34 6.0/5
KSDO-AM Talk Men 25-54 .8/25(T)
KJQY-FM Adult Contemporary Women 25-54 2.8/10
KOGO-AM News Talk Adults 25-54 2.8/12
KKLQ-FM Contemporary Hit Radio Adults 18-34 3.3/9
KIOZ-FM Album Oriented Rock Men 18-34 10.3/1
KGB-FM Classic Rock Men 25-54 9.5/1
KPOP-AM Nostalgia Adults 35-64 2.5/12
PHOENIX 6
KGLQ-FM P Classic Hits Adults 25-54 3.0/14
KZZP-FM P Hot Adult Contemporary Adults 25-54 4.7/8(T)
ST. LOUIS 4
KSLZ-FM Contemporary Hit Radio Adults 18-34 --
KATZ-FM Urban Adult Contemporary Adults 25-54 2.4/15
KMJM-AM Gospel Adults 35-64 1.5/17
KMJM-FM Urban Contemporary Adults 25-54 5.6/7(T)
BALTIMORE (2) 4
WPOC-FM P Country Adults 25-54 5.8/4
TAMPA 1
WFLA-AM News Talk Adults 35-64 7.5/2
WFLZ-FM Contemporary Hit Radio Adults 18-34 16.7/1
WDUV-FM EZ/Nostalgia Adults 35-64 5.8/7
WXTB-FM Album Oriented Rock Men 18-34 14.2/2
WTBT-FM Classic Rock Men 18-34 4.3/8
WAKS-FM Hot Adult Contemporary Women 18-34 6.6/4
WDAE-AM Sports Men 25-54 .7/21
</TABLE>
S-30
<PAGE>
<TABLE>
<CAPTION>
TARGET
1996 COMBINED DEMOGRAPHIC
BROADCAST AREA/ PENDING ACQUISITION RADIO REVENUE TARGET SHARE
STATION (1) (P) RANK FORMAT DEMOGRAPHIC %/RANK
- ----------------- ------------------- ----------------- -------------------------------------- ---------------- ------------
<S> <C> <C> <C> <C> <C>
DENVER (2)(6) 1
KOA-AM News Talk Men 25-54 8.9/2
KRFX-FM Classic Rock Men 25-54 10.2/1
KBPI-FM Rock Alternative Men 18-34 7.1/6
KTLK-AM Talk Adults 35-64 1.1/18
KHIH-FM Jazz Adults 25-54 5.2/8(T)
KHOW-AM Talk Adults 25-54 3.2/13
KBCO-FM Album Oriented Rock Adults 25-54 7.0/3(T)
CLEVELAND 1
WMVX-FM Adult Contemporary Women 25-54 8.2/5
WTAM-AM News Talk Men 25-54 5.7/8
WKNR-AM Sports Men 25-54 7.4/5
WGAR-FM P Country Adults 25-54 9.3/2
WMJI-FM P Oldies Adults 25-54 9.8/1
WMMS-FM P Album Oriented Rock Men 18-34 14.8/2
PORTLAND 1
KEX-AM News Talk Adults 35-64 5.9/4
KKCW-FM Adult Contemporary Women 25-54 13.9/1
KKRZ-FM Contemporary Hit Radio Women 18-34 17.0/1
KEWS-AM Talk Adults 35-64 3.6/11
CINCINNATI 1
WLW-AM News Talk Men 25-54 11.5/2
WEBN-FM Album Oriented Rock Men 18-34 22.7/1
WOFX-FM Classic Rock Men 25-54 10.8/2
WKRC-AM Talk Adults 35-64 4.5/8
WVMX-FM Adult Contemporary Women 25-54 6.4/6
WAQZ-FM (4) Contemporary Alternative Adults 18-34 4.3/9
WSAI-AM (4) Nostalgia Adults 35-64 2.0/13
WCKY-AM (3)(4) Info Radio Adults 25-54 --
SAN JOSE 3
KSJO-FM P Rock Adults 18-34 5.6/4
COLUMBUS 1
WTVN-AM News Talk Adults 35-64 3.9/8
WLVQ-FM Album Oriented Rock Men 18-34 12.1/2
WHOK-FM Country Adults 25-54 4.8/9
WKFX-FM Classic Rock Men 25-54 .5/25(T)
WAZU-FM Rock Men 18-34 3.6/10(T)
WZAZ-FM Alternative Adults 18-34 6.5/6
WCOL-FM P Country Adults 25-54 10.2/2
WFII-AM P News Talk Adults 35-64 1.4/17(T)
WNCI-FM P Hot Adult Contemporary Adults 18-34 13.5/1
SALT LAKE CITY 2
KALL-AM News Talk Adults 35-64 4.1/9
KODJ-FM Oldies Women 25-54 5.9/3
KKAT-FM Country Adults 25-54 4.0/9
KURR-FM New Rock Men 18-34 5.7/5
KZHT-FM Contemporary Hit Radio Women 18-34 4.8/10
KWLW-AM P Beautiful/EZ Adults 35-64 .3/26
KNRS-AM (4) P Nostalgia Adults 35-64 5.3/6
</TABLE>
S-31
<PAGE>
<TABLE>
<CAPTION>
TARGET
1996 COMBINED DEMOGRAPHIC
BROADCAST AREA/ PENDING ACQUISITION RADIO REVENUE TARGET SHARE
STATION (1) (P) RANK FORMAT DEMOGRAPHIC %/RANK
- ----------------- ------------------- ----------------- -------------------------------------- ---------------- ------------
<S> <C> <C> <C> <C> <C>
LAS VEGAS 1
KFMS-FM Country Adults 25-54 3.0/14
KWNR-FM Country Adults 25-54 4.5/9(T)
KBGO-FM Oldies Women 25-54 3.9/8
KSNE-FM Adult Contemporary Women 25-54 10.0/2
ROCHESTER 2
WVOR-FM Adult Contemporary Adults 25-54 6.1/6
WHAM-AM News Talk Adults 25-54 8.0/3(T)
WHTK-AM Talk Adults 35-64 1.6/12(T)
WNVE-FM New Rock Men 18-34 13.9/1
WMAX-FM Alternative Adults 18-34 3.7/9
WMHX-FM Alternative Adults 18-34 .2/23
WRCD-FM New Adult Contemporary Adults 25-54 1.0/16
JACKSONVILLE 2
WJBT-FM Urban Adults 18-34 10.1/3
WQIK-FM Country Adults 25-54 8.3/2
WSOL-FM Urban Adult Contemporary Adults 25-54 5.5/7
WZAZ-AM Gospel Adults 35-64 4.1/10
WJGR-AM Talk Adults 25-54 .5/21(T)
LOUISVILLE (6) 2
WDJX-FM Contemporary Hit Radio Adults 18-34 11.0/3
WFIA-AM Religion Adults 25-54 .3/21(T)
WVEZ-FM Soft Adult Contemporary Women 25-54 13.6/2
WSFR-FM Classic Rock Men 25-54 6.4/4
WLRS-FM Alternative Men 18-34 13.6/2
DAYTON 1
WMMX-FM Hot Adult Contemporary Women 18-34 21.0/1
WTUE-FM Rock Men 18-34 20.9/1
WLQT-FM Adult Contemporary Women 25-54 10.4/3
WXEG-FM Alternative Men 18-34 6.4/5
WBTT-FM Dance Adults 18-34 5.8/8
WONE-AM Nostalgia Adults 35-64 4.2/7(T)
TOLEDO 1
WSPD-AM News Talk Adult 35-64 5.5/6
WVKS-FM Contemporary Hit Radio Adults 18-34 11.8/2
WRVF-FM Adult Contemporary Women 25-54 14.0/3
WIOT-FM Album Oriented Rock Men 18-34 21.9/1
WCWA-AM Nostalgia Adults 35-64 2.1/12
SARASOTA/
BRADENTON (7) 1
WSRZ-FM Oldies Adults 25-54 5.6/6
WYNF-FM Album Oriented Rock Men 25-54 7.3/3
WSPB-AM (3) Business News Men 35-64 --
DES MOINES 1
WHO-AM News Talk Men 25-54 8.1/4(T)
KLYF-FM Adult Contemporary Women 25-54 10.4/3(T)
YOUNGSTOWN (7) 2
WNCD-FM Rock Adults 18-34 12.6/3
WNIO-AM Nostalgia Adults 35-64 1.8/10
WKBN-FM (4) P Talk Adults 25-54 8.5/5
WKBN-AM (4) P Soft Adult Contemporary Adults 25-54 3.6/8
</TABLE>
S-32
<PAGE>
<TABLE>
<CAPTION>
TARGET
1996 COMBINED DEMOGRAPHIC
BROADCAST AREA/ PENDING ACQUISITION RADIO REVENUE TARGET SHARE
STATION (1) (P) RANK FORMAT DEMOGRAPHIC %/RANK
- ----------------- ------------------- ----------------- -------------------------------------- ---------------- ------------
<S> <C> <C> <C> <C> <C>
CHARLESTON 2
WEZL-FM Country Adults 25-54 9.6/1
WXLY-FM Oldies Adults 25-54 6.6/3
WLLC-FM Modern Adult Contemporary Adults 25-54 4.4/10
WRFQ-FM Classic Hits Adults 18-34 5.3/6(T)
LEXINGTON (7) 1
WMXL-FM Hot Adult Contemporary Women 18-34 13.9/2
WBUL-FM Country Adults 18-34 6.7/6
WLAP-AM News Talk Men 25-54 3.8/9
WKQQ-FM Album Oriented Rock Men 18-34 20.8/1
WTKT-AM Urban Adult Contemporary Adults 35-64 2.5/12
WLKT-FM Contemporary Hit Radio Adults 18-34 15.8/1
BOISE (7) 2
KIDO-AM News Talk Adults 25-54 6.3/7
KARO-FM Classic Rock Men 25-54 10.4/1
KLTB-FM Oldies Adults 25-54 8.0/2
KCIX-FM (4) P Adult Contemporary Women 25-54 7.4/6
KXLT-FM (4) P Adult Contemporary Women 25-54 9.6/3
KFXD-AM Talk Adults 25-54 .7/17
SANTA BARBARA (2) 1
KTYD-FM Rock Adults 18-34 10.2/2
KQSB-AM Talk Adults 35-64 4.4/6(T)
KSBL-FM Adult Contemporary Adults 25-54 11.8/1
KLDZ-FM (3)(9) P -- -- --
KIST-AM Oldies Adults 35-64 2.7/10(T)
CEDAR RAPIDS (7) 1
WMT-AM Full Service Adults 35-64 6.8/6
WMT-FM Adult Contemporary Women 25-54 11.9/3
LIMA (7) 1
WIMA-AM News Talk Adults 35-64 6.7/4
WIMT-FM Country Adults 25-54 19.8/1
WBUK-FM Oldies Adults 25-54 9.9/3(T)
WMLX-FM (3) Hot Adult Contemporary Women 18-34 --
CHEYENNE (7) 1
KIGN-FM Rock Adults 18-34 21.7/1
KLEN-FM Adult Contemporary Women 25-54 8.1/3
KOLZ-FM Country Adults 25-54 18.4/2
KGAB-AM (3) Talk Adults 35-64 --
CASPER (7) 3
KTWO-AM Full Service/Country Adults 35-64 21.4/1
KMGW-FM Adult Contemporary Women 25-54 19.2/2
FINDLAY (5) N/A
WHMQ-FM P Country Adults 25-54 --
WQTL-FM P Classic Hits Adults 25-54 --
FORT COLLINS/
GREELEY (8) N/A
KCOL-AM News Talk Adults 35-64 --
KPAW-FM Oldies/Adult Contemporary Adults 25-54 --
KGLL-FM Country Adults 25-54 --
IDAHO FALLS (8) N/A
KID-FM Country Adults 25-54 --
KID-AM News Talk Adults 25-54 --
</TABLE>
S-33
<PAGE>
<TABLE>
<CAPTION>
TARGET
1996 COMBINED DEMOGRAPHIC
BROADCAST AREA/ PENDING ACQUISITION RADIO REVENUE TARGET SHARE
STATION (1) (P) RANK FORMAT DEMOGRAPHIC %/RANK
- ----------------- ------------------- ----------------- -------------------------------------- ---------------- ------------
<S> <C> <C> <C> <C> <C>
IOWA CITY (8) N/A
KXIC-AM (3) Talk Adults 25-54 --
KKRQ-FM Classic Rock Adults 18-34 14.5/2(T)
MARION (8) N/A
WMRN-FM P Country Adults 25-54 --
WMRN-AM P Talk Adults 25-54 --
WDIF-FM P Contemporary Hot Radio Adults 18-34 --
POCATELLO (8) N/A
KPKY-FM Oldies Adults 25-54 --
KWIK-AM Sports Men 25-54 --
SANDUSKY (8) N/A
WLEC-AM Nostalgia Adults 35-64 --
WCPZ-FM Adult Contemporary Women 25-54 --
WNCG-FM Oldies Adults 25-54 --
TWIN FALLS (8) N/A
KEZJ-FM Country Adults 25-54 --
KLIX-FM Oldies Adults 25-54 --
KLIX-AM News Talk Adults 25-54 --
VENICE/ ENGLEWOOD
(8) N/A
WAMR-AM Talk Adults 25-54 --
WCTQ-FM Country Adults 25-54 --
WLTF-FM (3)(9) -- -- --
WASHINGTON COURT
HOUSE (8) N/A
WCHO-FM Country Adults 25-54 --
WOFR-AM Country Adults 25-54 --
</TABLE>
- ------------------------------
(T) Designates tied.
(1) Jacor also owns or has the right to purchase three insignificant stations in
Sebring, Florida, one each in Morro Bay, California, Santa Rosa, California
and Thousand Oaks, California and one pending application for a construction
permit in Casper, Wyoming.
(2) Share and rank information is derived from the Fall 1997 Arbitron Metro Area
Rating Survey.
(3) These stations do not have Arbitron ratings.
(4) The Company provides programming and sells air time for WGST-FM in Atlanta,
Georgia; WKBN-AM and WKBN-FM in Youngstown, Ohio; WAQZ-FM, WSAI-AM and
WCKY-AM in Cincinnati, Ohio; KNRS-AM in Salt Lake City, Utah; and KCIX-FM
and KXLT-FM in Boise, Idaho pursuant to LMAs. At any time after September
30, 1999 and before September 30, 2003, Cherokee Broadcasting can "put"
WGST-FM to Jacor for a price of $31.0 million. At any time after May 31,
2003 and before September 30, 2003, Jacor can "call" the station for the
same price.
(5) Assumes the disposition of KXGL-FM and KMCG-FM currently owned by
Nationwide. See "Transactions -- Nationwide Aquisition." Also, excludes
XTRA-FM and XTRA-AM, stations Jacor provides programming to and sells air
time for under an exclusive sales agency agreement.
(6) Excludes KTCL-FM in Denver, Colorado and WSJW-FM in Louisville, Kentucky on
which Jacor sells advertising time pursuant to JSAs.
(7) Share and rank information is derived from the Spring 1997 Abritron Metro
Area Rating Survey.
(8) These broadcast areas do not have Arbitron ranks.
(9) WLTF-FM and KLDZ-FM are unconstructed stations and, as such, are not yet
operating.
S-34
<PAGE>
BROADCASTING RELATED BUSINESSES AND SERVICES
Jacor currently owns, produces and distributes syndicated programming for
radio broadcasting, including such programs as RUSH LIMBAUGH, THE DR. LAURA
SCHLESSINGER SHOW and DR. DEAN EDELL. The RUSH LIMBAUGH show is a nationally
syndicated talk radio program broadcast on more than 600 radio stations. THE DR.
LAURA SCHLESSINGER SHOW is a nationally syndicated talk radio program broadcast
on more than 400 radio stations. The DR. DEAN EDELL show is a health care and
medicine talk radio program broadcast on more than 300 radio stations. These
three programs are the three highest rated syndicated talk radio programs in the
United States. Jacor is also the producer and distributor of other syndicated
programs and services, including LEEZA GIBBONS ENTERTAINMENT TONIGHT ON THE
RADIO, THE MICHAEL REAGAN SHOW, AFTER MIDNITE WITH BLAIR GARNER and THE JIM ROME
SHOW. These nationally syndicated programs and services are currently broadcast
on more than 4,000 radio stations pursuant to over 6,300 contracts. See
"Broadcasting Related Acquisitions."
Jacor's broadcasting related services include comprehensive radio research
services and a national, in-house sales force. Premiere's mediabase research
service provides music play-list and on-air promotion tracking and call-out
research for seven radio formats, which research services help radio station
affiliates increase their audience share and ratings. Jacor provides the
research services in exchange for commercial broadcast inventory instead of on a
cash basis in order to make the services more attractive to radio stations which
have limited cash resources and/or excess commercial broadcast inventory.
Premiere's national, in-house network radio sales force and infrastructure
sells commercial broadcast inventory to more than 350 national advertisers.
Jacor leverages its sales force and generates additional revenues without
significant additional overhead costs by providing network advertising sales
representation services, on a commission basis, to third-party radio networks
and independent syndicated programming and service suppliers that do not have
their own sales forces. Jacor believes that Premiere is presently the second
largest network radio advertising sales representative in the United States in
terms of its gross billings. It presently represents nine independent radio
networks, including WOR Radio Networks, One-on-One Sports Radio Network and
Accuweather. Also, upon Jacor's acquisition of MultiVerse, Premiere became the
network radio sales representative for shows such as COUNTRY HEARTLINES WITH
JOHN CRENSHAW and BEYOND THE BELTWAY WITH BRUCE DUMONT.
In addition, Jacor will benefit from the distribution network acquired with
NSN Network Services, which network will create efficiencies and lower costs
related to the distribution of programming among the Company's radio stations.
Further, this network will continue to enhance the Company's back-office
backbone by facilitating the sharing of financial data and other communications.
TELEVISION
Jacor owns a television station in the Cincinnati broadcast area where it
currently owns and operates multiple radio stations. By operating a television
station in the broadcast area where Jacor has a significant radio presence,
Jacor has realized significant operating efficiencies including shared news
departments and reduction of administrative overhead. Jacor currently operates
this television station under a temporary waiver of an FCC rule that restricts
ownership of television and radio stations in the same market. This waiver will
continue until at least six months after the FCC completes a pending rulemaking
proceeding in which it is considering whether to substantially liberalize this
rule.
The following table sets forth certain information regarding the Cincinnati
television station and the broadcast area in which it operates:
<TABLE>
<CAPTION>
COMMERCIAL STATIONS IN
STATION RANK (1)
----------------------------
TV HOUSEHOLDS ADULTS BROADCAST AREA
BROADCAST NATIONAL BROADCAST IN DMA (1) AGED -------------
AREA/STATION AREA RANK (1) (000S) TV HOUSEHOLDS 25-54 VHF UHF
- ---------------------- ------------------- --------------- ----------------- --------- ----- -----
<S> <C> <C> <C> <C> <C> <C>
Cincinnati/WKRC 30 797 3 3 3 3
<CAPTION>
BROADCAST CABLE SUBSCRIBER NETWORK
AREA/STATION % AFFILIATION
- ---------------------- ----------------- ---------
<S> <C> <C>
Cincinnati/WKRC 62 CBS
</TABLE>
- ------------------------------
(1) Rankings for DMA, 6:00 a.m. to 2:00 a.m., Sunday-Saturday for "TV
Households" and "Adults aged 25-54." This market information is from
Nielsen.
S-35
<PAGE>
DESCRIPTION OF COMMON STOCK
For a general description of the Common Stock, see "Description of Capital
Stock" in the accompanying Prospectus. The description of the Common Stock in
the accompanying Prospectus and of certain provisions of Delaware law do not
purport to be complete and are subject to and qualified in their entirety by
reference to Jacor's Certificate of Incorporation and Bylaws and Delaware law.
Copies of such documents have been filed with the Commission. See "Available
Information" in the accompanying Prospectus.
SHARES ELIGIBLE FOR FUTURE SALE
By virtue of its current control of Jacor, Zell/Chilmark Fund L.P.
("Zell/Chilmark") could sell large amounts of Common Stock by causing Jacor to
file a registration statement with respect to such stock. In addition,
Zell/Chilmark could sell or distribute its shares of Common Stock without
registration pursuant to Rule 144 under the Securities Act of 1933. In general,
under Rule 144, if one year has elapsed since the later of the date of
acquisition of restricted securities from an issuer or any affiliate, the
acquiror or subsequent holder thereof is entitled to sell within any three-month
period a number of shares that does not exceed the greater of 1% of the then
outstanding shares of Common Stock or the average weekly trading volume of the
Common Stock during the four calendar weeks preceding such sale. In addition,
sales under Rule 144 may be made only through unsolicited "broker's
transactions" or directly with a market maker and are subject to various other
conditions, including the availability of certain public information about
Jacor. If two years have elapsed since the date of acquisition of restricted
securities from Jacor or any affiliate and the acquiror or subsequent holder is
not deemed to have been an affiliate of Jacor for at least 90 days prior to a
proposed transaction, such person would be entitled to sell such securities
under Rule 144 without regard to the limitations described above.
In general, under Rule 144 under the Securities Act as currently in effect,
a person (or persons whose shares are aggregated) who has beneficially owned
restricted securities within the meaning of Rule 144 ("Restricted Securities")
for at least one year, and including the holding period of any prior owner
except an affiliate, would be entitled to sell within any three-month period a
number of shares that does not exceed the greater of one percent of the
then-outstanding shares of Common Stock or the average weekly trading volume of
the Common Stock on the Nasdaq National Market during the four calendar weeks
preceding such sale. Sales under Rule 144 are also subject to certain manner of
sale provisions, notice requirements and the availability of current public
information about Jacor. Any person (or persons whose shares are aggregated) who
is not deemed to have been an affiliate of Jacor at any time during the three
months preceding a sale, and who has beneficially owned shares for at least two
years (including any period of ownership of preceding non-affiliated holders),
would be entitled to sell such shares under Rule 144(k) without regard to the
volume limitations, manner of sale provisions, public information requirements
or notice requirements. An "affiliate" is a person that directly, or indirectly
through one or more intermediaries, controls or is controlled by or under common
control with, such issuer.
In addition, the Commission has proposed further revisions to the holding
periods and volume limitations contained in Rule 144. The adoption of amendments
effecting such proposed revisions may result in resales of restricted securities
sooner than would be the case under Rule 144 as currently amended. However,
there can be no assurance of when, if ever, such amendments will be proposed or
adopted.
Rule 144A under the Securities Act as currently in effect generally permits
unlimited resales of certain Restricted Securities of any issuer provided that
the purchaser is a qualified institution that owns and invests on a
discretionary basis at least $100.0 million in securities (and, in the case of a
bank or savings and loan association, has a net worth of at least $25.0 million)
or is a registered broker-dealer that owns and invests on a discretionary basis
at least $10.0 million in securities. Rule 144A allows certain existing
shareholders of Jacor to sell their shares of Common Stock held prior to this
Offering to such institutions
S-36
<PAGE>
and registered broker-dealers without regard to any volume or other
restrictions. There can be no assurance that the availability of such resale
exemption will not have an adverse effect on the trading price of the Common
Stock.
Jacor, its directors and executive officers and Zell/Chilmark have agreed
not to offer to sell, sell, distribute, grant any option to purchase or
otherwise dispose of, directly or indirectly, any shares of Common Stock or
securities convertible into, or exercisable or exchangeable for, shares of
Common Stock owned by them prior to the expiration of 120 days from the date of
this Prospectus Supplement, except (i) with the prior written consent of
Donaldson, Lufkin & Jenrette Securities Corporation ("DLJ"), (ii) in the case of
Jacor, for the issuance of shares of Common Stock in connection with the
conversion of the LYONs due 2011 and the LYONs and acquisition transactions in
which the recipients of such shares are restricted from selling such shares
until after the expiration of 120 days from the date of this Prospectus
Supplement or upon the exercise of outstanding options or the grant of options
to purchase shares of Common Stock under Jacor's stock option plans, stock
purchase plans and incentive stock plans, described in this Prospectus
Supplement or the accompanying Prospectus (by incorporation or otherwise), (iii)
in the case of the directors and executive officers of Jacor, for the exercise
by such individuals of outstanding options and (iv) for the sale of shares in
this Offering. In addition, Jacor will inform certain former shareholders of
Regent Communications, Inc. who in the aggregate hold approximately 909,600
warrants to acquire approximately 102,500 shares of Common Stock (the "Regent
Holders") that, for a period of 30 days from the date of this Prospectus
Supplement, the Regent Holders may not sell any of such shares or warrants
pursuant to the shelf registration statement currently in effect providing for
the registration and distribution of such shares and warrants. DLJ may, in its
sole discretion and at any time without prior notice, release all or any portion
of the shares subject to these "lock-up" agreements.
Jacor can make no prediction as to the effect, if any, that sales of shares
of its Common Stock, or the availability of shares for future sale, will have on
the market price of the Common Stock prevailing from time to time. Sales of
substantial amounts of Common Stock (including shares issued upon the exercise
of warrants or options) in the public market, or the perception that such sales
could occur, could depress the prevailing market price for the Common Stock.
Such sales may also make it more difficult for Jacor to sell equity securities
or equity-related securities in the future at a time and price which it deems
appropriate.
S-37
<PAGE>
UNDERWRITING
Subject to the terms and conditions of an Underwriting Agreement, dated
, 1998 (the "Underwriting Agreement"), the underwriters named below
(the "Underwriters"), who are represented by Donaldson, Lufkin & Jenrette
Securities Corporation, Goldman, Sachs & Co., Morgan Stanley & Co. Incorporated
and Smith Barney Inc. (the "Representatives"), have severally agreed to purchase
from Jacor the respective number of shares of Common Stock set forth opposite
their names below.
<TABLE>
<CAPTION>
NUMBER OF
UNDERWRITERS SHARES
<S> <C>
Donaldson, Lufkin & Jenrette Securities Corporation..............................
Goldman, Sachs & Co..............................................................
Morgan Stanley & Co. Incorporated................................................
Smith Barney Inc.................................................................
----------
Total..........................................................................
----------
----------
</TABLE>
The Underwriting Agreement provides that the obligations of the several
Underwriters to purchase and accept delivery of the shares of Common Stock
offered hereby are subject to approval by their counsel of certain legal matters
and to certain other conditions. The Underwriters are obligated to purchase and
accept delivery of all the shares of Common Stock offered hereby (other than
shares covered by the overallotment option described below) if any are
purchased.
The Underwriters initially propose to offer the shares of Common Stock in
part directly to the public at the initial public offering price set forth on
the cover page of this Prospectus Supplement and in part to certain dealers
(including the Underwriters) at such price less a concession not in excess of
$ per share. The Underwriters may allow, and such dealers may re-allow, to
certain other dealers a concession not in excess of $ per share. After the
initial offering of the Common Stock, the public offering price and other
selling terms may be changed by the Representatives at any time without notice.
Jacor has granted to the Underwriters an option, exercisable for 30 days
after the date of this Prospectus, to purchase, from time to time, in whole or
in part, up to an aggregate of 570,000 additional shares of Common Stock at the
initial public offering price less underwriting discounts and commissions. The
Underwriters may exercise such option solely to cover overallotments, if any,
made in connection with the Offering. To the extent that the Underwriters
exercise such option, each Underwriter will become obligated, subject to certain
conditions, to purchase its pro rata portion of such additional shares based on
such Underwriter's percentage underwriting commitment as indicated in the
preceding table.
Jacor has agreed to indemnify the Underwriters against certain liabilities,
including liabilities under the Securities Act of 1933, or to contribute to
payments that the Underwriters may be required to make in respect thereof.
Jacor, its directors and executive officers and Zell/Chilmark have agreed
not to offer to sell, sell, distribute, grant any option to purchase or
otherwise dispose of, directly or indirectly, any shares of Common Stock or
securities convertible into, or exercisable or exchangeable for, shares of
Common Stock
S-38
<PAGE>
owned by them prior to the expiration of 120 days from the date of this
Prospectus Supplement, except (i) with the prior written consent of DLJ, (ii) in
the case of Jacor, for the issuance of shares of Common Stock in connection with
the conversion of the LYONs due 2011 and the LYONs and acquisition transactions
in which the recipients of such shares are restricted from selling such shares
until after the expiration of 120 days from the date of this Prospectus
Supplement or upon the exercise of outstanding options or the grant of options
to purchase shares of Common Stock under Jacor's stock option plans, stock
purchase plans and incentive stock plans described in this Prospectus Supplement
or the accompanying Prospectus (by incorporation or otherwise), (iii) in the
case of the directors and executive officers of Jacor, for the exercise by such
individuals of outstanding options and (iv) for the sale of shares in this
Offering. In addition, Jacor will inform the Regent Holders, who in the
aggregate hold approximately 909,600 warrants to acquire approximately 102,500
shares of Common Stock that, for a period of 30 days from the date of this
Prospectus Supplement, the Regent Holders may not sell any of such shares or
warrants pursuant to the shelf registration statement currently in effect
providing for the registration and distribution of such shares and warrants. DLJ
may, in its sole discretion and at any time without prior notice, release all or
any portion of the shares subject to these "lock-up" agreements.
Other than in the United States, no action has been taken by Jacor or the
Underwriters that would permit a public offering of the shares of Common Stock
offered hereby in any jurisdiction where action for that purpose is required.
The shares of Common Stock offered hereby may not be offered or sold, directly
or indirectly, nor may this Prospectus Supplement or the accompanying Prospectus
or any other offering material or advertisements in connection with the offer
and sale of any such shares of Common Stock be distributed or published in any
jurisdiction, except under circumstances that will result in compliance with the
applicable rules and regulations of such jurisdiction. Persons into whose
possession this Prospectus Supplement or the accompanying Prospectus comes are
advised to inform themselves about and to observe any restrictions relating to
the Offering and the distribution of this Prospectus Supplement and the
accompanying Prospectus. This Prospectus Supplement and the accompanying
Prospectus do not constitute an offer to sell or a solicitation of an offer to
buy any shares of Common Stock offered hereby in any jurisdiction in which such
an offer or a solicitation is unlawful.
In connection with the Offering, the Underwriters may engage in transactions
that stabilize, maintain or otherwise affect the price of the Common Stock.
Specifically, the Underwriters may overallot the Offering, creating a syndicate
short position. The Underwriters may bid for and purchase shares of Common Stock
in the open market to cover such syndicate short position or to stabilize the
price of the Common Stock. These activities may stabilize or maintain the market
price of the Common Stock above independent market levels. The Underwriters are
not required to engage in these activities and may end any of these activities
at any time.
In the ordinary course of their business, certain of the underwriters have
engaged in, and expect to engage in the future, transactions with, and have
performed, and expect to perform in the future, services for, the Company,
Zell/Chilmark and their respective subsidiaries or affiliates for which they
expect to receive usual and customary fees.
EXPERTS
The consolidated balance sheets of Jacor Communications, Inc. and
Subsidiaries as of December 31, 1996 and 1995 and the related consolidated
statements of operations, shareholders' equity and cash flows for each of the
three years in the period ended December 31, 1996; the combined balance sheets
of EFM Media Management, Inc., EFM Publishing, Inc. and PAM Media, Inc. (the
"Combined EFM Companies") as of December 31, 1995 and 1996 and related combined
statements of operations, changes in retained earnings and cash flows for the
years ended December 31, 1994, 1995 and 1996; the balance sheets of Archon
Communications, Inc. as of December 31, 1996 and March 31, 1997 and related
statements of income, changes in stockholders' equity and cash flows for the
period July 6, 1995 (Date of Inception) to December 31, 1995, the year ended
December 31, 1996 and the three months ended March 31, 1997; and
S-39
<PAGE>
the combined balance sheets of Synergy Broadcast Investment Enterprises, L.L.C.,
Worldstar, Inc. and MultiVerse Networks L.L.C. as of September 28, 1997 and the
combined balance sheets of Shanahan Broadcasting, Inc., Worldstar, Inc. and
MultiVerse Networks, L.L.C. as of December 29, 1996 and December 31, 1995, and
the related combined statements of income, shareholders' equity and cash flows
for the nine month period ended September 28, 1997, the year ended December 29,
1996 and the ten months ended December 31, 1995 each incorporated by reference
in the Prospectus, have been incorporated herein by reference in reliance on the
reports of Coopers & Lybrand L.L.P., independent accountants, given on the
authority of that firm as experts in accounting and auditing.
The consolidated financial statements of Premiere Radio Networks, Inc. at
December 31, 1996 and 1995, and for each of the three years in the period ended
December 31, 1996, appearing in Jacor Communications, Inc.'s Current Report on
Form 8-K(A) dated April 7, 1997 have been audited by Ernst & Young, LLP,
independent auditors as set forth in their report thereon included therein and
incorporated herein by reference. Such consolidated financial statements are
incorporated herein by reference in reliance upon such report given upon the
authority of such firm as experts in accounting and auditing.
The combined financial statements of Nationwide Communications as of
September 30, 1997 and December 31, 1996, and for the nine month period ended
September 30, 1997 and each of the years in the two year period ended December
31, 1996, appearing in Jacor Communications, Inc.'s Current Report on Form 8-K
dated January 5, 1998, as amended, have been audited by KPMG Peat Marwick LLP,
independent certified public accountants, as set forth in their report thereon
included therein and incorporated herein by reference. Such combined financial
statements are incorporated herein by reference in reliance upon such report
given upon the authority of said firm as experts in accounting and auditing.
The balance sheets of Jacor Broadcasting of Youngstown, Inc. (formerly WN
Broadcasting Corp.) as of December 31, 1996, 1995 and 1994 and the related
statements of operations, retained earnings and cash flows for each of the three
years in the period ended December 31, 1996, appearing in Jacor Communications,
Inc.'s Current Report on Form 8-K dated November 21, 1997, have been audited by
William T. Ogden, Inc., independent certified public accountants as set forth in
their report thereon included therein and incorporated herein by reference. Such
report and financial statements are incorporated herein by reference in reliance
upon such report given upon the authority of such firm as experts in accounting
and auditing.
LEGAL MATTERS
The authorization and issuance of the shares of Common Stock offered hereby
will be passed upon for Jacor by Graydon, Head & Ritchey, Cincinnati, Ohio.
Certain legal matters in connection with this Offering will be passed upon for
the Underwriters by Skadden, Arps, Slate, Meagher & Flom LLP, Los Angeles,
California.
S-40
<PAGE>
PROSPECTUS
JANUARY 21, 1998
$500,000,000
[LOGO]
PREFERRED STOCK
CONVERTIBLE PREFERRED STOCK
DEPOSITARY SHARES
COMMON STOCK
CONVERTIBLE DEBT SECURITIES
GUARANTEED TO THE EXTENT SET FORTH HEREIN BY
JACOR COMMUNICATIONS COMPANY
AND THE SUBSIDIARY GUARANTORS
JACOR COMMUNICATIONS COMPANY
DEBT SECURITIES
CONVERTIBLE DEBT SECURITIES
GUARANTEED TO THE EXTENT SET FORTH HEREIN BY
JACOR COMMUNICATIONS, INC.
AND THE SUBSIDIARY GUARANTORS
Jacor Communications, Inc. ("Jacor") may from time to time offer (i)
convertible debt securities consisting of debentures, notes or other evidences
of indebtedness representing unsecured obligations of Jacor, which may be either
subordinated or senior if Jacor's then-existing loan agreements and indentures
permit the issuance of Senior Debt (as defined herein), and which are
convertible or exchangeable into Jacor Common Stock (as defined below), Jacor
Preferred Stock (as defined below) or other debt securities issued hereunder
(the "Jacor Convertible Debt Securities"), (ii) shares of Jacor Preferred Stock,
par value $.01 per share (the "Jacor Preferred Stock"), which may be issued in
the form of depositary shares evidenced by depositary receipts (the "Jacor
Depositary Shares"); (iii) shares of Jacor Preferred Stock convertible or
exchangeable into Common Stock, par value $.01 per share (the "Jacor Common
Stock"), another series of Jacor Preferred Stock or other debt securities issued
hereunder (the "Jacor Convertible Preferred Stock"); and (iv) shares of Jacor
Common Stock, in each case, in amounts, at prices and on terms to be determined
at the time of the offering.
Jacor Communications Company, a wholly-owned subsidiary of Jacor ("JCC"),
may also from time to time offer (i) debt securities consisting of debentures,
notes or other evidences of indebtedness representing unsecured obligations of
JCC, which may be either subordinated or senior if JCC's then-existing loan
agreements and indentures permit the issuance of Senior Debt (the "JCC Debt
Securities"); and (ii) convertible debt securities consisting of JCC Debt
Securities which are convertible or exchangeable into Jacor Common Stock or
Jacor Preferred Stock or other debt securities issued hereunder (the "JCC
Convertible Debt Securities"), in each case, in amounts, at prices and on terms
to be determined at the time of the offering. In connection therewith, Jacor and
the Subsidiary Guarantors (as defined herein) may, on a joint and several basis,
offer full and unconditional guarantees ("Guarantees") with respect to the JCC
Debt Securities and JCC Convertible Debt Securities, as described herein under
"Description of Convertible Debt Securities and JCC Debt Securities." All
subsidiaries of JCC will become Subsidiary Guarantors if required by the
indenture governing the Convertible Debt Securities and/or the JCC Debt
Securities. The Jacor Convertible Debt Securities and the JCC Convertible Debt
Securities are sometimes collectively referred to as the "Convertible Debt
Securities." The Jacor Convertible Debt Securities, the Jacor Preferred Stock,
the Jacor Convertible Preferred Stock, the Jacor Common Stock, the Jacor
Depositary Shares, the JCC Debt Securities, the JCC Convertible Debt Securities,
and the Guarantees are collectively called the "Securities." See "Description of
Convertible Debt Securities and JCC Debt Securities -- Certain Covenants --
Subsidiary Guarantees" and "Description of Indebtedness -- Credit Facility," "--
10 1/8% Notes," "-- Liquid Yield Option-TM- Notes," "-- 9 3/4% Notes due 2011,"
and "-- 8 3/4% Notes."
For each offering of Securities for which this Prospectus is being
delivered, there will be an accompanying Prospectus Supplement (the "Prospectus
Supplement"), which sets forth, where applicable, (i) in the case of Convertible
Debt Securities and JCC Debt Securities, the specific designation, aggregate
principal amount, the denomination, maturity, priority, premium, if any, the
rate (which may be fixed or variable), time and method of calculating payment of
interest, if any, on such Convertible Debt Securities or JCC Debt Securities,
any terms of redemption at the option of Jacor, JCC, or the holder, terms for
sinking fund payments, and with respect to Convertible Debt Securities, terms
for conversion or exchange into Jacor Common Stock, Jacor Preferred Stock or
other debt securities issued hereunder; (ii) in the case of Jacor Preferred
Stock or Jacor Convertible Preferred Stock, the specific title and stated value,
any dividend, liquidation, redemption, voting and other rights, and any other
special terms, including the terms for converting or exchanging Jacor
Convertible Preferred Stock into other Securities, and whether the Jacor
Preferred Stock or Jacor Convertible Preferred Stock will be offered in the form
of Jacor Depositary Shares and the terms thereof; and (iii) in the case of Jacor
Common Stock, the number of shares of Jacor Common Stock and the terms of
offering thereof. The Prospectus Supplement will also contain information, as
applicable, about certain United States Federal income tax considerations
relating to the particular Securities offered thereby.
The aggregate initial offering price of the Securities offered by Jacor
and/or JCC hereby will not exceed $500,000,000.00.
Jacor and/or JCC may sell the Securities to or through underwriters, through
dealers or agents or directly to purchasers. See "Plan of Distribution." The
accompanying Prospectus Supplement will set forth the names of any underwriters,
dealers or agents involved in the sale of the Securities in respect of which
this Prospectus is being delivered, the amounts proposed to be purchased by
them, any applicable fee, commission or discount arrangements with them, the
initial public offering price and the net proceeds to Jacor and/or JCC. Any
statement contained in this Prospectus will be deemed to be modified or
superseded by any inconsistent statement contained in the accompanying
Prospectus Supplement.
The Jacor Common Stock is traded on the Nasdaq National Market under the
symbol "JCOR." Any Jacor Common Stock sold pursuant to a Prospectus Supplement
will be listed on the Nasdaq National Market, subject to official notice of
issuance. Warrants issued by Jacor in 1996 are listed on the Nasdaq National
Market under the symbol "JCORZ." Liquid Yield Option-TM- Notes due 2011 issued
by Jacor in 1996 are listed on the Nasdaq Small Cap Market under the symbol
"JCORL" and Warrants issued by Jacor in 1997 are listed on the Nasdaq National
Market under the symbol "JCORM." Jacor has not yet determined whether any of the
JCC Debt Securities, JCC Convertible Debt Securities, Jacor Convertible Debt
Securities, Jacor Preferred Stock, or Jacor Convertible Preferred Stock offered
hereby will be listed on any exchange or over-the-counter market. If Jacor
decides to seek listing of any such Securities, the Prospectus Supplement
relating thereto will disclose such exchange or market.
SEE "RISK FACTORS" AT PAGE 4 FOR CERTAIN INFORMATION THAT SHOULD BE
CONSIDERED BY PROSPECTIVE INVESTORS.
------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
------------------------
This Prospectus may not be used to consummate sales of Securities unless
accompanied by the applicable Prospectus Supplement.
<PAGE>
AVAILABLE INFORMATION
Jacor is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and accordingly files
reports, proxy statements and other information with the Securities and Exchange
Commission (the "Commission"). Jacor, JCC and the Subsidiary Guarantors have
filed a Registration Statement on Form S-3 together with all amendments and
exhibits thereto (the "Registration Statement") with the Commission under the
Securities Act of 1933, as amended (the "Securities Act") with respect to the
Securities offered hereby. This Prospectus does not contain all of the
information set forth in the Registration Statement, certain parts of which are
omitted in accordance with the rules and regulations of the Commission. The
Registration Statement, including any amendments, schedules and exhibits
thereto, is available for inspection and copying as set forth above. Statements
contained in this Prospectus as to the contents of any contract or other
document referred to herein include all material terms of such contracts or
other documents but are not necessarily complete, and in each instance reference
is made to the copy of such contract or other document filed as an exhibit to
the Registration Statement, each such statement being qualified in all respects
by such reference. Such reports, proxy statements and other information filed
with the Commission are available for inspection and copying at the public
reference facilities maintained by the Commission at Room 1024, Judiciary Plaza,
450 Fifth Street, N.W., Washington, D.C. 20549, and at the Commission's Regional
Offices located at Citicorp Center, 500 West Madison Street, Suite 1400,
Chicago, Illinois 60661-2511, and at 7 World Trade Center, 13th Floor, New York,
New York 10048. Copies of such documents may also be obtained from the Public
Reference Room of the Commission at Judiciary Plaza, 450 Fifth Street, N.W.,
Washington, D.C. 20549, at prescribed rates. Jacor files its reports, proxy
statements and other information with the Commission electronically, and the
Commission maintains a Web site located at http://www.sec.gov containing such
information. In addition, reports and other information concerning Jacor are
available for inspection and copying at the offices of The Nasdaq Stock Market
at 1735 K Street, N.W., Washington, D.C. 20006-1506.
2
<PAGE>
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents previously filed by Jacor with the Commission are
incorporated herein by reference and are made a part hereof:
(a) Jacor's Annual Report on Form 10-K for the fiscal year ended December
31, 1996, as amended;
(b) Jacor's Quarterly Reports on Form 10-Q for the quarters ended March 31,
1997, June 30, 1997 and September 30, 1997;
(c) Jacor's Current Reports on Form 8-K dated January 9, 1997, January 24,
1997, March 7, 1997 (amending Jacor's Form 8-K dated October 23, 1996), March
21, 1997, as amended, April 8, 1997, as amended, May 5, 1997, May 16, 1997, June
12, 1997, as amended, August 29, 1997, September 30, 1997, November 4, 1997,
November 21, 1997 and January 5, 1998, as amended; and
(d) Jacor's Form 8-B Registration Statement dated September 23, 1996.
All documents filed by Jacor with the Commission pursuant to Section 13(a),
13(c), 14 or 15(d) of the Exchange Act, after the date of this Prospectus and
prior to the termination of the offering of the securities made hereby shall be
deemed to be incorporated by reference into this Prospectus and to be a part
hereof from the date of filing of such documents. Any statement contained in a
document incorporated or deemed to be incorporated by reference herein shall be
deemed to be modified or superseded for purposes of this Prospectus to the
extent that a statement contained herein (or in any other subsequently filed
document that is or is deemed to be incorporated by reference herein) modifies
or supersedes such previous statement. Any statement so modified or superseded
shall not be deemed to constitute a part of this Prospectus except as so
modified or superseded.
This Prospectus incorporates by reference certain documents relating to
Jacor which are not delivered herewith. These documents (other than exhibits to
such documents unless such exhibits are specifically incorporated by reference
herein) are available, without charge, upon oral or written request by any
person to whom this Prospectus is delivered. Such requests should be directed to
Jacor Communications, Inc., 50 East RiverCenter Boulevard, 12th Floor,
Covington, Kentucky 41011, Attention: Corporate Communications and Investor
Relations, Telephone Number (606) 655-2267, Fax Number (606) 655-9345.
3
<PAGE>
RISK FACTORS
IN ADDITION TO THE OTHER INFORMATION CONTAINED OR INCORPORATED BY REFERENCE
IN THIS PROSPECTUS OR THE ACCOMPANYING PROSPECTUS SUPPLEMENT, PROSPECTIVE
INVESTORS SHOULD CAREFULLY CONSIDER THE FOLLOWING FACTORS BEFORE PURCHASING THE
SECURITIES OFFERED HEREBY.
RISKS OF ACQUISITION STRATEGY. Jacor intends to pursue growth through the
opportunistic acquisition of broadcasting companies, radio station groups,
individual radio stations and entities that provide programming and services to
radio station groups or individual radio stations. In this regard, Jacor
routinely reviews such acquisition opportunities. Jacor believes that currently
there are available a number of acquisition opportunities that would be
complementary to its business, although it may be more difficult to find
suitable transactions on terms acceptable to Jacor given the substantial
consolidation that has occurred in the radio broadcast industry since the
passage of the Telecom Act (as defined herein). Jacor cannot predict whether it
will be successful in pursuing such acquisition opportunities or what the
consequences of any such acquisition would be.
The receipt of certain federal and state governmental or regulatory
approvals is required in order to consummate the acquisitions, including
approvals or waivers from the Federal Communications Commission (the "FCC"),
and, if certain criteria are met, the expiration of or termination of the
applicable waiting periods under the Hart-Scott-Rodino Antitrust Improvements
Act of 1976, as amended (the "HSR Act"), as enforced by the Antitrust Division
of the Department of Justice (the "Antitrust Division"). With regard to each
proposed acquisition, Jacor will use its reasonable best efforts to obtain such
approvals or waivers, but there can be no assurance that (i) the FCC will
approve the transfer of the broadcast licenses in connection with each proposed
transaction; (ii) the FCC or a court would affirm the FCC consent to the
proposed transaction if such review is undertaken; (iii) the HSR Act waiting
periods with respect to the various proposed transactions will expire without
objections being raised by either the Federal Trade Commission (the "FTC") or
the Antitrust Division that would not be eliminated without substantial changes
to the terms of the applicable proposed transactions; or (iv) Jacor will be
successful in consummating various proposed transactions in a timely manner or
on the terms originally agreed upon by the parties to the transactions.
Jacor's acquisition strategy involves numerous risks, including difficulties
in the integration of operations and systems, the diversion of management's
attention from other business concerns and the potential loss of key employees
of acquired businesses. There can be no assurance that Jacor's management will
be able to manage effectively the resulting business or that such acquisitions
will benefit Jacor.
In addition to the expenditure of capital relating to the Pending
Transactions, future acquisitions also may involve the expenditure of
significant funds, including the issuance of additional debt or equity.
Depending upon the nature, size and timing of future acquisitions, Jacor may be
required to raise additional financing. There is no assurance that such
additional financing will be available to Jacor on acceptable terms at the time
desired.
NEED TO DEVELOP "STICK" PROPERTIES. Jacor's business strategy relies, in
part, on improving the broadcast cash flow and ratings of its "stick" properties
(i.e. properties with insignificant broadcast cash flow and/or insignificant
ratings). In evaluating acquisition opportunities, Jacor seeks out "stick"
properties because Jacor believes that such radio stations provide the potential
for the greatest improvement in broadcast cash flow. Typically, Jacor will make
a substantial investment in a "stick" property to improve its programming
operations and/or signal. The Company currently has 99 "stick" properties, which
constitute more than half of the Company's portfolio of radio stations. There
can be no assurances that Jacor will be successful in improving the performance
of its "stick" properties, notwithstanding that substantial costs may be
incurred by Jacor in implementing this aspect of its business strategy.
INCREASED ANTITRUST SCRUTINY. Subsequent to the passage of the
Telecommunications Act of 1996 (the "Telecom Act") on February 8, 1996, the
radio broadcast industry has been subject to an increased amount of scrutiny by
the Antitrust Division. Such scrutiny caused Jacor to experience delays and
increased costs in
4
<PAGE>
closing several transactions and also compelled changes in the proposed terms of
several acquisitions. Jacor could experience similar delays, increased costs,
and compelled changes in connection with future transactions.
Although Jacor does not believe that antitrust considerations will adversely
affect Jacor's ability to successfully implement its business strategy, the
effects of the Antitrust Division's heightened level of scrutiny on the radio
broadcast industry and on Jacor are uncertain. There can be no assurance that
these concerns will not negatively impact Jacor.
FCC REGULATION OF BROADCASTING INDUSTRY. The broadcasting industry is
subject to extensive regulation by the FCC which, among other things, requires
approval for the issuance, renewal, transfer and assignment of broadcasting
station operating licenses, limits the number of broadcasting properties Jacor
may acquire and regulates the operations of broadcasting stations. Additionally,
in certain circumstances, the Communications Act of 1934, as amended (the
"Communications Act"), and FCC rules will operate to impose limitations on alien
ownership and voting of the capital stock of Jacor. Jacor's Certificate of
Incorporation permits the redemption of Common Stock from stockholders where
necessary to protect Jacor's regulatory licenses. See "Description of Capital
Stock." The FCC is considering changes to its rules in response to the Telecom
Act and other industry developments. There can be no assurance that any such
rule changes will not negatively impact Jacor's operations in the future.
Jacor's business will be dependent upon maintaining its broadcasting
licenses issued by the FCC, which are issued currently for a maximum term of
eight years. Although it is rare for the FCC to deny a renewal application,
there can be no assurance that the pending or future renewal applications will
be approved, or that such renewals will not include conditions or qualifications
that could adversely affect Jacor's operations. Moreover, governmental
regulations and policies may change over time and there can be no assurance that
such changes would not have a material adverse impact upon Jacor's business,
financial condition and results of operations.
COMPETITION; BUSINESS RISKS. Broadcasting is a highly competitive business.
Jacor's radio and television stations and syndicated radio programming compete
for audiences and advertising revenues directly with other radio and television
stations and other syndicated programs, as well as with other media, such as
newspapers, magazines, cable television, outdoor advertising, and direct mail,
within their respective geographic areas. Audience ratings and revenue shares
are subject to change and any adverse change in a particular geographic area
could have a material and adverse effect on the revenue of stations located in
that geographic area. Future operations are further subject to many variables
which could have an adverse effect upon Jacor's financial performance. These
variables include economic conditions, both generally and relative to the
broadcasting industry; shifts in population and other demographics; the level of
competition for advertising dollars with other radio stations, television
stations, and other entertainment and communications media; fluctuations in
operating costs; technological changes and innovations; changes in labor
conditions; and changes in governmental regulations and policies and actions of
federal regulatory bodies. Although Jacor believes that each of its stations is
able to compete effectively in its respective broadcast area and that its
syndicated radio programs will continue to attract listeners and advertisers,
there can be no assurance that any such stations or syndicated programs will be
able to maintain or increase its current audience ratings and advertising
revenues.
JACOR STRUCTURE. A significant percentage of the assets and revenues of
Jacor are held by or derived from the operations of Jacor's subsidiaries. As a
result, trade creditors and other creditors of these subsidiaries may have a
claim that is structurally superior to that of the holders of indebtedness at
Jacor whose recourse to the assets and revenues of these subsidiaries derives
almost entirely from the equity interest therein of Jacor.
The ability of Jacor and its subsidiaries to incur certain obligations is
limited by certain of the restrictive covenants contained in the Credit
Facility. Additionally, borrowings under the Credit Facility are secured by a
first priority lien on the capital stock of Jacor's subsidiaries, all
intercompany indebtedness owed to Jacor and have priority as to such collateral.
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In addition, Jacor's ability to make required principal and interest
payments with respect to Jacor's indebtedness depends on the earnings of its
subsidiaries. Since indebtedness of Jacor is an obligation of Jacor only (unless
otherwise guaranteed or agreed), Jacor's subsidiaries are not obligated or
required to pay any amounts due pursuant thereto or to make funds available
therefor in the form of dividends or advances to Jacor. In addition, the payment
of dividends and the making of loans, advances and other payments to Jacor by
its subsidiaries may be subject to statutory restrictions, are subject to
contractual restrictions in the Credit Facility and JCC's senior subordinated
indebtdness, are contingent upon the earnings of those subsidiaries and are
subject to various business and other considerations.
SUBSTANTIAL LEVERAGE AND LIMITED FINANCIAL FLEXIBILITY. Jacor's outstanding
indebtedness and its offering of any debt securities hereunder may have the
following important consequences: (i) significant interest expense and principal
repayment obligations resulting in substantial annual fixed charges; (ii)
significant limitations on Jacor's ability to obtain additional debt financing;
and (iii) increased vulnerability to adverse general economic and industry
conditions. In addition, Jacor's existing and anticipated credit facilities have
or will have a number of financial covenants, including interest coverage, debt
service coverage and a maximum ratio of debt to earnings before other expenses
(income), interest expenses, taxes, depreciation and amortization.
SHARE OWNERSHIP BY ZELL/CHILMARK. Zell/Chilmark Fund L.P. ("Zell/Chilmark")
holds approximately 13,349,720 (currently 29.3%) of the outstanding shares of
Jacor Common Stock and is Jacor's largest stockholder as of the date hereof. The
large share ownership of Zell/Chilmark may have the effect of discouraging
certain types of transactions involving an actual or potential change of control
of Jacor, including transactions in which the holders of Jacor Common Stock
might otherwise receive a premium for their shares over then-current market
prices.
By the terms of its partnership agreement, Zell/Chilmark is to terminate on
or before July 1, 2000, subject to two one-year extensions in certain
circumstances. Accordingly, Zell/Chilmark will be required to sell its shares of
Jacor Common Stock or to distribute its shares of Jacor Common Stock to its
partners prior to or upon the termination of Zell/Chilmark. Subject to certain
restrictions under the Securities Act, Zell/ Chilmark is free to sell or
distribute shares of Jacor Common Stock from time to time for any reason. By
virtue of its current control of Jacor, Zell/Chilmark could sell large amounts
of Jacor Common Stock by causing Jacor to file a registration statement with
respect to such stock. In addition, Zell/Chilmark could sell its shares of Jacor
Common Stock without registration pursuant to Rule 144 under the Securities Act.
Jacor can make no prediction as to the effect, if any, that such sales or
distributions of shares of Jacor Common Stock would have on the prevailing
market price. Sales or distributions of substantial amounts of Jacor Common
Stock, or the availability of such shares for sale or distribution, could
adversely affect prevailing market prices. Sales or distributions of Jacor
Common Stock by Zell/Chilmark could result in another person or entity becoming
a controlling stockholder of Jacor.
LACK OF DIVIDENDS; RESTRICTIONS ON PAYMENTS OF DIVIDENDS. Jacor has not
paid any dividends to its stockholders. Jacor intends to retain all available
earnings, if any, generated by its operations for the development and growth of
its business and does not anticipate paying any dividends on Jacor Common Stock
in the foreseeable future. In addition, the payment of dividends on the Jacor
Common Stock is restricted under Jacor's credit facilities.
KEY PERSONNEL. Jacor's business is dependent upon the performance of
certain key employees, including its Chief Executive Officer and its President.
Jacor also employs or independently contracts with several on-air personalities
and hosts of syndicated radio programs with significant loyal audiences in their
respective broadcast areas. Jacor generally enters into long-term agreements
with its key on-air talent and program hosts to protect its interests in those
relationships, but there can be no assurance that all such individuals will
remain with Jacor or will retain their audiences.
POTENTIAL NEGATIVE IMPACT OF OTHER SECURITIES ISSUANCES. Jacor has
authorized for issuance up to 4,000,000 shares of undesignated preferred stock.
The Jacor Board of Directors has the authority, without
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further vote or action by Jacor stockholders, to issue the undesignated shares
of Jacor Preferred Stock in one or more series and to fix all rights,
qualifications, preferences, privileges, limitations and restrictions of each
such series, including dividend rights, voting rights, terms of redemption,
redemption prices, liquidation preferences and the number of shares constituting
any series or the designation of such series. Although it currently has no plans
to do so, the Jacor Board of Directors, without stockholder approval, can issue
Jacor Preferred Stock with voting and conversion rights which would adversely
affect the voting power of the holders of Jacor Common Stock. In addition, the
issuance of Jacor Preferred Stock may have the effect of delaying, deferring or
preventing a change in control of Jacor and could therefore have a negative
impact on the trading price of the Jacor Common Stock. Jacor may also issue
other types of securities in the future that may have the same or similar
negative effects as the undesignated preferred stock. See "Description of
Capital Stock."
FORWARD-LOOKING STATEMENTS. This Prospectus and the accompanying Prospectus
Supplement set forth or incorporate by reference forward-looking statements
within the meaning of Section 27A of the Securities Act. Discussions containing
such forward-looking statements may be found in the material set forth under
"Business" in the accompanying Prospectus Supplement, as well as within this
Prospectus and the accompanying Prospectus Supplement generally. In addition,
when used in this Prospectus and the accompanying Prospectus Supplement, the
words "believes," "anticipates," "expects" and similar expressions are intended
to identify forward-looking statements. Such statements are subject to a number
of risks and uncertainties. Actual results in the future could differ materially
from those described in the forward-looking statements as a result of the risk
factors set forth above and the matters set forth or incorporated by reference
in this Prospectus and the accompanying Prospectus Supplement generally. Jacor
undertakes no obligation to publicly release the result of any revisions to
these forward-looking statements that may be made to reflect any future events
or circumstances. Jacor cautions the reader, however, that this list of risk
factors may not be exhaustive.
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BUSINESS
Jacor and JCC, a direct wholly-owned subsidiary of Jacor, are holding
companies engaged primarily in the radio broadcasting business. Through their
subsidiaries, Jacor and JCC also distribute nationally syndicated talk
programming for radio broadcasting, provide support services to other
broadcasting companies and own and operate one television station in Cincinnati,
Ohio.
Additional information concerning Jacor and JCC is incorporated by reference
in this Prospectus. See "Available Information" and "Incorporation of Certain
Documents by Reference."
USE OF PROCEEDS
Unless otherwise described in an applicable Prospectus Supplement, the
proceeds from the sale of Securities offered hereby will be used for general
corporate purposes, including acquisitions.
CONSOLIDATED RATIOS OF EARNINGS TO FIXED CHARGES AND EARNINGS TO COMBINED FIXED
CHARGES AND PREFERRED STOCK DIVIDENDS
The following table sets forth the unaudited consolidated ratio of earnings
to fixed charges and the unaudited consolidated ratio of earnings to combined
fixed charges and preferred stock dividends for Jacor for the periods shown
(dollars in thousands):
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31, NINE MONTHS
----------------------------------------------------- ENDED SEPTEMBER
1992 1993 1994 1995 1996 30, 1997
--------- --------- --------- --------- --------- ---------------
<S> <C> <C> <C> <C> <C> <C>
Ratio of earnings to fixed charges (1)................ N/A 1.9 6.0 5.7 1.4 1.1
--------- --------- --- --- --- ---
--------- --------- --- --- --- ---
Ratio of earnings to combined fixed charges and
preferred stock dividends (1)(2)..................... N/A 1.9 6.0 5.7 1.4 1.1
--------- --------- --- --- --- ---
--------- --------- --- --- --- ---
Coverage deficiency................................... $ 23,701 N/A N/A N/A N/A N/A
--------- --------- --- --- --- ---
--------- --------- --- --- --- ---
</TABLE>
- ------------------------
(1) For the purpose of computing the ratio of earnings to fixed charges as
prescribed by the rules and regulations of the Commission, earnings
represent pretax income from continuing operations plus fixed charges, less
interest capitalized. Fixed charges represent interest (including amounts
capitalized), the portion of rent expenses deemed to be interest and
amortization of deferred financing costs.
(2) Jacor had no shares of Jacor Preferred Stock outstanding and no dividends
were declared or paid on Jacor Preferred Stock during any of the periods
indicated.
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DESCRIPTION OF CONVERTIBLE DEBT SECURITIES AND JCC DEBT SECURITIES
The Jacor Convertible Debt Securities are to be issued under an Indenture
(the "Jacor Indenture") between Jacor and a trustee to be identified in the
applicable Prospectus Supplement (the "Jacor Trustee"). The JCC Debt Securities
and the JCC Convertible Debt Securities are to be issued under an Indenture (the
"JCC Indenture") between JCC and a trustee to be identified in the applicable
Prospectus Supplement (the "JCC Trustee"). The Jacor Trustee and the JCC Trustee
may be the same trustee. The Jacor Indenture and the JCC Indenture are sometimes
collectively called the "Indentures." The terms of the Indentures will also be
governed by certain provisions of the Trust Indenture Act of 1939, as amended.
The following summary statements with respect to the JCC Debt Securities and the
Convertible Debt Securities do not purport to be complete and are subject to,
and are qualified in their entirety by reference to, the detailed provisions of
the Indentures. Although some of the following summary statements collectively
refer to Jacor, JCC, the Subsidiary Guarantors and other parties, such
statements concerning each party shall apply to each such party respectively and
the applicable Indentures, unless otherwise noted. Capitalized terms are defined
in the Indentures unless otherwise defined herein. Whenever any particular
section of the Indentures or any term defined therein is referred to, such
section or definition is incorporated herein by reference. A copy of the form of
Indentures is available upon request.
GENERAL
The JCC Debt Securities and the Convertible Debt Securities offered hereby
will be limited to an aggregate initial offering price not to exceed
$500,000,000. The Jacor Indenture will not limit the amount of Jacor Convertible
Debt Securities which can be issued thereunder and will provide that additional
Jacor Convertible Debt Securities may be issued in one or more series thereunder
up to the aggregate principal amount which may be authorized from time to time
by Jacor's Board of Directors. The JCC Indenture will not limit the amount of
JCC Debt Securities or JCC Convertible Debt Securities which can be issued
thereunder and will provide that additional JCC Debt Securities or JCC
Convertible Debt Securities may be issued in one or more series thereunder up to
the aggregate principal amount which may be authorized from time to time by
JCC's Board of Directors. The Jacor Convertible Debt Securities, the JCC
Convertible Debt Securities and the JCC Debt Securities will be unsecured
obligations of Jacor or JCC, respectively, and to the extent as may be permitted
under Jacor's and JCC's then-existing loan agreements and indentures, will rank
either senior to or equally and ratably with all other unsecured indebtedness of
JCC. The Jacor Convertible Debt Securities, the JCC Convertible Debt Securities
and the JCC Debt Securities also may be subordinate, and junior in right of
payment to all Senior Debt, to the extent and in the manner set forth in the
respective Indenture. See "Subordination."
The Jacor Convertible Debt Securities may be fully and unconditionally
guaranteed by JCC and may be further guaranteed fully and unconditionally,
jointly and severally with JCC by certain subsidiaries of JCC (the "Subsidiary
Guarantors"). The JCC Debt Securities and JCC Convertible Debt Securities may be
fully and unconditionally guaranteed on a senior subordinated basis by Jacor and
may be further guaranteed fully and unconditionally, jointly and severally with
Jacor by the Subsidiary Guarantors (collectively with JCC and Jacor, the
"Guarantors"). The obligations of each Guarantor under its guarantee, however,
will be limited in a manner intended to avoid such guarantee being deemed a
fraudulent conveyance under applicable law. See "Fraudulent Transfer
Considerations" below.
Reference is made to the Prospectus Supplement relating to the particular
Convertible Debt Securities or JCC Debt Securities offered thereby for the
following terms, where applicable, of the Convertible Debt Securities or JCC
Debt Securities: (i) the specific designation of the Convertible Debt Securities
or JCC Debt Securities; (ii) the denominations in which such Convertible Debt
Securities or JCC Debt Securities are authorized to be issued; (iii) the
aggregate principal amount of such Convertible Debt Securities or JCC Debt
Securities; (iv) the date or dates on which the principal of such Convertible
Debt Securities or JCC Debt Securities will mature or the method of determining
such date or dates; (v) the price or prices (expressed as a percentage of the
aggregate principal amount thereof) at which the Convertible Debt Securities or
JCC Debt Securities will be issued; (vi) the rate or rates (which may be fixed
or variable) at which such Convertible Debt Securities or JCC Debt Securities
will bear interest, if any, or the method of
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calculating such rate or rates; (vii) the times and places where principal of,
premium, if any, and interest, if any, on such Convertible Debt Securities or
JCC Debt Securities will be payable; (viii) the date, if any, after which such
Convertible Debt Securities or JCC Debt Securities may be redeemed and the
redemption prices; (ix) the date or dates on which interest, if any, will be
payable and the record date or dates therefor or the method by which such date
or dates will be determined; (x) the period or periods within which, the price
or prices at which, the currency or currencies (including currency units) in
which, and the terms and conditions upon which, such Convertible Debt Securities
or JCC Debt Securities may be redeemed, in whole or in part, at the option of
Jacor or JCC, as applicable; (xi) the obligation, if any, of Jacor or JCC to
redeem or purchase such Convertible Debt Securities or JCC Debt Securities
pursuant to any sinking fund or analogous provisions, upon the happening of a
specified event or at the option of a holder thereof and the period or periods
within which, the price or prices at which and the terms and conditions upon
which, such Convertible Debt Securities or JCC Debt Securities shall be redeemed
or purchased, in whole or in part, pursuant to such obligations; (xii) the terms
and conditions upon which conversion or exchange of such Convertible Debt
Securities will be effected, including the exchange terms, the conversion price,
the conversion period and other conversion or exchange provisions in addition to
or in lieu of those described below; (xiii) if other than the principal amount
thereof, the portion of the principal amount of such Convertible Debt Securities
or JCC Debt Securities which will be payable upon declaration of the
acceleration of the maturity thereof or the method by which such portion shall
be determined; (xiv) the person to whom any interest on any such Debt Security
or Convertible Debt Security shall be payable if other than the person in whose
name such Debt Security or Convertible Debt Security is registered on the
applicable record date; (xv) any addition to, or modification or deletion of,
any Event of Default or any covenant of Jacor or JCC specified in the Indenture
with respect to such Convertible Debt Securities or JCC Debt Securities; (xvi)
the application, if any, of such means of defeasance or covenant defeasance as
may be specified for such Convertible Debt Securities or JCC Debt Securities;
(xvii) whether such Convertible Debt Securities or JCC Debt Securities are to be
issued in whole or in part in the form of one or more temporary or permanent
global securities and, if so, the identity of the depositary for such global
security or securities; (xviii) whether such Convertible Debt Securities or JCC
Debt Securities shall be subordinated and subject to the right to prior payment
in full of all Senior Debt, including the then-existing credit facilities; and
(xix) any other special terms pertaining to such Convertible Debt Securities or
JCC Debt Securities. Unless otherwise specified in the applicable Prospectus
Supplement, the Convertible Debt Securities or JCC Debt Securities will not be
listed on any securities exchange. Unless otherwise provided in the applicable
Prospectus Supplement, principal and premium, if any, or interest, if any, will
be payable and the Convertible Debt Securities or JCC Debt Securities may be
surrendered for payment or transferred at the offices of the applicable Trustee
as paying and authenticating agent, provided that payment of interest on
Registered Securities may be made at the option of Jacor or JCC, as applicable,
by check mailed to the address of the person entitled thereto as it appears in
the Security Register. Payment of Convertible Debt Securities or JCC Debt
Securities in bearer form will be made at such paying agencies outside of the
United States as Jacor or JCC, as applicable, may appoint.
Unless otherwise specified in the applicable Prospectus Supplement, the
Convertible Debt Securities and JCC Debt Securities will be issued in fully
registered form without coupons in denominations set forth in the Prospectus
Supplement. No service charge will be made for any transfer or exchange of such
Convertible Debt Securities or JCC Debt Securities, but Jacor or JCC, as
applicable, may require payment of a sum sufficient to cover any tax or other
governmental charge payable in connection therewith. Where Convertible Debt
Securities and JCC Debt Securities of any series are issued in bearer form, the
special restrictions and considerations, including special offering restrictions
and special Federal income tax considerations, applicable to any such
Convertible Debt Securities or JCC Debt Securities and to payment on and
transfer and exchange of such Convertible Debt Securities or JCC Debt Securities
will be described in the Prospectus Supplement. Bearer Convertible Debt
Securities and JCC Debt Securities will be transferrable by delivery.
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Some of the Convertible Debt Securities and JCC Debt Securities may be
issued at a discount (bearing no interest or interest at below market rates) to
be sold at a substantial discount below their stated principal amount. Federal
income tax consequences and other special considerations applicable to any such
Convertible Debt Securities and JCC Debt Securities will be described in the
applicable Prospectus Supplement.
The Prospectus Supplement for a particular series may indicate terms for
redemption at the option of a Holder. Unless otherwise indicated in the
applicable Prospectus Supplement, the covenants contained in the Indentures and
the Convertible Debt Securities or JCC Debt Securities (as the case may be)
would not provide for redemption at the option of a Holder nor necessarily
afford Holders thereof protection in the event of a highly leveraged or other
transaction that may adversely affect such Holders.
CONVERSION OF CONVERTIBLE DEBT SECURITIES
The following provisions will further apply to Convertible Debt Securities,
unless otherwise provided in the applicable Prospectus Supplement for such
Convertible Debt Securities. The holder of any Convertible Debt Securities will
have the right exercisable at any time prior to maturity, or prior to such other
date as may be specified in the applicable Prospectus Supplement, unless
previously redeemed by Jacor or JCC, as applicable, to convert such Convertible
Debt Securities into shares of Jacor Common Stock or Jacor Preferred Stock at
the conversion price set forth in the applicable Prospectus Supplement, subject
to adjustment. In the case of Convertible Debt Securities called for redemption,
conversion rights will expire at the close of business on the date fixed for the
redemption unless Jacor or JCC, as applicable, shall default in payment of the
redemption price, except that in the case of redemption at the option of the
Holder thereof, if applicable, the conversion right will terminate upon receipt
of written notice of the exercise of such option. In certain events, the
conversion price will be subject to adjustment as set forth in the applicable
Prospectus Supplement. Fractional shares of Jacor Common Stock or Jacor
Preferred Stock will not be issued upon conversion, but, in lieu thereof, Jacor
or JCC, as applicable, will pay a cash adjustment based on the then current
market price for the Jacor Common Stock or Jacor Preferred Stock.
EXCHANGEABILITY
The Holders of Convertible Debt Securities of any series may be obligated at
any time or at maturity to exchange them for Jacor Common Stock, Jacor Preferred
Stock or other debt securities of Jacor issued hereunder. The terms of any such
exchange will be described in the Prospectus Supplement relating to such series
of Convertible Debt Securities.
SUBORDINATION
The Convertible Debt Securities and JCC Debt Securities may be subordinated
and junior in right of payment, to the extent set forth in the applicable
Prospectus Supplement, to all "Senior Debt" of Jacor, JCC or the Guarantors, as
applicable, including the then-existing credit facilities, as set forth in the
applicable Prospectus Supplement. Unless otherwise provided in the applicable
Indenture or applicable Prospectus Supplement, the subordination provisions of
the Indentures will be as set forth below.
To the extent the JCC Debt Securities and/or the Convertible Debt Securities
are subordinated to Senior Debt, the Indentures will provide that no payment
(including any payment which may be payable to any Holder by reason of the
subordination of any other indebtedness or other obligations to, or guarantee
of, the Convertible Debt Securities and JCC Debt Securities) or distribution (by
set-off or otherwise) may be made by or on behalf of Jacor, JCC or a Guarantor,
as applicable, on account of the principal of, premium, if any, or interest on
the Convertible Debt Securities and JCC Debt Securities (including any
repurchases of Convertible Debt Securities and JCC Debt Securities) or any other
amounts with respect thereto, or on account of the redemption provisions of the
Convertible Debt Securities and JCC Debt Securities, for cash or property (other
than Junior Securities), (i) upon the maturity of any Senior Debt of Jacor, JCC
or such Guarantor by lapse of time, acceleration (unless waived) or otherwise,
unless and until all principal of, premium, if any, and the interest on, and all
other amounts with respect to, such Senior Debt are first paid in full in cash
or otherwise to the extent each of the holders of Senior Debt accept
satisfaction of amounts due to such holder by settlement in other than cash, or
(ii) in the event of default in the payment of any principal of, premium, if
any, or interest on, or any other amounts with respect to, Senior Debt of Jacor,
JCC or such
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Guarantor when it becomes due and payable, whether at maturity or at a date
fixed for prepayment or by declaration or otherwise (each of the foregoing, a
"Payment Default"), unless and until such Payment Default has been cured or
waived or otherwise has ceased to exist.
Upon (i) the happening of a default (other than a Payment Default) that
permits the holders of Senior Debt (or a percentage thereof) to declare such
Senior Debt to be due and payable and (ii) written notice of such default given
to Jacor, JCC or such Guarantor, as applicable, and the Trustee by
Representative under the then-existing credit facilities or the holders of an
aggregate of at least $25.0 million principal amount outstanding of any other
Senior Debt or their representative at such holders' direction (a "Payment
Notice"), then, unless and until such default has been cured or waived or
otherwise has ceased to exist, no payment (including any payment which may be
payable to any Holder by reason of the subordination of any other indebtedness
or other obligations to, or guarantee of, the Convertible Debt Securities and
JCC Debt Securities) or distribution (by set-off or otherwise) may be made by or
on behalf of Jacor, JCC or any Guarantor which is an obligor under such Senior
Debt on account of the principal of, premium, if any, or interest on the
Convertible Debt Securities and JCC Debt Securities (including any repurchases
of any of the Convertible Debt Securities and JCC Debt Securities), or any other
amount with respect thereto, or on account of the redemption provisions of the
Convertible Debt Securities and JCC Debt Securities, in any such case, other
than payments made with Junior Securities. Notwithstanding the foregoing, unless
the Senior Debt in respect of which such default exists has been declared due
and payable in its entirety within 179 days after the Payment Notice is
delivered as set forth above (the "Payment Blockage Period") (and such
declaration has not been rescinded or waived), at the end of the Payment
Blockage Period (and assuming that no Payment Default exists), Jacor, JCC and
the Guarantors, as applicable, shall not be prohibited by the subordination
provisions from paying all sums then due and not paid to the Holders of the
Convertible Debt Securities and JCC Debt Securities during the Payment Blockage
Period due to the foregoing prohibitions and to resume all other payments as and
when due on the Convertible Debt Securities and JCC Debt Securities. Any number
of Payment Notices may be given; PROVIDED, HOWEVER, that (i) not more than one
Payment Notice shall be given within a period of any 360 consecutive days, and
(ii) no default that existed upon the date of delivery of such Payment Notice
(whether or not such default is on the same issue of Senior Debt) shall be made
the basis for the commencement of any other Payment Blockage Period.
Upon any distribution of assets of Jacor, JCC or any Guarantor upon any
dissolution, winding up, total or partial liquidation or reorganization of
Jacor, JCC or a Guarantor, whether voluntary or involuntary, in bankruptcy,
insolvency, receivership or a similar proceeding or upon assignment for the
benefit of creditors or any marshaling of assets or liabilities, (i) the holders
of all Senior Debt of Jacor, JCC or such Guarantor, as applicable, will first be
entitled to receive payment in full of all amounts of Senior Debt in cash or
otherwise to the extent each of such holders accepts satisfaction of amounts due
by settlement in other than cash before the Holders are entitled to receive any
payment (including any payment which may be payable to any Holder by reason of
the subordination of any other indebtedness or other obligations to, or
guarantee of, the Convertible Debt Securities and JCC Debt Securities) or
distribution on account of principal of, premium, if any, and interest on, or
any other amounts with respect to, the Convertible Debt Securities and JCC Debt
Securities (other than Junior Securities) and (ii) any payment or distribution
of assets of Jacor, JCC or such Guarantor of any kind or character from any
source, whether in cash, property or securities (other than Junior Securities)
to which the Holders or the Trustee on behalf of the Holders would be entitled
(by set-off or otherwise) except for the subordination provisions contained in
the Indentures, will be paid by the liquidating trustee or agent or other person
making such a payment or distribution directly to the holders of such Senior
Debt or their representative to the extent necessary to make payment in full on
all such Senior Debt remaining unpaid, after giving effect to any concurrent
payment or distribution to the holders of such Senior Debt.
In the event that, notwithstanding the foregoing, any payment or
distribution of assets of Jacor, JCC or any Guarantor (other than Junior
Securities) shall be received by the Trustee or the Holders at a time when such
payment or distribution is prohibited by the foregoing provisions, such payment
or distribution shall be held in trust for the benefit of the holders of such
Senior Debt, and shall be paid or delivered by the Trustee or such Holders, as
the case may be, to the holders of such Senior Debt remaining unpaid or to their
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representative or representatives, or to the trustee or trustees under any
indenture pursuant to which any instruments evidencing any of such Senior Debt
may have been issued, ratably according to the aggregate principal amounts
remaining unpaid on account of such Senior Debt held or represented by each, for
application to the payment of all such Senior Debt remaining unpaid, to the
extent necessary to pay all such Senior Debt in full in cash or otherwise to the
extent each of the holders of such Senior Debt accept satisfaction of amounts
due by settlement in other than cash after giving effect to any concurrent
payment or distribution to the holders of such Senior Debt. The Indentures will
contain other customary subordination provisions, including rights of
subrogation and rights to file claims in bankruptcy.
As among Jacor, JCC, the Guarantors and the Holders, no provision contained
in the Indentures or the Convertible Debt Securities and JCC Debt Securities
will affect the obligations of Jacor, JCC and the Guarantors, which are absolute
and unconditional, to pay, when due, principal of, premium, if any, and interest
on the Convertible Debt Securities and JCC Debt Securities. The subordination
provisions of the Indentures and the Convertible Debt Securities and JCC Debt
Securities will not prevent the occurrence of any Default or Event of Default
under the Indentures or limit the rights of the Trustee or any Holder to pursue
any other rights or remedies with respect to the Convertible Debt Securities and
JCC Debt Securities.
As a result of these subordination provisions, in the event of the
liquidation, bankruptcy, reorganization, insolvency, receivership or similar
proceeding or an assignment for the benefit of the creditors of Jacor, JCC or
any of the Guarantors or a marshaling of assets or liabilities of Jacor, JCC or
any of the Guarantors, holders of the Convertible Debt Securities and JCC Debt
Securities may receive ratably less than other creditors.
Jacor and JCC conduct operations through their subsidiaries. Accordingly,
Jacor's and JCC's ability to meet their cash obligations will be dependent upon
the ability of their subsidiaries to make cash distributions to Jacor and JCC,
respectively. Furthermore, any right of Jacor or JCC to receive the assets of
any such subsidiary upon such subsidiary's liquidation or reorganization
effectively will be subordinated by operation of law to the claims of such
subsidiary's creditors (including trade creditors) and holders of such
subsidiary's preferred stock, except to the extent that Jacor or JCC, as
applicable, is itself recognized as a creditor or preferred stockholder of such
subsidiary, in which case the claims of Jacor or JCC, as applicable, would still
be subordinate to any indebtedness or preferred stock of such subsidiary senior
in right of payment to that held by Jacor or JCC, as applicable.
FRAUDULENT TRANSFER CONSIDERATIONS
Generally, under various state and federal fraudulent transfer or fraudulent
conveyance laws (collectively, "the Fraudulent Transfer Laws"), a Guarantor's
obligations under the Guarantee of the JCC Debt Securities and/or the
Convertible Debt Securities could be avoided if a court in a lawsuit by an
unpaid creditor of a Guarantor or a representative of such creditors (such as a
trustee in bankruptcy or JCC as debtor-in-possession) were to find that (i) the
Guarantor did not receive reasonably equivalent value or fair consideration in
exchange for the obligation created by the applicable Convertible Debt
Securities or JCC Debt Securities and (ii) at the time of the issuance of such
Convertible Debt Securities or JCC Debt Securities, the Guarantor (A) was
insolvent or became insolvent as a result of the incurrence of the obligations
represented by such Convertible Debt Securities or JCC Debt Securities, (B) was
engaged, or was about to be engaged, in a business or transaction for which the
property remaining with it was an unreasonably small capital or for which its
unencumbered assets constituted unreasonably small capital, or (C) intended to
incur, or believed that it would incur, debts beyond its ability to pay as such
debts matured.
A court could conclude that a Guarantor did not receive reasonably
equivalent value or fair consideration to the extent that such Guarantor's
liability on its guarantee exceeds the economic benefits that it receives in the
offering of such Convertible Debt Securities or JCC Debt Securities. Were a
court to so find, the court could avoid the Guarantor's obligation under its
guarantee and direct the return of amounts paid thereunder if one or more of the
conditions set forth in subparagraphs (ii)(A), (B), or (C) above were also met
as to such Guarantor. Management believes, however, that the Guarantees will be
structured so as to minimize the likelihood that a court would find that the
Guarantor did not receive reasonably equivalent value or fair consideration for
its Guarantee (the "Savings Clause"). No assurance, however, can be given
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that a court would uphold such a fraudulent transfer Savings Clause. Moreover,
there can be no assurance that a court would not limit a Guarantee to an amount
equal to the proceeds actually received by any given Guarantor from the offering
of such Convertible Debt Securities or JCC Debt Securities.
The determination of insolvency for purposes of the Fraudulent Transfer Laws
may vary depending upon the law of the jurisdiction being applied. Generally,
however, an entity is insolvent if (i) the sum of its debts (including
unliquidated or contingent debts) is greater than all of its property, at a fair
valuation or (ii) the present fair saleable value of its assets is less than the
amount that will be required to pay its probable liability on its existing debts
as they become absolute and matured. Additionally, under certain state
Fraudulent Transfer Laws, an entity is presumed to be insolvent if it is
generally not paying its debts as they become due.
Furthermore, a court could avoid Jacor's obligations under the Jacor
Convertible Debt Securities, JCC's obligations under the JCC Debt Securities
and/or JCC Convertible Debt Securities and the Guarantors' obligations under
their respective Guarantees without regard to the solvency, capitalization and
other conditions described in clauses (ii)(A), (B), and (C) above if it finds
that the obligations created by such Convertible Debt Securities or JCC Debt
Securities or the Guarantees were incurred with actual intent to hinder, delay,
or defraud now existing or future creditors. If the obligations under such
Convertible Debt Securities or JCC Debt Securities were to be avoided, there can
be no assurance that the recoveries under the Guarantees would be sufficient to
pay the outstanding amounts due and owing under such Convertible Debt Securities
or JCC Debt Securities. Moreover, if the obligations of one or more Guarantors
were to be avoided, there can be no assurance that the remaining Guarantees
would be sufficient to ensure payment in full on such Convertible Debt
Securities or JCC Debt Securities.
CERTAIN COVENANTS
REPURCHASE OF NOTES AT THE OPTION OF THE HOLDER UPON A CHANGE OF CONTROL
Unless otherwise provided in the applicable Indenture or applicable
Prospectus Supplement, the covenants relating to repurchase upon a change of
control will be as set forth below. The Indentures will provide that in the
event that a Change of Control has occurred, each Holder of Convertible Debt
Securities or JCC Debt Securities will have the right, at such Holder's option,
pursuant to an irrevocable and unconditional offer by Jacor or JCC , as
applicable, (the "Change of Control Offer"), to require Jacor or JCC, as
applicable, to repurchase all or any part of such Holder's Convertible Debt
Securities or JCC Debt Securities (PROVIDED, that the principal amount of such
Convertible Debt Securities or JCC Debt Securities must be $1,000 or an integral
multiple thereof) on a date (the "Change of Control Purchase Date") that is no
later than 35 Business Days after the occurrence of such Change of Control, at a
cash price (the "Change of Control Purchase Price") equal to 101% of the
principal amount thereof, together with accrued and unpaid interest, if any, to
the Change of Control Purchase Date. The Change of Control Offer shall be made
within 10 Business Days following a Change of Control and shall remain open for
20 Business Days following its commencement (the "Change of Control Offer
Period"). Upon expiration of the Change of Control Offer Period, Jacor or JCC,
as applicable, promptly shall purchase all Convertible Debt Securities or JCC
Debt Securities properly tendered in response to the Change of Control Offer.
As used herein, a "Change of Control" will mean (i) any merger or
consolidation of JCC with or into any person or any sale, transfer or other
conveyance, whether direct or indirect, of all or substantially all of any of
the assets of JCC, on a consolidated basis, in one transaction or a series of
related transactions, if, immediately after giving effect to such
transaction(s), any "person" or "group" (as such terms are used for purposes of
Sections 13(d) and 14(d) of the Exchange Act, whether or not applicable) (other
than an Excluded Person) is or becomes the "beneficial owner," directly or
indirectly, of more than 50% of the total voting power in the aggregate normally
entitled to vote in the election of directors, managers, or trustees, as
applicable, of the transferee(s) or surviving entity or entities, (ii) any
"person" or "group" (as such terms are used for purposes of Sections 13(d) and
14(d) of the Exchange Act, whether or not applicable) (other than an Excluded
Person) is or becomes the "beneficial owner," directly or indirectly, of more
than 50% of the total voting power in the aggregate of all classes of Capital
Stock of JCC then outstanding normally entitled to vote in elections of
directors, or (iii) during any period of 12 consecutive months after the Issue
Date,
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individuals who at the beginning of any such 12-month period constituted the
Board of Directors of JCC (together with any new directors whose election by
such Board or whose nomination for election by the shareholders of JCC was
approved by a vote of a majority of the directors then still in office who were
either directors at the beginning of such period or whose election or nomination
for election was previously so approved) cease for any reason to constitute a
majority of the Board of Directors of JCC then in office.
On or before the Change of Control Purchase Date, Jacor or JCC, as
applicable, will (i) accept for payment Convertible Debt Securities or JCC Debt
Securities or portions thereof properly tendered pursuant to the Change of
Control Offer, (ii) deposit with the Paying Agent cash sufficient to pay the
Change of Control Purchase Price (together with accrued and unpaid interest) of
all Convertible Debt Securities or JCC Debt Securities so tendered and (iii)
deliver to the Trustee Convertible Debt Securities or JCC Debt Securities so
accepted together with an Officers' Certificate listing the Convertible Debt
Securities or JCC Debt Securities or portions thereof being purchased by Jacor
or JCC, as applicable. The Paying Agent promptly will pay the Holders of
Convertible Debt Securities or JCC Debt Securities so accepted an amount equal
to the Change of Control Purchase Price (together with accrued and unpaid
interest), and the Trustee promptly will authenticate and deliver to such
Holders a new Convertible Debt Security or JCC Debt Security equal in principal
amount to any unpurchased portion of the Convertible Debt Securities or JCC Debt
Securities surrendered. Any Convertible Debt Securities or JCC Debt Securities
not so accepted will be delivered promptly by Jacor or JCC, as applicable, to
the Holder thereof. Jacor or JCC, as applicable, publicly will announce the
results of the Change of Control Offer on or as soon as practicable after the
Change of Control Purchase Date.
A change of control under the indenture which governs each of the
Convertible Debt Securities, JCC Debt Securities, 10 1/8% Notes (as defined
herein), LYONs due 2011 (as defined herein), 9 3/4% Notes (as defined herein)
and 8 3/4% Notes (as defined herein) will result in a default under the Credit
Facility (as defined herein). Additionally, unless Jacor and/or JCC, as
applicable, is successful in (i) seeking consents from its lenders under the
Credit Facility to permit change of control repurchase offers for each of the
Convertible Debt Securities, JCC Debt Securities, 10 1/8% Notes, LYONs due 2011,
9 3/4% Notes or 8 3/4% Notes, or (ii) refinancing such borrowings, such event of
default under the Credit Facility would constitute an event of default under
each of the Convertible Debt Securities, JCC Debt Securities, 10 1/8% Notes,
LYONs due 2011, 9 3/4% Notes and 8 3/4% Notes. Such events of default could
result in the immediate acceleration of all then outstanding indebtedness under
each of the Convertible Debt Securities, JCC Debt Securities, 10 1/8% Notes,
LYONs due 2011, 9 3/4% Notes and 8 3/4% Notes. As a result, differences in the
definitions of change of control under the indentures for the Convertible Debt
Securities, JCC Debt Securities, 10 1/8% Notes, LYONs due 2011, 9 3/4% Notes and
8 3/4% Notes will not have a difference in the effect on Jacor or JCC, as
applicable, or the respective holders other than where the lenders under the
Credit Facility have waived such event of default. In the event of such waiver
there could be a change of control under the Convertible Debt Securities, JCC
Debt Securities, 10 1/8% Notes, 9 3/4% Notes and 8 3/4% Notes which would not
result in a change of control under the LYONs due 2011 or VICE VERSA. See
"Description of Indebtedness."
The Change of Control purchase feature of the Convertible Debt Securities or
JCC Debt Securities may make more difficult or discourage a takeover of Jacor or
JCC, and, thus, the removal of incumbent management.
The phrase "all or substantially all" of the assets of Jacor or JCC, as
applicable, will likely be interpreted under applicable state law and will be
dependent upon particular facts and circumstances. As a result, there may be a
degree of uncertainty in ascertaining whether a sale or transfer of "all or
substantially all" of the assets of Jacor or JCC, as applicable, has occurred.
In addition, no assurance can be given that Jacor or JCC, as applicable, will be
able to acquire Convertible Debt Securities or JCC Debt Securities tendered upon
the occurrence of a Change of Control.
Any Change of Control Offer will be made in compliance with all applicable
laws, rules and regulations, including, if applicable, Regulation 14E under the
Exchange Act and the rules thereunder and all other applicable Federal and state
securities laws.
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LIMITATION ON INCURRENCE OF ADDITIONAL INDEBTEDNESS AND DISQUALIFIED CAPITAL
STOCK
Unless otherwise provided in the applicable Indenture or applicable
Prospectus Supplement, the covenants relating to limitations on incurring
additional indebtedness and disqualified capital stock will be as set forth
below. the Indentures will provide that, except as set forth below in this
covenant, Jacor, JCC and any Subsidiary Guarantors will not, and will not permit
any of their Subsidiaries to, directly or indirectly, issue, assume, guaranty,
incur, become directly or indirectly liable with respect to (including as a
result of an Acquisition), or otherwise become responsible for, contingently or
otherwise (individually and collectively, to "incur" or, as appropriate, an
"incurrence"), any Indebtedness or any Disqualified Capital Stock (including
Acquired Indebtedness) other than Permitted Indebtedness. Notwithstanding the
foregoing limitations, Jacor or JCC may incur and the Subsidiary Guarantors may
guarantee Indebtedness and Disqualified Capital Stock in addition to Permitted
Indebtedness: if (i) no Default or Event of Default shall have occurred and be
continuing at the time of, or would occur after giving effect on a PRO FORMA
basis to, such incurrence of Indebtedness or Disqualified Capital Stock and (ii)
on the date of such incurrence (the "Incurrence Date"), the Leverage Ratio of
JCC for the Reference Period immediately preceding the Incurrence Date, after
giving effect on a pro forma basis to such incurrence of such Indebtedness or
Disqualified Capital Stock and, to the extent set forth in the definition of
Leverage Ratio, the use of proceeds thereof, would be less than the ratio
specified in the Indentures.
Indebtedness or Disqualified Capital Stock of any person which is
outstanding at the time such person becomes a Subsidiary of Jacor or JCC
(including upon designation of any subsidiary or other person as a Subsidiary)
or is merged with or into or consolidated with Jacor or JCC or a Subsidiary of
Jacor or JCC, respectively, shall be deemed to have been incurred at the time
such Person becomes such a Subsidiary of Jacor or JCC, respectively, or is
merged with or into or consolidated with Jacor or JCC, respectively, or a
Subsidiary of Jacor or JCC, as applicable.
LIMITATION ON RESTRICTED PAYMENTS
Unless otherwise provided in the applicable Indenture or applicable
Prospectus Supplement, the Indentures will provide that Jacor and JCC and their
Subsidiaries will not, and will not permit any of their Subsidiaries to,
directly or indirectly, make any Restricted Payment if, after giving effect to
such Restricted Payment on a PRO FORMA basis, (1) a Default or an Event of
Default shall have occurred and be continuing, (2) Jacor and JCC is not
permitted to incur at least $1.00 of additional Indebtedness pursuant to the
Leverage Ratio described in the covenant "Limitation on Incurrence of Additional
Indebtedness and Disqualified Capital Stock," or (3) the aggregate amount of all
Restricted Payments made by Jacor and JCC and their Subsidiaries, including
after giving effect to such proposed Restricted Payment, from and after the
Issue Date, would exceed the amount specified in the Indentures.
The foregoing clauses (2) and (3) of the immediately preceding paragraph,
however, will not prohibit (w) payments to Jacor to reimburse Jacor for
reasonable and necessary corporate and administrative expenses, (x) Restricted
Investments, provided, that, after giving pro forma effect to such Restricted
Investment, the aggregate amount of all such Restricted Investments made on or
after the Issue Date that are outstanding (after giving effect to any such
Restricted Investments that are returned to JCC or the Subsidiary Guarantor that
made such prior Restricted Investment, without restriction, in cash on or prior
to the date of any such calculation) at any time does not exceed an amount
specified in the Indentures, (y) a Qualified Exchange, and (z) the payment of
any dividend on Qualified Capital Stock within 60 days after the date of its
declaration if such dividend could have been made on the date of such
declaration in compliance with the foregoing provisions.
LIMITATION ON DIVIDENDS AND OTHER PAYMENT RESTRICTIONS AFFECTING
SUBSIDIARIES
Unless otherwise provided in the applicable Indenture or applicable
Prospectus Supplement, the Indentures will provide that Jacor, JCC and their
Subsidiaries will not, and will not permit any of their Subsidiaries to, create,
assume or suffer to exist any consensual restriction on the ability of any
Subsidiary of Jacor or JCC to pay dividends or make other distributions to or on
behalf of, or to pay any obligation to or on behalf of, or otherwise to transfer
assets or property to or on behalf of, or make or pay loans or advances to
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or on behalf of, Jacor or JCC or any Subsidiary of Jacor or JCC, respectively,
except (a) restrictions imposed by the JCC Debt Securities, the Convertible Debt
Securities or the Indenture, (b) restrictions imposed by applicable law, (c)
existing restrictions under specified Indebtedness outstanding on the Issue
Date, (d) restrictions under any Acquired Indebtedness not incurred in violation
of the Indentures or any agreement relating to any property, asset, or business
acquired by Jacor, JCC or any of their Subsidiaries, which restrictions in each
case existed at the time of acquisition, were not put in place in connection
with or in anticipation of such acquisition and are not applicable to any
person, other than the person acquired, or to any property, asset or business,
other than the property, assets and business so acquired, (e) any such
restriction or requirement imposed by Indebtedness incurred under paragraph (f)
under the definition of Permitted Indebtedness, provided such restriction or
requirement is no more restrictive than that imposed by Jacor's or JCC's, as
applicable, credit facilities in effect as of the Issue Date, (f) restrictions
with respect solely to a Subsidiary of Jacor or JCC imposed pursuant to a
binding agreement which has been entered into for the sale or disposition of all
or substantially all of the Equity Interests or assets of such Subsidiary,
provided such restrictions apply solely to the Equity Interests or assets of
such Subsidiary which are being sold, and (g) in connection with and pursuant to
permitted Refinancings, replacements of restrictions imposed pursuant to clauses
(a), (c) or (d) of this paragraph that are not more restrictive than those being
replaced and do not apply to any other person or assets than those that would
have been covered by the restrictions in the Indebtedness so refinanced.
Notwithstanding the foregoing, neither (a) customary provisions restricting
subletting or assignment of any lease entered into in the ordinary course of
business, consistent with industry practice, or other standard non-assignment
clauses in contracts entered into in the ordinary course of business, (b)
Capital Leases or agreements governing purchase money Indebtedness which contain
restrictions of the type referred to above with respect to the property covered
thereby, nor (c) Liens permitted under the terms of the Indenture on assets
securing Senior Debt incurred pursuant to the Leverage Ratio in accordance with
the covenant described under "Limitation on Incurrence of Additional
Indebtedness and Disqualified Capital Stock" or permitted pursuant to the
definition of Permitted Indebtedness shall in and of themselves be considered a
restriction on the ability of the applicable Subsidiary to transfer such
agreement or assets, as the case may be.
LIMITATIONS ON LAYERING INDEBTEDNESS; LIENS
Unless otherwise provided in the applicable Indenture or applicable
Prospectus Supplement, the Indentures will provide that Jacor, JCC and their
Subsidiaries will not, and will not permit any of their Subsidiaries to,
directly or indirectly, incur, or, other than with respect to the 10 1/8% Notes,
9 3/4% Notes and 8 3/4% Notes suffer to exist (a) any Indebtedness that is
subordinate in right of payment to any other Indebtedness of Jacor, JCC or a
Guarantor unless, by its terms, such Indebtedness (i) has a maturity date
subsequent to the Stated Maturity of the respective Convertible Debt Securities
or JCC Debt Securities and an Average Life longer than that of such Convertible
Debt Securities or JCC Debt Securities and (ii) is subordinate in right of
payment to, or ranks PARI PASSU with, such JCC Debt Securities, Convertible Debt
Securities or the Guarantees, as applicable, or (b) other than Permitted Liens,
any Lien upon any of its property or assets, whether now owned or hereafter
acquired, or upon any income or profits therefrom securing Indebtedness other
than (1) Liens securing Senior Debt incurred pursuant to the Leverage Ratio in
accordance with the covenant described under "Limitation on Incurrence of
Additional Indebtedness and Disqualified Capital Stock" and (2) Liens securing
Senior Debt incurred as permitted pursuant to the definition of Permitted
Indebtedness.
LIMITATION ON SALE OF ASSETS AND SUBSIDIARY STOCK
Unless otherwise provided in the applicable Indenture or applicable
Prospectus Supplement, the covenants relating to limitations on sales of assets
and Subsidiary stock will be as set forth below. The Indentures will provide
that Jacor, JCC and their Subsidiaries will not, and will not permit any of
their Subsidiaries to, in one or a series of related transactions, sell,
transfer, or otherwise dispose of, any of its property, business or assets,
including by merger or consolidation (in the case of a Guarantor or a Subsidiary
of Jacor or JCC), and including any sale or other transfer or issuance of any
Equity Interests of any direct or indirect Subsidiary of Jacor or JCC, whether
by Jacor or JCC or a direct or indirect Subsidiary thereof (an
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"Asset Sale"), unless (1) within 450 days after the date of such Asset Sale, the
Net Cash Proceeds therefrom (the "Asset Sale Offer Amount") are (a) applied to
the optional redemption of the Convertible Debt Securities and/or JCC Debt
Securities in accordance with the terms of the Indentures or to the repurchase
of the Convertible Debt Securities and/or JCC Debt Securities pursuant to an
irrevocable, unconditional cash offer (the "Asset Sale Offer") to repurchase
Convertible Debt Securities and/or JCC Debt Securities at a purchase price (the
"Asset Sale Offer Price") of 100% of principal amount, plus accrued interest to
the date of payment, (b) invested in assets and property (other than notes,
bonds, obligations and securities) which in the good faith reasonable judgment
of the Board of Jacor or JCC, as applicable, will immediately constitute or be a
part of a Related Business of Jacor or JCC, as applicable, or a Subsidiary (if
it continues to be a Subsidiary) immediately following such transaction or (c)
used to permanently retire or reduce Senior Debt or Indebtedness permitted
pursuant to paragraphs (d), (e) or (f) under the definition of Permitted
Indebtedness (including that in the case of a revolver or similar arrangement
that makes credit available, such commitment is so permanently reduced by such
amount), (2) with respect to any Asset Sale or related series of Asset Sales
involving securities, property or assets with an aggregate fair market value in
excess of $2.5 million, at least 75% of the consideration for such Asset Sale or
series of related Asset Sales (excluding the amount of (A) any Indebtedness
(other than the Convertible Debt Securities and/or JCC Debt Securities) that is
required to be repaid or assumed (and is either repaid or assumed by the
transferee of the related assets) by virtue of such Asset Sale and which is
secured by a Lien on the property or asset sold and (B) property received by
Jacor or JCC, as applicable, or any such Subsidiary from the transferee that
within 90 days of such Asset Sale is converted into cash or Cash Equivalents)
consists of cash or Cash Equivalents (other than in the case of an Asset Swap or
where Jacor or JCC, as applicable, is exchanging all or substantially all the
assets of one or more Related Businesses operated by Jacor or JCC, as
applicable, or its Subsidiaries (including by way of the transfer of capital
stock) for all or substantially all the assets (including by way of the transfer
of capital stock) constituting one or more Related Businesses operated by
another person, in which event the foregoing requirement with respect to the
receipt of cash or Cash Equivalents shall not apply), (3) no Default or Event of
Default shall have occurred and be continuing at the time of, or would occur
after giving effect, on a PRO FORMA basis, to, such Asset Sale, and (4) the
Board of Jacor or JCC, as applicable, determines in good faith that Jacor or
JCC, as applicable, or such Subsidiary, as applicable, receives fair market
value for such Asset Sale.
The Indentures will provide that an Asset Sale Offer may be deferred until
the accumulated Net Cash Proceeds from Asset Sales not applied to the uses set
forth in (1)(b) or (1)(c) above (the "Excess Proceeds") exceeds $5.0 million and
that each Asset Sale Offer shall remain open for 20 Business Days following its
commencement and no longer (the "Asset Sale Offer Period"). Upon expiration of
the Asset Sale Offer Period, Jacor or JCC, as applicable, shall apply the Asset
Sale Offer Amount plus an amount equal to accrued interest to the purchase of
all Convertible Debt Securities and/or JCC Debt Securities properly tendered (on
a PRO RATA basis if the Asset Sale Offer Amount is insufficient to purchase all
Convertible Debt Securities and/or JCC Debt Securities so tendered) at the Asset
Sale Offer Price (together with accrued interest). To the extent that the
aggregate amount of Convertible Debt Securities and/or JCC Debt Securities
tendered pursuant to an Asset Sale Offer is less than the Asset Sale Offer
Amount, Jacor or JCC, as applicable, may use any remaining Net Cash Proceeds for
general corporate purposes as otherwise permitted by the Indentures and
following each Asset Sale Offer the Excess Proceeds amount shall be reset to
zero. If required by applicable law, the Asset Sale Offer Period may be extended
as so required, however, if so extended it shall nevertheless constitute an
Event of Default if within 60 Business Days of its commencement the Asset Sale
Offer is not consummated or the properly tendered Convertible Debt Securities
and/or JCC Debt Securities are not purchased pursuant thereto.
Notwithstanding the foregoing provisions of the first paragraph of this
covenant the Indentures will provide that with respect to an Asset Sale Offer,
Jacor or JCC, as applicable, will not be permitted to commence an Asset Sale
Offer for the Convertible Debt Securities and/or JCC Debt Securities until such
time as an Asset Sale Offer for the 10 1/8% Notes, 9 3/4% Notes and 8 3/4% Notes
in each case if required, has been completed. To the extent that any Excess
Proceeds remain after expiration of an Asset Sale Offer Period for the 10 1/8%
Notes, 9 3/4% Notes and 8 3/4% Notes, Jacor or JCC, as applicable, may use the
remaining
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Net Cash Proceeds to commence an Asset Sale Offer for the Convertible Debt
Securities and/or JCC Debt Securities; PROVIDED, that with respect to the
10 1/8% Notes, 9 3/4% Notes and 8 3/4% Notes this paragraph shall be of no
further force and effect upon the earlier of (w) the maturity of the 10 1/8%
Notes, 9 3/4% Notes or 8 3/4% Notes, as applicable, (x) the date upon which
defeasance of the 10 1/8% Notes, 9 3/4% Notes or 8 3/4% Notes, as applicable,
becomes effective, (y) the date on which there are no longer any 10 1/8% Notes,
9 3/4% Notes or 8 3/4% Notes, as applicable, outstanding under the terms of the
governing indenture and (z) the date on which the Limitation on Sale of Assets
and Subsidiary Stock covenant no longer applies in accordance with the terms of
the indenture governing the 10 1/8% Notes, 9 3/4% Notes or 8 3/4% Notes, as
applicable.
Notwithstanding the foregoing provisions of the first paragraph of this
covenant and without complying with the foregoing provisions:
(i) Jacor or JCC, as applicable, and its Subsidiaries may convey, sell,
transfer, assign or otherwise dispose of assets pursuant to and in
accordance with the limitation on mergers, sales or consolidations
provisions in the Indentures;
(ii) Jacor or JCC, as applicable, and its Subsidiaries may sell or
dispose of inventory or damaged, worn out or other obsolete property in the
ordinary course of business so long as such property is no longer necessary
for the proper conduct of the business of Jacor or JCC, as applicable, or
such Subsidiary, as applicable; and
(iii) any of Jacor's or JCC's, as applicable, Subsidiaries may convey,
sell, transfer, assign or otherwise dispose of assets to, or merge with or
into, Jacor or JCC, as applicable, or any of its wholly owned Subsidiary
Guarantors.
All Net Cash Proceeds from an Event of Loss shall be applied to the
restoration, repair or replacement of the asset so affected or invested, used
for prepayment of Senior Debt, or used to repurchase Convertible Debt Securities
and/or JCC Debt Securities, all within the period and as otherwise provided
above in clauses 1(a), 1(b) or 1(c) of the first paragraph of this covenant.
In addition to the foregoing, Jacor or JCC, as applicable, will not, and
will not permit any of its Subsidiaries to, directly or indirectly make any
Asset Sale of any of the Equity Interests of any Subsidiary except pursuant to
an Asset Sale of all the Equity Interests of such Subsidiary.
Any Asset Sale Offer shall be made in compliance with all applicable laws,
rules, and regulations, including, if applicable, Regulation 14E of the Exchange
Act and the rules and regulations thereunder and all other applicable Federal
and state securities laws.
LIMITATION ON ASSET SWAPS
Unless otherwise provided in the applicable Indenture or applicable
Prospectus Supplement, the Indentures will provide that Jacor, JCC and their
Subsidiaries will not, and will not permit any of their Subsidiaries to, in one
or a series of related transactions, directly or indirectly, engage in any Asset
Swaps, unless: (i) at the time of entering into the agreement to swap assets and
immediately after giving effect to the proposed Asset Swap, no Default or Event
of Default shall have occurred and be continuing or would occur as a consequence
thereof; (ii) Jacor or JCC would, after giving PRO FORMA effect to the proposed
Asset Swap, have been permitted to incur at least $1.00 of additional
Indebtedness pursuant to the Leverage Ratio in the covenant "Limitation on
Incurrence of Additional Indebtedness and Disqualified Capital Stock;" (iii) the
respective fair market values of the assets being purchased and sold by Jacor,
JCC or any of their Subsidiaries (as determined in good faith by the management
of Jacor or JCC or, if such Asset Swap includes consideration in excess of $2.5
million, by the Board of Directors of Jacor or JCC, respectively, as evidenced
by a Board Resolution) are substantially the same at the time of entering into
the agreement to swap assets; and (iv) at the time of the consummation of the
proposed Asset Swap, the percentage of any decline in the fair market value
(determined as aforesaid) of the asset or assets being acquired by Jacor, JCC
and their Subsidiaries shall not be significantly greater than the percentage of
any decline in the fair market value (determined as aforesaid) of the assets
being disposed of by Jacor, JCC or their Subsidiaries, calculated from the time
the agreement to swap assets was entered into.
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LIMITATION ON TRANSACTIONS WITH AFFILIATES
Unless otherwise provided in the applicable Indenture or applicable
Prospectus Supplement, the Indentures will provide that neither Jacor, JCC nor
any of their Subsidiaries will be permitted after the Issue Date to enter into
any contract, agreement, arrangement or transaction with any Affiliate (an
"Affiliate Transaction"), or any series of related Affiliate Transactions (other
than Exempted Affiliate Transactions), (i) unless it is determined that the
terms of such Affiliate Transaction are fair and reasonable to Jacor or JCC, as
applicable, and no less favorable to Jacor or JCC, as applicable, than could
have been obtained in an arm's length transaction with a non-Affiliate and, (ii)
if involving consideration to either party in excess of $5.0 million, unless
such Affiliate Transaction(s) is evidenced by (A) an Officers' Certificate
addressed and delivered to the Trustee certifying that such Affiliate
Transaction(s) has been approved by a majority of the members of the Board of
Directors of Jacor or JCC, as applicable, who are disinterested in such
transaction or, (B) with regard to JCC, in the event there are no members of the
Board of Directors of JCC who are disinterested in such transaction, then so
long as JCC is a wholly owned subsidiary of Jacor, an Officers' Certificate
addressed and delivered to the Trustee certifying that such Affiliate
Transaction(s) have been approved by a majority of the members of the Board of
Directors of Jacor who are disinterested in such transaction and (iii) if
involving consideration to either party in excess of $10.0 million, unless in
addition Jacor or JCC, as applicable, prior to the consummation thereof, obtains
a written favorable opinion as to the fairness of such transaction to Jacor or
JCC, as applicable, from a financial point of view from an independent
investment banking firm of national reputation.
LIMITATION ON MERGER, SALE OR CONSOLIDATION
Unless otherwise provided in the applicable Indenture or applicable
Prospectus Supplement, the covenants on mergers, sales and consolidation will be
as set forth below. The Indentures will provide that Jacor and JCC will not,
directly or indirectly, consolidate with or merge with or into another person or
sell, lease, convey or transfer all or substantially all of their assets
(computed on a consolidated basis), whether in a single transaction or a series
of related transactions, to another person or group of affiliated persons or
adopt a Plan of Liquidation, unless (i) either (a) Jacor or JCC, as applicable,
is the continuing entity or (b) the resulting, surviving or transferee entity
or, in the case of a Plan of Liquidation, the entity which receives the greatest
value from such Plan of Liquidation is a corporation organized under the laws of
the United States, any state thereof or the District of Columbia and expressly
assumes by supplemental indenture all of the obligations of Jacor or JCC, as
applicable, in connection with the JCC Debt Securities, Convertible Debt
Securities and/or the Indentures; (ii) no Default or Event of Default shall
exist or shall occur immediately after giving effect on a PRO FORMA basis to
such transaction; and (iii) immediately after giving effect to such transaction
on a PRO FORMA basis, the consolidated resulting, surviving or transferee entity
or, in the case of a Plan of Liquidation, the entity which receives the greatest
value from such Plan of Liquidation would immediately thereafter be permitted to
incur at least $1.00 of additional Indebtedness pursuant to the Leverage Ratio
set forth in the covenant described under "Limitation on Incurrence of
Additional Indebtedness and Disqualified Capital Stock."
Upon any consolidation or merger or any transfer of all or substantially all
of the assets of Jacor or JCC or consummation of a Plan of Liquidation in
accordance with the foregoing, the successor corporation formed by such
consolidation or into which Jacor or JCC, as applicable, is merged or to which
such transfer is made or, in the case of a Plan of Liquidation, the entity which
receives the greatest value from such Plan of Liquidation shall succeed to, and
be substituted for, and may exercise every right and power of, Jacor or JCC
under the Indentures with the same effect as if such successor corporation had
been named therein as Jacor or JCC, and Jacor or JCC shall be released from the
obligations under the respective Convertible Debt Securities and/or JCC Debt
Securities and the Indentures except with respect to any obligations that arise
from, or are related to, such transaction.
For purposes of the foregoing, the transfer (by lease, assignment, sale or
otherwise) of all or substantially all of the properties and assets of one or
more Subsidiaries, Jacor's or JCC's interest in which constitutes all or
substantially all of the properties and assets of Jacor or JCC, as applicable,
shall be deemed to be the transfer of all or substantially all of the properties
and assets of Jacor or JCC, as applicable.
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LIMITATION ON LINES OF BUSINESS
Unless otherwise provided in the applicable Indenture or applicable
Prospectus Supplement, the Indentures will provide that neither Jacor, JCC nor
any of their Subsidiaries shall directly or indirectly engage to any substantial
extent in any line or lines of business activity other than that which is a
Related Business.
RESTRICTION ON SALE AND ISSUANCE OF SUBSIDIARY STOCK
Unless otherwise provided in the applicable Indenture or applicable
Prospectus Supplement, the Indentures will provide that Jacor, JCC and the
Guarantors will not sell, and will not permit any of their Subsidiaries to issue
or sell, any Equity Interests of any Subsidiary of Jacor or JCC, as applicable,
to any person other than Jacor or JCC, as applicable, or a wholly owned
Subsidiary of Jacor or JCC, as applicable, except for Equity Interests with no
preferences or special rights or privileges and with no redemption or prepayment
provisions.
SUBSIDIARY GUARANTORS
Unless otherwise provided in the applicable Indenture or applicable
Prospectus Supplement, the Indentures will provide that (i) all present
Subsidiaries of Jacor or JCC, if any, and their Subsidiaries, and (ii) all
future Subsidiaries of Jacor or JCC and their Subsidiaries, which are not
prohibited from becoming guarantors by law or by the terms of any Acquired
Indebtedness or any agreement (other than an agreement entered into in
connection with the transaction resulting in such person becoming a Subsidiary
of Jacor, JCC or their Subsidiaries) to which such Subsidiary is a party,
jointly and severally, will guaranty fully and unconditionally all principal,
premium, if any, and interest on the JCC Debt Securities and the Convertible
Debt Securities on a senior subordinated basis; PROVIDED, HOWEVER, that upon any
change in the law, Acquired Indebtedness or any agreement (whether by
expiration, termination or otherwise) which no longer prohibits a Subsidiary of
Jacor or JCC from becoming a Subsidiary Guarantor, such Subsidiary shall
immediately thereafter become a Subsidiary Guarantor; PROVIDED, FURTHER, in the
event that any Subsidiary of Jacor, JCC or their Subsidiaries becomes a
guarantor of any other Indebtedness of Jacor, JCC or any of their Subsidiaries
or any of their Subsidiaries, such Subsidiary shall immediately thereafter
become a Subsidiary Guarantor.
All subsidiaries of Jacor or JCC, as applicable, will be Subsidiary
Guarantors if required by the covenant "Subsidiary Guarantors."
RELEASE OF GUARANTORS
Unless otherwise provided in the applicable Indenture or applicable
Prospectus Supplement, the Indentures will provide that no Guarantor shall
consolidate or merge with or into (whether or not such Guarantor is the
surviving Person) another Person unless (i) subject to the provisions of the
following paragraph and certain other provisions of the Indentures, the Person
formed by or surviving any such consolidation or merger (if other than such
Guarantor) assumes all the obligations of such Guarantor pursuant to a
supplemental indenture in form reasonably satisfactory to the Trustee, pursuant
to which such Person shall unconditionally guarantee, on a senior subordinated
basis, all of such Guarantor's obligations under such Guarantor's guarantee, the
Indentures on the terms set forth in the Indentures; (ii) immediately before and
immediately after giving effect to such transaction on a PRO FORMA basis, no
Default or Event of Default shall have occurred or be continuing; and (iii)
immediately after such transaction, the surviving person holds all permits
required for operation of the business of, and such entity is controlled by a
person or entity (or has retained a person or entity which is) experienced in,
operating broadcast properties, or otherwise holds all Permits to operate its
business.
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Upon the sale or disposition (whether by merger, stock purchase, asset sale
or otherwise) of a Subsidiary Guarantor or all of its assets to an entity which
is not a Subsidiary Guarantor, which transaction is otherwise in compliance with
the Indentures, such Subsidiary Guarantor will be deemed released from its
obligations under its Guarantee of the Convertible Debt Securities and/or JCC
Debt Securities; PROVIDED, HOWEVER, that any such termination shall occur only
to the extent that all obligations of such Subsidiary Guarantor under all of its
guarantees of, and under all of its pledges of assets or other security
interests which secure, any Indebtedness of Jacor or JCC or any other Subsidiary
shall also terminate upon such release, sale or transfer.
LIMITATION ON STATUS AS INVESTMENT COMPANY
Unless otherwise provided in the applicable Indenture or applicable
Prospectus Supplement, the Indentures will prohibit Jacor, JCC and their
Subsidiaries from being required to register as an "investment company" (as that
term is defined in the Investment Company Act of 1940, as amended), or from
otherwise becoming subject to regulation under the Investment Company Act.
REPORTS
The JCC Indenture will provide that for so long as Jacor or any successor
thereto is subject to the reporting requirements of Section 13 or 15(d) of the
Exchange Act and JCC is a wholly owned subsidiary of Jacor, JCC shall deliver to
the Trustee and, to each Holder, Jacor's annual and quarterly reports pursuant
to Section 13 or 15(d) of the Exchange Act, within 15 days after such reports
have been filed with the Commission; PROVIDED, HOWEVER, in the event either (i)
Jacor or a successor as set forth above is no longer subject to the reporting
requirements of Section 13 or 15(d) of the Exchange Act or (ii) JCC is no longer
a wholly owned subsidiary of Jacor or a successor as set forth above, the JCC
Indenture will provide that whether or not JCC is subject to the reporting
requirements of Section 13 or 15(d) of the Exchange Act, JCC shall deliver to
the Trustee and, to each Holder, within 15 days after it is or would have been
(if it were subject to such reporting obligations) required to file such with
the Commission, annual and quarterly financial statements substantially
equivalent to financial statements that would have been included in reports
filed with the Commission, if JCC were subject to the requirements of Section 13
or 15(d) of the Exchange Act, including, with respect to annual information
only, a report thereon by JCC's certified independent public accountants as such
would be required in such reports to the Commission, and, in each case, together
with a management's discussion and analysis of financial condition and results
of operations which would be so required and, to the extent permitted by the
Exchange Act or the Commission (if it were subject to such reporting
obligations), file with the Commission the annual, quarterly and other reports
which it is or would have been required to file with the Commission.
EVENTS OF DEFAULT AND REMEDIES
Unless otherwise provided in the applicable Indenture or applicable
Prospectus Supplement, the events of default and remedies will be as set forth
below. The Indentures will define an Event of Default as (i) the failure by
Jacor or JCC, as applicable, to pay any installment of interest on the
Convertible Debt Securities and/or JCC Debt Securities as and when the same
becomes due and payable and the continuance of any such failure for 30 days,
(ii) the failure by Jacor or JCC, as applicable, to pay all or any part of the
principal, or premium, if any, on such Convertible Debt Securities or JCC Debt
Securities when and as the same becomes due and payable at maturity, redemption,
by acceleration or otherwise, (iii) the failure by Jacor, JCC or any Guarantor,
as applicable, to observe or perform any other covenant or agreement contained
in the JCC Debt Securities, Convertible Debt Securities and/or the Indentures
and, subject to certain exceptions, the continuance of such failure for a period
of 60 days after written notice is given to Jacor or JCC, as applicable, by the
Trustee or to Jacor or JCC, as applicable, and the Trustee by the Holders of at
least 25% in aggregate principal amount of the such Convertible Debt Securities
or JCC Debt Securities outstanding, as the case may be, (iv) certain events of
bankruptcy, insolvency or reorganization in respect of Jacor, JCC or any of
their Significant Subsidiaries, (v) a default in any issue of Indebtedness of
Jacor, JCC or any of their Subsidiaries with an aggregate principal amount in
excess of $5.0 million (a) resulting from the failure to pay principal at final
maturity or (b) as a result of which the maturity of such Indebtedness has been
accelerated prior to its stated maturity, and (vi) final unsatisfied judgments
not covered by insurance aggregating in
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excess of $5.0 million, at any one time rendered against Jacor, JCC or any of
their Subsidiaries and not stayed, bonded or discharged within 60 days. The
Indentures will provide that if a Default occurs and is continuing, the Trustee
must, within 90 days after the occurrence of such Default, give to the Holders
notice of such Default.
If an Event of Default occurs and is continuing (other than an Event of
Default specified in clause (iv) above relating to Jacor, JCC or any Significant
Subsidiary,) then in every such case, unless the principal of all of the
Convertible Debt Securities and JCC Debt Securities shall have already become
due and payable, either the Trustee or the Holders of 25% in aggregate principal
amount of such Convertible Debt Securities or JCC Debt Securities at the time
outstanding, by notice in writing to Jacor or JCC (and to the Trustee if given
by Holders) (an "Acceleration Notice"), may declare all principal, determined as
set forth below, and accrued interest thereon to be due and payable immediately;
PROVIDED, HOWEVER, that if any Senior Debt is outstanding pursuant to Jacor's or
JCC's credit facilities then in effect upon a declaration of such acceleration,
such principal and interest shall be due and payable upon the earlier of (x) the
third Business Day after the sending to Jacor or JCC, as applicable, and the
Representative of such written notice, unless such Event of Default is cured or
waived prior to such date and (y) the date of acceleration of any Senior Debt
under such credit facilities. In the event a declaration of acceleration
resulting from an Event of Default described in clause (v) above has occurred
and is continuing, such declaration of acceleration shall be automatically
annulled if such default is cured or waived or the holders of the Indebtedness
which is the subject of such default have rescinded their declaration of
acceleration in respect of such Indebtedness within five days thereof and the
Trustee has received written notice or such cure, waiver or rescission and no
other Event of Default described in clause (v) above has occurred that has not
been cured or waived within five days of the declaration of such acceleration in
respect of such Indebtedness. If an Event of Default specified in clause (iv),
above, relating to Jacor, JCC or any Significant Subsidiary occurs, all
principal and accrued interest thereon will be immediately due and payable on
all outstanding Convertible Debt Securities and JCC Debt Securities without any
declaration or other act on the part of Trustee or the Holders. The Holders of a
majority in aggregate principal amount of such Convertible Debt Securities or
JCC Debt Securities at the time outstanding, as the case may be, generally are
authorized to rescind such acceleration if all existing Events of Default, other
than the non-payment of the principal of, premium, if any, and interest on such
Convertible Debt Securities or JCC Debt Securities which have become due solely
by such acceleration and except on default with respect to any provision
requiring a supermajority approval to amend, which default may only be waived by
such a supermajority, and have been cured or waived.
Prior to the declaration of acceleration of the maturity of any Convertible
Debt Securities or JCC Debt Securities, the Holders of a majority in aggregate
principal amount of such Convertible Debt Securities or JCC Debt Securities at
the time outstanding, as the case may be, may waive on behalf of all the Holders
any default, except on default with respect to any provision requiring a
supermajority approval to amend, which default may only be waived by such a
supermajority, and except a default in the payment of principal of or interest
on any Debt Security or Convertible Debt Security not yet cured or a default
with respect to any covenant or provision which cannot be modified or amended
without the consent of the Holder of each outstanding Debt Security or
Convertible Debt Security affected. Subject to the provisions of the Indentures
relating to the duties of the Trustee, the Trustee will be under no obligation
to exercise any of its rights or powers under the Indentures at the request,
order or direction of any of the Holders, unless such Holders have offered to
the Trustee reasonable security or indemnity. Subject to all provisions of the
Indentures and applicable law, the Holders of a majority in aggregate principal
amount of the Convertible Debt Securities or JCC Debt Securities at the time
outstanding, as the case may be, will have the right to direct the time, method
and place of conducting any proceeding for any remedy available to the Trustee,
or exercising any trust or power conferred on the Trustee.
LEGAL DEFEASANCE AND COVENANT DEFEASANCE
Unless otherwise provided in the applicable Indenture or applicable
Prospectus Supplement, the procedures for legal defeasance and covenant
defeasance will be as set forth below. The Indentures will provide that Jacor or
JCC may, at its option, elect to have its obligations and the obligations of the
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Guarantors discharged with respect to the outstanding Convertible Debt
Securities and/or JCC Debt Securities ("Legal Defeasance"). Such Legal
Defeasance means that Jacor or JCC, as applicable, shall be deemed to have paid
and discharged the entire indebtedness represented, and the Indentures shall
cease to be of further effect as to all such outstanding Convertible Debt
Securities and JCC Debt Securities and Guarantees, except as to (i) rights of
Holders to receive payments in respect of the principal of, premium, if any, and
interest on such Convertible Debt Securities and JCC Debt Securities when such
payments are due from the trust funds; (ii) Jacor's or JCC's, as applicable,
obligations with respect to such Convertible Debt Securities and JCC Debt
Securities concerning issuing temporary Convertible Debt Securities and JCC Debt
Securities, registration of Convertible Debt Securities and JCC Debt Securities,
mutilated, destroyed, lost or stolen Convertible Debt Securities and JCC Debt
Securities, and the maintenance of an office or agency for payment and money for
security payments held in trust; (iii) the rights, powers, trust, duties, and
immunities of the Trustee, and Jacor's or JCC's, as applicable, obligations in
connection therewith; and (iv) the Legal Defeasance provisions of the
Indentures. In addition, Jacor or JCC may, at its option and at any time, elect
to have the obligations of Jacor or JCC and the Guarantors released with respect
to certain covenants that are described in the Indentures ("Covenant
Defeasance") and thereafter any omission to comply with such obligations shall
not constitute a Default or Event of Default with respect to the Convertible
Debt Securities and JCC Debt Securities. In the event Covenant Defeasance
occurs, certain events (not including non-payment, bankruptcy, receivership,
rehabilitation and insolvency events) described under "Events of Default" will
no longer constitute an Event of Default with respect to the Convertible Debt
Securities and JCC Debt Securities.
In order to exercise either Legal Defeasance or Covenant Defeasance, (i)
Jacor or JCC, as applicable, must irrevocably deposit with the Trustee, in
trust, for the benefit of the Holders of the Convertible Debt Securities and JCC
Debt Securities, U.S. legal tender, U.S. Government Obligations or a combination
thereof, in such amounts as will be sufficient, in the opinion of a nationally
recognized firm of independent public accountants, to pay the principal of,
premium, if any, and interest on such Convertible Debt Securities and JCC Debt
Securities on the stated date for payment thereof or on the redemption date of
such principal or installment of principal of, premium, if any, or interest on
such Convertible Debt Securities and JCC Debt Securities, and the Holders of
Convertible Debt Securities and JCC Debt Securities must have a valid,
perfected, exclusive security interest in such trust; (ii) in the case of the
Legal Defeasance, Jacor or JCC, as applicable, shall have delivered to the
Trustee an opinion of counsel in the United States reasonably acceptable to the
Trustee confirming that (A) Jacor or JCC, as applicable, has received from, or
there has been published by the Internal Revenue Service, a ruling or (B) since
the date of the Indentures, there has been a change in the applicable federal
income tax law, in either case to the effect that, and based thereon such
opinion of counsel shall confirm that, the Holders of such Convertible Debt
Securities and JCC Debt Securities will not recognize income, gain or loss for
federal income tax purposes as a result of such Legal Defeasance and will be
subject to federal income tax on the same amounts, in the same manner and at the
same times as would have been the case if such Legal Defeasance had not
occurred; (iii) in the case of Covenant Defeasance, Jacor or JCC, as applicable,
shall have delivered to the Trustee an opinion of counsel in the United States
reasonably acceptable to such Trustee confirming that the Holders of such
Convertible Debt Securities and JCC Debt Securities will not recognize income,
gain or loss for federal income tax purposes as a result of such Covenant
Defeasance and will be subject to federal income tax on the same amounts, in the
same manner and at the same times as would have been the case if such Covenant
Defeasance had not occurred; (iv) no Default or Event of Default shall have
occurred and be continuing on the date of such deposit or insofar as Events of
Default from bankruptcy or insolvency events are concerned, at any time in the
period ending on the 91st day after the date of deposit; (v) such Legal
Defeasance or Covenant Defeasance shall not result in a breach or violation of,
or constitute a default under the Indenture or any other material agreement or
instrument to which Jacor, JCC or any of their Subsidiaries is a party or by
which Jacor, JCC or any of their Subsidiaries is bound; (vi) Jacor or JCC, as
applicable, shall have delivered to the Trustee an Officers' Certificate stating
that the deposit was not made by Jacor or JCC, as applicable, with the intent of
preferring the holders of such Convertible Debt Securities and JCC Debt
Securities over any other creditors of Jacor or JCC, as applicable, or with the
intent of defeating, hindering,
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delaying or defrauding any other creditors of Jacor or JCC, as applicable, or
others; and (vii) Jacor or JCC, as applicable, shall have delivered to the
Trustee an Officers' Certificate and an opinion of counsel, each stating that
the conditions precedent provided for in, in the case of the officers'
certificate, (i) through (vi) and, in the case of the opinion of counsel,
clauses (i), (with respect to the validity and perfection of the security
interest) (ii), (iii) and (v) of this paragraph have been complied with.
Jacor or JCC, as applicable, shall have delivered to the Trustee any
required consent of the lenders under its then-existing credit facilities to
such defeasance or covenant defeasance, as the case may be.
AMENDMENTS AND SUPPLEMENTS
Unless otherwise provided in the applicable Indenture or applicable
Prospectus Supplement, the Indentures will contain provisions permitting Jacor,
JCC, the Guarantors and the Trustee to enter into a supplemental indenture for
certain limited purposes without the consent of the Holders. With the consent of
the Holders of not less than a majority in aggregate principal amount of the
Convertible Debt Securities and JCC Debt Securities at the time outstanding, as
the case may be, Jacor, JCC, the Guarantors and the Trustee are permitted to
amend or supplement the Indentures or any supplemental indenture or modify the
rights of the Holders; provided that no such modification may without the
consent of holders of at least 75% in aggregate principal amount of such
Convertible Debt Securities and/or JCC Debt Securities at the time outstanding,
provided, that no such modification may, without the consent of each Holder
affected thereby: (i) change the Stated Maturity on any Debt Security or
Convertible Debt Security or reduce the principal amount thereof or the rate (or
extend the time for payment) of interest thereon or any premium payable upon the
redemption thereof, or change the place of payment where, or the coin or
currency in which, any Debt Security or Convertible Debt Security or any premium
or the interest thereon is payable, or impair the right to institute suit for
the enforcement of any such payment on or after the Stated Maturity thereof (or,
in the case of redemption, on or after the redemption date) or alter the
provisions (including the defined terms used therein) regarding the right of
Jacor or JCC, as applicable, to redeem the Convertible Debt Securities and JCC
Debt Securities in a manner adverse to the Holders, or (ii) reduce the
percentage in principal amount of the outstanding Convertible Debt Securities
and/or JCC Debt Securities, the consent of whose Holders is required for any
such amendment, supplemental indenture or waiver provided for in the Indentures,
or (iii) modify any of the waiver provisions, except to increase any required
percentage or to provide that certain other provisions of the Indentures cannot
be modified or waived without the consent of the Holder of each outstanding Debt
Security or Convertible Debt Security affected thereby. The Indentures will
contain a provision that the subordination provisions may not be amended,
modified or waived in a manner adverse to the holders of the Senior Debt without
the consent of the Representative on behalf of the lenders under the Jacor or
JCC credit facilities then in effect.
NO PERSONAL LIABILITY OF STOCKHOLDERS, OFFICERS OR DIRECTORS
The Indentures will provide that no direct or indirect stockholder,
employee, officer or director, as such, past, present or future of Jacor, JCC,
the Guarantors or any successor entity shall have any personal liability in
respect of the obligations of Jacor, JCC or the Guarantors under the Indentures,
the JCC Debt Securities and/or the Convertible Debt Securities by reason of his
or its status as such stockholder, employee, officer or director.
REGARDING THE TRUSTEE
The Indentures will provide that, except during the continuance of an Event
of Default, the Trustee shall perform only such duties as are specifically set
forth in the Indentures. During the continuance of any Event of Default, the
Trustee shall exercise such of the rights and powers vested in it under the
Indenture and use the same degree of care and skill in their exercise as a
prudent man would exercise or use under the circumstances in the conduct of his
own affairs.
The Trustee may acquire and hold Convertible Debt Securities or JCC Debt
Securities and, subject to certain conditions, otherwise deal with Jacor or JCC
as if it were not the Trustee under the Indentures.
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Jacor and JCC may maintain deposit accounts and conduct other banking
transactions with the Trustee in the ordinary course of Jacor's and JCC's
business.
CERTAIN DEFINITIONS
Unless otherwise provided in the applicable Indenture or applicable
Prospectus Supplement, the definitions set forth below will be contained in the
Indentures.
"ACQUIRED INDEBTEDNESS" means Indebtedness or Disqualified Capital Stock of
any person existing at the time such person becomes a Subsidiary of Jacor or
JCC, including by designation, or is merged or consolidated into or with either
of Jacor, JCC or one of their Subsidiaries; provided, that such Indebtedness was
not incurred in anticipation of, or in connection with, and was outstanding
prior to such person becoming a Subsidiary of Jacor or JCC.
"ACQUISITION" means the purchase or other acquisition of any person or
substantially all the assets of any person by any other person, whether by
purchase, merger, consolidation, or other transfer, and whether or not for
consideration.
"AFFILIATE" means any person directly or indirectly controlling or
controlled by or under direct or indirect common control with Jacor or JCC, as
applicable. For purposes of this definition, the term "control" means the power
to direct the management and policies of a person, directly or through one or
more intermediaries, whether through the ownership of voting securities, by
contract, or otherwise, PROVIDED, THAT, a Beneficial Owner of 10% or more of the
total voting power normally entitled to vote in the election of directors,
managers or trustees, as applicable, shall for such purposes be deemed to
constitute control.
"ASSET SWAP" means the execution of a definitive agreement, subject only to
regulatory approval and other customary closing conditions, that Jacor or JCC,
as applicable, in good faith believes will be satisfied, for a substantially
concurrent purchase and sale, or exchange, of Productive Assets between Jacor or
JCC, as applicable, or any of their Subsidiaries and another person or group of
affiliated persons; provided that any amendment to or waiver of any closing
condition which individually or in the aggregate is material to the Asset Swap
shall be deemed to be a new Asset Swap.
"AVERAGE LIFE" means, as of the date of determination, with respect to any
security or instrument, the quotient obtained by dividing (i) the sum of (a) the
product of the number of years from the date of determination to the date or
dates of each successive scheduled principal (or redemption) payment of such
security or instrument and (b) the amount of each such respective principal (or
redemption) payment by (ii) the sum of all such principal (or redemption)
payments.
"BENEFICIAL OWNER" or "BENEFICIAL OWNER" for purposes of the definition of
Change of Control has the meaning attributed to it in Rules 13d-3 and 13d-5
under the Exchange Act (as in effect on the Issue Date), whether or not
applicable, except that a "person" shall be deemed to have "beneficial
ownership" of all shares that any such person has the right to acquire, whether
such right is exercisable immediately or only after the passage of time.
"BOARD RESOLUTION" means, with respect to any person, a duly adopted
resolution of the Board of Directors of such or the executive committee of such
Board of Directors of such person.
"BUSINESS DAY" means each Monday, Tuesday, Wednesday, Thursday and Friday
which is not a day on which banking institutions in New York, New York are
authorized or obligated by law or executive order to close.
"CAPITAL STOCK" means, with respect to any corporation, any and all shares,
interests, rights to purchase (other than convertible or exchangeable
Indebtedness), warrants, options, participations or other equivalents of or
interests (however designated) in stock issued by that corporation.
"CASH EQUIVALENT" means (i) securities issued directly or fully guaranteed
or insured by the United States of America or any agency or instrumentality
thereof (provided that the full faith and credit of the United States of America
is pledged in support thereof) or (ii) time deposits and certificates of deposit
with,
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and commercial paper issued by the parent corporation of, any domestic
commercial bank of recognized standing having capital and surplus in excess of
$500.0 million and commercial paper issued by others rated at least A-2 or the
equivalent thereof by Standard & Poor's Corporation or at least A-2 or the
equivalent thereof by Moody's Investors Service, Inc. and in each case maturing
within one year after the date of acquisition.
"CONSOLIDATED EBITDA" means, with respect to any person, for any period, the
Consolidated Net Income of such person for such period adjusted to add thereto
(to the extent deducted from net revenues in determining Consolidated Net
Income), without duplication, the sum of (i) Consolidated income tax expense,
(ii) Consolidated depreciation and amortization expense, provided that
consolidated depreciation and amortization of a Subsidiary that is a less than
wholly owned Subsidiary shall only be added to the extent of the equity interest
of Jacor or JCC, as applicable, in such Subsidiary, (iii) other noncash charges
(including amortization of goodwill and other intangibles), (iv) Consolidated
Fixed Charges, and less the amount of all cash payments made by such person or
any of its Subsidiaries during such period to the extent such payments relate to
non-cash charges that were added back in determining Consolidated EBITDA for
such period or any prior period.
"CONSOLIDATED FIXED CHARGES" of any person means, for any period, the
aggregate amount (without duplication and determined in each case in accordance
with GAAP) of (a) interest expensed or capitalized, paid, accrued, or scheduled
to be paid or accrued (including, in accordance with the following sentence,
interest attributable to Capitalized Lease Obligations) of such person and its
Consolidated Subsidiaries during such period, including (i) original issue
discount and non-cash interest payments or accruals on any Indebtedness, (ii)
the interest portion of all deferred payment obligations, and (iii) all
commissions, discounts and other fees and charges owed with respect to bankers'
acceptances and letters of credit financings and currency and Interest Swap and
Hedging Obligations, in each case to the extent attributable to such period, and
(b) the amount of dividends accrued or payable (or guaranteed) by such person or
any of its Consolidated Subsidiaries in respect of Jacor Preferred Stock (other
than by Subsidiaries of such person to such person or such person's wholly owned
Subsidiaries). For purposes of this definition, (x) interest on a Capitalized
Lease Obligation shall be deemed to accrue at an interest rate reasonably
determined by Jacor or JCC, as applicable, to be the rate of interest implicit
in such Capitalized Lease Obligation in accordance with GAAP and (y) interest
expense attributable to any Indebtedness represented by the guaranty by such
person or a Subsidiary of such person of an obligation of another person shall
be deemed to be the interest expense attributable to the Indebtedness
guaranteed.
"CONSOLIDATED NET INCOME" means, with respect to any person for any period,
the net income (or loss) of such person and its Consolidated Subsidiaries
(determined on a consolidated basis in accordance with GAAP) for such period,
adjusted to exclude (only to the extent included in computing such net income
(or loss) and without duplication): (a) all gains or losses which are either
noncash or extraordinary (as determined in accordance with GAAP) or are either
unusual or nonrecurring (including any gain from the sale or other disposition
of assets outside the ordinary course of business or from the issuance or sale
of any capital stock), (b) the net income, if positive, of any person, other
than a wholly owned Consolidated Subsidiary, in which such person or any of its
Consolidated Subsidiaries has an interest, except to the extent of the amount of
any dividends or distributions actually paid in cash to such person or a wholly
owned Consolidated Subsidiary of such person during such period, but in any case
not in excess of such person's pro rata share of such person's net income for
such period, (c) the net income or loss of any person acquired in a pooling of
interests transaction for any period prior to the date of such acquisition, (d)
the net income, if positive, of any of such person's Consolidated Subsidiaries
to the extent that the declaration or payment of dividends or similar
distributions is not at the time permitted by operation of the terms of its
charter or bylaws or any other agreement, instrument, judgment, decree, order,
statute, rule or governmental regulation applicable to such Consolidated
Subsidiary.
"CONSOLIDATED SUBSIDIARY" means, for any person, each Subsidiary of such
person (whether now existing or hereafter created or acquired) the financial
statements of which are consolidated for financial statement reporting purposes
with the financial statements of such person in accordance with GAAP.
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"CREDIT FACILITY," as of the date hereof, means the Amended and Restated
Credit Agreement dated as of September 16, 1997, by and among JCC, The Chase
Manhattan Bank, as Administrative Agent, Banque Paribas, as Documentation Agent,
Bank of America National Trust and Savings Association (as successor by merger
to Bank of America, Illinois), as Syndication Agent, and certain financial
institutions which are parties thereto from time to time, including any related
notes, guarantees, collateral documents, instruments, letters of credit,
reimbursement obligations and other agreements executed by Jacor, JCC and/or any
of their Subsidiaries in connection therewith (the "Related Documents"), as such
Credit Agreement and/or Related Documents may be amended, restated,
supplemented, renewed, replaced or otherwise modified from time to time whether
or not with the same agent, trustee, representative lenders or holders, and,
subject to the proviso to the next succeeding sentence, irrespective of any
changes in the terms and conditions thereof. Without limiting the generality of
the foregoing, the term "Credit Facility" shall include agreements in respect of
Interest Swap and Hedging Obligations with lenders party to the Credit Facility
and shall also include any amendment, restatement, renewal, extension,
restructuring, supplement or modification in whole or in part to any Credit
Facility and all refundings, refinancings and replacements in whole or in part
of any Credit Facility, including, without limitation, any agreement or
agreements (i) extending the maturity of any Indebtedness incurred thereunder or
contemplated thereby, (ii) adding or deleting borrowers or guarantors
thereunder, (iii) increasing the amount of Indebtedness incurred thereunder or
available to be borrowed thereunder, PROVIDED that on the date such Indebtedness
is incurred it would be permitted by paragraph (f) under the definition of
Permitted Indebtedness, or (iv) otherwise altering the terms and conditions
thereof.
"DISQUALIFIED CAPITAL STOCK" means (a) except as set forth in (b), with
respect to any person, Equity Interests of such person that, by its terms or by
the terms of any security into which it is convertible, exercisable or
exchangeable, is, or upon the happening of an event or the passage of time would
be, required to be redeemed or repurchased (including at the option of the
holder thereof) by such person or any of its Subsidiaries, in whole or in part,
on or prior to the Stated Maturity of the Convertible Debt Securities and JCC
Debt Securities, and (b) with respect to any Subsidiary of such person
(including with respect to any Subsidiary of Jacor or JCC), any Equity Interests
other than any common equity with no preference, privileges, or redemption or
repayment provisions.
"EQUITY INTEREST" of any person means any shares, interests, participations
or other equivalents (however designated) in such person's equity, and shall in
any event include any Capital Stock issued by, or partnership interests in, such
person.
"EVENT OF LOSS" means, with respect to any property or asset, any (i) loss,
destruction or damage of such property or asset or (ii) any condemnation,
seizure or taking, by exercise of the power of eminent domain or otherwise, of
such property or asset, or confiscation or requisition of the use of such
property or asset.
"EXCLUDED PERSON" means Zell/Chilmark Fund L.P. and all Related Persons of
such person.
"EXEMPTED AFFILIATE TRANSACTION" means (a) customary employee compensation
arrangements approved by a majority of independent (as to such transactions)
members of the Board of Directors of Jacor or JCC, as applicable, (b) dividends
permitted under the terms of the covenant discussed above under "Limitation on
Restricted Payments" above and payable, in form and amount, on a pro rata basis
to all holders of Jacor Common Stock, (c) transactions solely between Jacor or
JCC, as applicable, and any of their wholly owned Subsidiaries or solely among
wholly owned Subsidiaries of Jacor or JCC, as applicable, and (d) payments to
Zell/Chilmark Fund L.P. or its Affiliates for reasonable and customary fees and
expenses for financial advisory and investment banking services provided to
Jacor and JCC, and (e) payments to Jacor made in accordance with any Tax Sharing
Agreement.
"FUTURE SUBSIDIARY GUARANTOR" means future Subsidiaries of Jacor or JCC and
their Subsidiaries, which are not prohibited form becoming guarantors by law or
by the terms of any Acquired Indebtedness or any agreement (other than an
agreement entered into in connection with the transaction resulting in such
person becoming a Subsidiary of Jacor or JCC or their Subsidiaries) to which
such Subsidiary is a party.
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"GAAP" means United States generally accepted accounting principles set
forth in the opinions and pronouncements of the Accounting Principles Board of
the American Institute of Certified Public Accountants and statements and
pronouncements of the Financial Accounting Standards Board or in such other
statements by such other entity as approved by a significant segment of the
accounting profession as in effect on the Issue Date unless otherwise specified.
"INDEBTEDNESS" of any person means, without duplication, (a) all liabilities
and obligations, contingent or otherwise, of such any person, (i) in respect of
borrowed money (whether or not the recourse of the lender is to the whole of the
assets of such person or only to a portion thereof), (ii) evidenced by bonds,
notes, debentures or similar instruments, (iii) representing the balance
deferred and unpaid of the purchase price of any property or services, except
those incurred in the ordinary course of its business that would constitute
ordinarily a trade payable to trade creditors, (iv) evidenced by bankers'
acceptances or similar instruments issued or accepted by banks, (v) relating to
any Capitalized Lease Obligation, or (vi) evidenced by a letter of credit or a
reimbursement obligation of such person with respect to any letter of credit;
(b) all net obligations of such person under Interest Swap and Hedging
Obligations; (c) all liabilities and obligations of others of the kind described
in the preceding clause (a) or (b) that such person has guaranteed or that is
otherwise its legal liability or which are secured by any assets or property of
such person and all obligations to purchase, redeem or acquire any Equity
Interests; and (d) all Disqualified Capital Stock of such person (valued at the
greater of its voluntary or involuntary maximum fixed repurchase price plus
accrued and unpaid dividends). For purposes hereof, the "maximum fixed
repurchase price" of any Disqualified Capital Stock which does not have a fixed
repurchase price shall be calculated in accordance with the terms of such
Disqualified Capital Stock as if such Disqualified Capital Stock were purchased
on any date on which Indebtedness shall be required to be determined pursuant to
the Indenture, and if such price is based upon, or measured by, the Fair Market
Value of such Disqualified Capital Stock, such Fair Market Value to be
determined in good faith by the board of directors of the issuer (or managing
general partner of the issuer) of such Disqualified Capital Stock.
"INTEREST SWAP AND HEDGING OBLIGATION" means any obligation of any person
pursuant to any interest rate swap agreement, interest rate cap agreement,
interest rate collar agreement, interest rate exchange agreement, currency
exchange agreement or any other agreement or arrangement designed to protect
against fluctuations in interest rates or currency values, including, without
limitation, any arrangement whereby, directly or indirectly, such person is
entitled to receive from time to time periodic payments calculated by applying
either a fixed or floating rate of interest on a stated notional amount in
exchange for periodic payments made by such person calculated by applying a
fixed or floating rate of interest on the same notional amount.
"INVESTMENT" by any person in any other person means, without duplication,
(a) the acquisition (whether by purchase, merger, consolidation or otherwise) by
such person (whether for cash, property, services, securities or otherwise) of
capital stock, bonds, notes, debentures, partnership or other ownership
interests or other securities, including any options or warrants, of such other
person or any agreement to make any such acquisition; (b) the making by such
person of any deposit with, or advance, loan or other extension of credit to,
such other person (including the purchase of property from another person
subject to an understanding or agreement, contingent or otherwise, to resell
such property to such other person) or any commitment to make any such advance,
loan or extension (but excluding accounts receivable or deposits arising in the
ordinary course of business); (c) other than guarantees of Indebtedness of JCC
or any Guarantor to the extent permitted by the covenant "Limitation on
Incurrence of Additional Indebtedness and Disqualified Capital Stock" or the
definition of Permitted Indebtedness, the entering into by such person of any
guarantee of, or other credit support or contingent obligation with respect to,
Indebtedness or other liability of such other person (other than the endorsement
of instruments for deposit or collection in the ordinary course of business);
and (d) the making of any capital contribution by such person to such other
person.
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"ISSUE DATE" with respect to each series of Convertible Debt Securities
and/or JCC Debt Securities issued under its respective Indenture, means the date
of first issuance of such series of Convertible Debt Securities and/or JCC Debt
Securities.
"JUNIOR SECURITY" means any Qualified Capital Stock and any Indebtedness of
Jacor, JCC or a Guarantor, as applicable, that is subordinated in right of
payment to Senior Debt at least to the same extent as the Convertible Debt
Securities and JCC Debt Securities or the Guarantees, as applicable, and has no
scheduled installment of principal due, by redemption, sinking fund payment or
otherwise, on or prior to the Stated Maturity of such Convertible Debt
Securities and/or JCC Debt Securities; PROVIDED, that in the case of
subordination in respect of Senior Debt under Jacor's or JCC's then-existing
credit facilities, "Junior Security" shall mean any Qualified Capital Stock and
any Indebtedness of Jacor, JCC or the Guarantors, as applicable, that (i) has a
final maturity date occurring after the final maturity date of, all Senior Debt
outstanding under such credit facilities on the date of issuance of such
Qualified Capital Stock or Indebtedness, (ii) is unsecured, (iii) has an Average
Life longer than the security for which such Qualified Capital Stock or
Indebtedness is being exchanged, and (iv) by their terms or by law are
subordinated to Senior Debt outstanding under such credit facilities on the date
of issuance of such Qualified Capital Stock or Indebtedness at least to the same
extent as such Convertible Debt Securities and/or JCC Debt Securities.
"LEVERAGE RATIO" of any person on any date of determination (the
"Transaction Date") means the ratio, on a PRO FORMA basis, of (a) the sum of the
aggregate outstanding amount of Indebtedness and Disqualified Capital Stock of
such person and its Subsidiaries as of the date of calculation on a consolidated
basis in accordance with GAAP to (b) the aggregate amount of Consolidated EBITDA
of such person attributable to continuing operations and businesses (exclusive
of amounts attributable to operations and businesses permanently discontinued or
disposed of) for the Reference Period; PROVIDED, that for purposes of such
calculation, (i) Acquisitions which occurred during the Reference Period or
subsequent to the Reference Period and on or prior to the Transaction Date shall
be assumed to have occurred on the first day of the Reference Period, (ii)
transactions giving rise to the need to calculate the Leverage Ratio shall be
assumed to have occurred on the first day of the Reference Period, (iii) the
incurrence of any Indebtedness or issuance of any Disqualified Capital Stock
during the Reference Period or subsequent to the Reference Period and on or
prior to the Transaction Date (and the application of the proceeds therefrom to
the extent used to refinance or retire other Indebtedness) shall be assumed to
have occurred on the first day of such Reference Period, and (iv) the
Consolidated Fixed Charges of such person attributable to interest on any
Indebtedness or dividends on any Disqualified Capital Stock bearing a floating
interest (or dividend) rate shall be computed on a PRO FORMA basis as if the
average rate in effect from the beginning of the Reference Period to the
Transaction Date had been the applicable rate for the entire period, unless such
person or any of its Subsidiaries is a party to an Interest Swap or Hedging
Obligation (which shall remain in effect for the 12-month period immediately
following the Transaction Date) that has the effect of fixing the interest rate
on the date of computation, in which case such rate (whether higher or lower)
shall be used.
"LIEN" means any mortgage, charge, pledge, lien (statutory or otherwise),
privilege, security interest, or other encumbrance upon or with respect to any
property of any kind, real or personal, movable or immovable, now owned or
hereafter acquired.
"NET CASH PROCEEDS" means the aggregate amount of cash or Cash Equivalents
received by Jacor and/ or JCC, as applicable, in the case of a sale of Qualified
Capital Stock and by Jacor and/or JCC, as applicable, and their Subsidiaries in
respect of an Asset Sale or an Event of Loss plus, in the case of an issuance of
Qualified Capital Stock of Jacor and/or JCC, as applicable, upon any exercise,
exchange or conversion of securities (including options, warrants, rights and
convertible or exchangeable debt) of Jacor and/or JCC, as applicable, that were
issued for cash on or after the Issue Date, the amount of cash originally
received by Jacor and/or JCC, as applicable, upon the issuance of such
securities (including options, warrants, rights and convertible or exchangeable
debt) less, in each case, the sum of all payments, fees, commissions and (in the
case of Asset Sales, reasonable and customary), expenses (including, without
limitation, the fees and expenses of legal counsel and investment banking fees
and expenses) incurred in connection with such Asset Sale, Event of Loss or sale
of Qualified Capital Stock, and, in the case of an Asset Sale only, less an
amount
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(estimated reasonably and in good faith by Jacor and/or JCC, as applicable, or
the amount actually incurred, if greater) of income, franchise, sales and other
applicable taxes required to be paid by Jacor and/or JCC, as applicable, or any
of their Subsidiaries in connection with such Asset Sale.
"OBLIGATION" means any principal, premium or interest payment, or monetary
penalty, or damages, due by Jacor, JCC or any Guarantor under the terms of the
JCC Debt Securities, Convertible Debt Securities and/or the respective
Indenture.
"PERMITTED INDEBTEDNESS" means any of the following:
(a) Jacor, JCC and their Subsidiaries may incur Indebtedness solely in
respect of bankers acceptances, letters of credit and performance bonds (to the
extent that such incurrence does not result in the incurrence of any obligation
to repay any obligation relating to borrowed money of others), all in the
ordinary course of business in accordance with customary industry practices, in
amounts and for the purposes customary in Jacor's or JCC's industry; provided,
that the aggregate principal amount outstanding of such Indebtedness (including
any Indebtedness issued to refinance, refund or replace such Indebtedness) shall
at no time exceed $5.0 million;
(b) Jacor and JCC may incur Indebtedness to any wholly owned Subsidiary
Guarantor, and any wholly owned Subsidiary Guarantor may incur Indebtedness to
any other wholly owned Subsidiary Guarantor or to Jacor or JCC; PROVIDED, that
in the case of Indebtedness of Jacor or JCC, such obligations shall be unsecured
and subordinated in all respects to Jacor's or JCC's obligations pursuant to the
Convertible Debt Securities and JCC Debt Securities and the date of any event
that causes such Subsidiary Guarantor to no longer be a wholly owned Subsidiary
shall be an Incurrence Date;
(c) Jacor, JCC and the Guarantors may incur Indebtedness evidenced by the
Convertible Debt Securities and JCC Debt Securities and the Guarantees and
represented by the respective Indenture up to the amounts specified therein as
of the date thereof;
(d) Jacor, JCC and the Guarantors, as applicable, may incur Refinancing
Indebtedness with respect to any Indebtedness or Disqualified Capital Stock, as
applicable, which Indebtedness was incurred pursuant to the Leverage Ratio in
the covenant described under "Limitation on Incurrence of Additional
Indebtedness and Disqualified Capital Stock" or clause (c) of this definition;
(e) Jacor, JCC and their Subsidiaries may incur Indebtedness in an aggregate
amount outstanding at any time (including any Indebtedness issued to refinance,
replace, or refund such Indebtedness) of up to $5.0 million;
(f) Jacor, JCC and the Guarantors may incur Indebtedness incurred pursuant
to Jacor's or JCC's then-existing credit facilities up to an aggregate principal
amount outstanding (including any Indebtedness issued to refinance, refund or
replace such Indebtedness in whole or in part) at any time of the maximum
borrowing amount permitted by such credit facilities, plus accrued interest and
additional expense and reimbursement obligations with respect thereto and such
additional amounts as may be deemed to be outstanding in the form of Interest
Swap and Hedging Obligations with such lenders, minus the amount of any such
Indebtedness retired with Net Cash Proceeds from any Asset Sale;
(g) Jacor, JCC and the Subsidiary Guarantors may incur Indebtedness under
Interest Swap and Hedging Obligations that do not increase the Indebtedness of
Jacor other than as a result of fluctuations in interest or foreign currency
exchange rates provided that such Interest Swap and Hedging Obligations are
incurred for the purpose of providing interest rate protection with respect to
Indebtedness permitted under the respective Indenture or to provide currency
exchange protection in connection with revenues generated in currencies other
than U.S. dollars;
(h) Subsidiaries may incur Acquired Indebtedness if Jacor or JCC at the time
of such incurrence could incur such Indebtedness pursuant to the Leverage Ratio
in the covenant "Limitation on Incurrence of Additional Indebtedness and
Disqualified Capital Stock;" and
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(i) Jacor, JCC and their Subsidiaries may incur Indebtedness existing on the
Issue Date.
"PERMITTED INVESTMENT" means:
(a) Investments in any of the Convertible Debt Securities and/or JCC Debt
Securities;
(b) Cash Equivalents;
(c) intercompany loans to the extent permitted under clause (b) of the
definition of "Permitted Indebtedness" and intercompany security agreements
relating thereto;
(d) loans, advances or investments in existence on the Issue Date;
(e) Investments in a person substantially all of whose assets are of a type
generally used in a Related Business (an "Acquired Person") if, as a result of
such Investments, (i) the Acquired Person immediately thereupon is or becomes a
Subsidiary of Jacor, or (ii) the Acquired Person immediately thereupon either
(1) is merged or consolidated with or into Jacor or any of its Subsidiaries and
the surviving person is Jacor or a Subsidiary of Jacor or (2) transfers or
conveys all or substantially all of its assets, or is liquidated into, Jacor,
JCC or any of their Subsidiaries.
(f) Investments in a person with whom Jacor, JCC or any of their
Subsidiaries have entered into, (i) local marketing agreements or time brokerage
agreements pursuant to which Jacor, JCC or any one of their Subsidiaries
programs substantial portions of the broadcast day on such person's radio
broadcast station(s) and sells advertising time during such program segments for
its own account or (ii) joint sales agreements pursuant to which Jacor, JCC or
any of their Subsidiaries sells substantially all of the advertising time for
such person's radio broadcast station(s);
(g) Investments that are in persons which will have the purpose of
furthering the operations of Jacor, JCC and their Subsidiaries not to exceed
$10.0 million; and
(h) demand deposit accounts maintained in the ordinary course of business.
"PERMITTED LIEN" means (a) Liens existing on the Issue Date; (b) Liens
imposed by governmental authorities for taxes, assessments or other charges or
levies not yet subject to penalty or which are being contested in good faith and
by appropriate proceedings, if adequate reserves with respect thereto are
maintained on the books of Jacor or JCC in accordance with GAAP as of the date
of determination; (c) statutory liens of carriers, warehousemen, mechanics,
materialmen, landlords, repairmen or other like Liens arising by operation of
law in the ordinary course of business provided that (i) the underlying
obligations are not overdue for a period of more than 60 days, or (ii) such
Liens are being contested in good faith and by appropriate proceedings and
adequate reserves with respect thereto are maintained on the books of Jacor or
JCC in accordance with GAAP as of the date of determination; (d) Liens securing
the performance of bids, trade contracts (other than borrowed money), leases,
statutory obligations, surety and appeal bonds, performance bonds and other
obligations of a like nature incurred in the ordinary course of business and
deposits made in the ordinary course of business to secure obligations of public
utilities; (e) easements, rights-of-way, zoning, building restrictions,
reservations, encroachments, exceptions, covenants, similar restrictions and
other similar encumbrances or title defects which, singly or in the aggregate,
do not in any case materially detract from the value of the property, subject
thereto (as such property is used by Jacor, JCC or any of their Subsidiaries) or
interfere with the ordinary conduct of the business of Jacor, JCC or any of
their Subsidiaries; (f) Liens arising by operation of law in connection with
judgments, PROVIDED, that the execution or other enforcement of such Liens is
effectively stayed and that the claims secured thereby are being contested in
good faith by appropriate proceedings; (g) pledges or deposits made in the
ordinary course of business in connection with workers' compensation,
unemployment insurance and other types of social security legislation; (h) Liens
securing Indebtedness of a person existing at the time such person becomes a
Subsidiary or is merged with or into Jacor, JCC or a Subsidiary or Liens
securing Indebtedness incurred in connection with an Acquisition, PROVIDED that
such Liens were in existence prior to the date of such acquisition, merger or
consolidation, were not incurred in anticipation thereof, and do not extend to
any other assets; (i) leases or subleases granted to other persons in the
ordinary course of business
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not materially interfering with the conduct of the business of Jacor, JCC or any
of their Subsidiaries or materially detracting from the value of the relative
assets of Jacor, JCC or any of their Subsidiaries; (j) Liens arising from
precautionary Uniform Commercial Code financing statement filings regarding
operating leases entered into by Jacor, JCC or any of their Subsidiaries in the
ordinary course of business; and (k) Liens securing Refinancing Indebtedness
incurred to refinance any Indebtedness that was previously so secured in a
manner no more adverse to the Holders of the Convertible Debt Securities and JCC
Debt Securities than the terms of the Liens securing such refinanced
Indebtedness provided that the Indebtedness secured is not increased and the
lien is not extended to any additional assets or property, (l) Liens in favor of
the lenders pursuant to Jacor's or JCC's then-existing credit facilities and (m)
Liens on property of a Subsidiary of Jacor or JCC provided that such Liens
secure only obligations owing by such Subsidiary to Jacor or JCC or another
Subsidiary of Jacor or JCC.
"PRODUCTIVE ASSETS" means assets of a kind used or usable by Jacor, JCC and
their Subsidiaries in a Related Business.
"PUBLIC OFFERING" means a firm commitment underwritten primary offering of
Capital Stock of Jacor or JCC.
"QUALIFIED CAPITAL STOCK" means any Capital Stock of Jacor or JCC that is
not Disqualified Capital Stock.
"QUALIFIED EXCHANGE" means any legal defeasance, redemption, retirement,
repurchase or other acquisition of Capital Stock or Indebtedness of Jacor or JCC
issued on or after the Issue Date with the Net Cash Proceeds received by Jacor
or JCC from the substantially concurrent sale of Qualified Capital Stock or any
exchange of Qualified Capital Stock for any Capital Stock or Indebtedness issued
on or after the Issue Date.
"REFERENCE PERIOD" with regard to any person means the four full fiscal
quarters (or such lesser period during which such person has been in existence)
ended immediately preceding any date upon which any determination is to be made
pursuant to the terms of the JCC Debt Securities, Convertible Debt Securities
and/or the respective Indenture.
"REFINANCING INDEBTEDNESS" means Indebtedness or Disqualified Capital Stock
(a) issued in exchange for, or the proceeds from the issuance and sale of which
are used substantially concurrently to repay, redeem, defease, refund,
refinance, discharge or otherwise retire for value, in whole or in part, or (b)
constituting an amendment, modification or supplement to, or a deferral or
renewal of ((a) and (b) above are, collectively, a "Refinancing"), any
Indebtedness or Disqualified Capital Stock in a principal amount or, in the case
of Disqualified Capital Stock, liquidation preference, not to exceed (after
deduction of reasonable and customary fees and expenses incurred in connection
with the Refinancing) the lesser of (i) the principal amount or, in the case of
Disqualified Capital Stock, liquidation preference, of the Indebtedness or
Disqualified Capital Stock so Refinanced and (ii) if such Indebtedness being
Refinanced was issued with an original issue discount, the accreted value
thereof (as determined in accordance with GAAP) at the time of such Refinancing;
provided, that (A) such Refinancing Indebtedness of any Subsidiary of Jacor or
JCC shall only be used to Refinance outstanding Indebtedness or Disqualified
Capital Stock of such Subsidiary, (B) such Refinancing Indebtedness shall (x)
not have an Average Life shorter than the Indebtedness or Disqualified Capital
Stock to be so refinanced at the time of such Refinancing and (y) in all
respects, be no less subordinated or junior, if applicable, to the rights of
Holders of the Convertible Debt Securities and JCC Debt Securities than was the
Indebtedness or Disqualified Capital Stock to be refinanced and (C) such
Refinancing Indebtedness shall have no installment of principal (or redemption
payment) scheduled to come due earlier than the scheduled maturity of any
installment of principal of the Indebtedness or Disqualified Capital Stock to be
so refinanced which was scheduled to come due prior to the Stated Maturity.
"RELATED BUSINESS" means the business conducted (or proposed to be
conducted) by Jacor, JCC and their Subsidiaries as of the Issue Date and any and
all businesses that in the good faith judgment of the Board of Directors of
Jacor or JCC, as applicable, are materially related businesses.
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"RELATED PERSON" means any person who controls, is controlled by or is under
common control with an Excluded Person; PROVIDED that for purposes of this
definition "control" means the beneficial ownership of more than 50% of the
total voting power of a person normally entitled to vote in the election of
directors, managers or trustees, as applicable of a person.
"RESTRICTED INVESTMENT" means, in one or a series of related transactions,
any Investment, other than investments in Permitted Investments; PROVIDED,
HOWEVER, that a merger of another person with or into Jacor, JCC or a Subsidiary
Guarantor shall not be deemed to be a Restricted Investment so long as the
surviving entity is Jacor, JCC or a direct wholly owned Subsidiary Guarantor.
"RESTRICTED PAYMENT" means, with respect to any person, (a) the declaration
or payment of any dividend or other distribution in respect of Equity Interests
of such person or any parent or Subsidiary of such person, (b) any payment on
account of the purchase, redemption or other acquisition or retirement for value
of Equity Interests of such person or any Subsidiary or parent of such person,
(c) other than with the proceeds from the substantially concurrent sale of, or
in exchange for, Refinancing Indebtedness any purchase, redemption, or other
acquisition or retirement for value of, any payment in respect of any amendment
of the terms of or any defeasance of, any Subordinated Indebtedness, directly or
indirectly, by such person or a parent or Subsidiary of such person prior to the
scheduled maturity, any scheduled repayment of principal, or scheduled sinking
fund payment, as the case may be, of such Indebtedness and (d) any Restricted
Investment by such person; PROVIDED, HOWEVER, that the term "Restricted Payment"
does not include (i) any dividend, distribution or other payment on or with
respect to Capital Stock of an issuer to the extent payable solely in shares of
Qualified Capital Stock of such issuer; (ii) any dividend, distribution or other
payment to Jacor or JCC, or to any of their wholly owned Subsidiary Guarantors,
by any of the Subsidiaries of Jacor or JCC; or (iii) loans or advances to any
Subsidiary Guarantor the proceeds of which are used by such Subsidiary Guarantor
in a Related Business activity of such Subsidiary Guarantor.
"SENIOR DEBT" of Jacor, JCC or any Guarantor means Indebtedness (including
any monetary obligation in respect of Jacor's or JCC's then-existing credit
facilities, and interest, whether or not such interest is allowed or allowable,
accruing on Indebtedness incurred pursuant to such credit facilities at the
contracted-for rate after the commencement of any proceeding under any
bankruptcy, insolvency or similar law) of Jacor, JCC or such Guarantor arising
under such credit facilities or that, by the terms of the instrument creating or
evidencing such Indebtedness, is expressly designated Senior Debt and made
senior in right of payment to the Convertible Debt Securities and JCC Debt
Securities or the applicable Guarantee; provided, that in no event shall Senior
Debt include (a) Indebtedness to any Subsidiary of Jacor or JCC or any officer,
director or employee of Jacor or JCC or any Subsidiary of Jacor or JCC, (b)
Indebtedness incurred in violation of the terms of the respective Indenture, (c)
Indebtedness to trade creditors, (d) Disqualified Capital Stock and (e) any
liability for taxes owed or owing by Jacor, JCC or such Guarantor.
"SIGNIFICANT SUBSIDIARY" shall have the meaning provided under Regulation
S-X of the Securities Act, as in effect on the Issue Date.
"STATED MATURITY," when used with respect to each series of Convertible Debt
Securities and/or JCC Debt Securities issued under the respective Indenture or
any installment of principal thereof or premium thereon or interest thereon,
means the date specified in such series of Convertible Debt Securities and/or
JCC Debt Securities or a coupon, if any, representing such installment of
interest, as the date on which the principal of such series of Convertible Debt
Securities and/or JCC Debt Securities or such installment of principal, premium,
or interest is due and payable.
"SUBORDINATED INDEBTEDNESS" means Indebtedness of Jacor, JCC or a Guarantor
that is subordinated in right of payment to the Convertible Debt Securities and
JCC Debt Securities or such Guarantee, as applicable, in any respect or has a
stated maturity on or after the Stated Maturity.
"SUBSIDIARY," with respect to any person, means (i) a corporation a majority
of whose Capital Stock with voting power, under ordinary circumstances, to elect
directors is at the time, directly or indirectly, owned by such person, by such
person and one or more Subsidiaries of such person or by one or more
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Subsidiaries of such person, (ii) any other person (other than a corporation) in
which such person, one or more Subsidiaries of such person, or such person and
one or more Subsidiaries of such person, directly or indirectly, at the date of
determination thereof has at least majority ownership interest, or (iii) a
partnership in which such person or a Subsidiary of such person is, at the time,
a general partner and in which such person, directly or indirectly, at the date
of determination thereof has at least a majority ownership interest.
"SUBSIDIARY GUARANTORS" means (i) the Present Subsidiary Guarantors
identified in the following sentence and (ii) Future Subsidiary Guarantors that
become Subsidiary Guarantors pursuant to the terms of the Indentures, but
excluding any Persons whose guarantees have been released pursuant to the terms
of the Indentures. The "PRESENT SUBSIDIARY GUARANTORS" means Broadcast Finance,
Inc; Cine Films, Inc.; Cine Guarantors, Inc.; Cine Guarantors II, Inc.; Cine
Guarantors II, Ltd.; Cine Mobile Systems Int'l. N.V.; Cine Movil S.A. de C.V.;
Citicasters Co.; F.M.I. Pennsylvania, Inc.; GACC-N26LB, Inc.; GACC-340, Inc.;
Georgia Network Equipment, Inc.; Great American Merchandising Group, Inc.; Great
American Television Productions, Inc.; Inmobiliaria Radial, S.A. de C.V.; Jacor
Broadcasting Corporation; Jacor Broadcasting of Atlanta, Inc.; Jacor
Broadcasting of Charleston, Inc.; Jacor Broadcasting of Colorado, Inc.; Jacor
Broadcasting of Denver, Inc.; Jacor Broadcasting of Florida, Inc.; Jacor
Broadcasting of Kansas City, Inc.; Jacor Broadcasting of Las Vegas, Inc.; Jacor
Broadcasting of Las Vegas II, Inc.; Jacor Broadcasting of Louisville, Inc.;
Jacor Broadcasting of Louisville II, Inc.; Jacor Broadcasting of Salt Lake City,
Inc.; Jacor Broadcasting of Salt Lake City II, Inc.; Jacor Broadcasting of San
Diego, Inc.; Jacor Broadcasting of Sarasota, Inc.; Jacor Broadcasting of St.
Louis, Inc.; Jacor Broadcasting of Tampa Bay, Inc.; Jacor Broadcasting of
Toledo, Inc.; Jacor Broadcasting of Youngstown, Inc.; Jacor Cable,Inc.; Jacor
Licensee of Charleston, Inc.; Jacor Licensee of Kansas City, Inc.; Jacor
Licensee of Las Vegas, Inc.; Jacor Licensee of Las Vegas II, Inc.; Jacor
Licensee of Louisville, Inc.; Jacor Licensee of Louisville II, Inc.; Jacor
Licensee of Salt Lake City, Inc.; Jacor Licensee of Salt Lake City II, Inc.;
Jacor/Premiere Holding, Inc.; JBSL, Inc.; Location Productions, Inc.; Location
Productions II, Inc.; MultiVerse Acquisition Corp.; Noble Broadcast Center,
Inc.; Noble Broadcast Group, Inc.; Noble Broadcast Holdings, Inc.; Noble
Broadcast Licenses, Inc.; Noble Broadcast of San Diego, Inc.; Nobro, S.C.; Nova
Marketing Group, Inc.; NSN Network Services, Ltd.; Premiere Radio Networks,
Inc.; Radio-Active Media, Inc.; Sports Radio Broadcasting, Inc.; Sports Radio,
Inc.; Taft-TCI Satellite Services, Inc.; The Sy Fischer Company Agency, Inc.;
VTTV Productions; and WHOK, Inc., each a direct or indirect subsidiary of Jacor
and JCC or any successor entity, whether by merger, consolidation, change of
name or otherwise.
"TAX SHARING AGREEMENT" means any agreements between JCC and Jacor pursuant
to which JCC may make payments to Jacor with respect to JCC's Federal, state, or
local income or franchise tax liabilities where JCC is included in a
consolidated, unitary or combined return filed by Jacor; provided, however, that
the payment by JCC under such agreement may not exceed the liability of Jacor
for such taxes if it had filed its income tax returns as a separate company.
DESCRIPTION OF CAPITAL STOCK
Jacor's Certificate of Incorporation authorizes 104,000,000 shares of
capital stock, of which 100,000,000 shares are Jacor Common Stock, 2,000,000
shares are Class A Preferred Stock, $.01 par value and 2,000,000 shares are
Class B Preferred Stock, $.01 par value (together with the Class A Preferred
Stock, the "Preferred Stock"). As of November 5, 1997, 45,564,401 shares of
Jacor Common Stock were issued and outstanding.
JACOR COMMON STOCK
Under Jacor's Certificate of Incorporation and Delaware law, the holders of
Jacor Common Stock have no preemptive rights and the Jacor Common Stock has no
redemption, sinking fund, or conversion privileges, except as set forth below.
The holders of Jacor Common Stock are entitled to one vote for each share held
on any matter submitted to the stockholders and do not have the right to
cumulate their votes in the election of directors. All corporate action
requiring stockholder approval, unless otherwise required by law, Jacor's
Certificate of Incorporation or its Bylaws, must be authorized by a majority of
the votes cast. Approval of only a majority of the outstanding voting shares is
required to effect (i) an amendment to Jacor's
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Certificate of Incorporation, (ii) a merger or consolidation, and (iii) a
disposition of all or substantially all of Jacor's assets. A majority of the
directors on the Jacor Board, as well as a majority of the outstanding voting
shares, have the ability to amend the Jacor Bylaws.
In the event of liquidation, each share of Jacor Common Stock is entitled to
share ratably in the distribution of remaining assets after payment of all
debts, subject to the prior rights in liquidation of any share of Jacor
Preferred Stock issued. Holders of shares of Jacor Common Stock are entitled to
share ratably in such dividends as the Jacor Board of Directors, in its
discretion, may validly declare from funds legally available therefor, subject
to the prior rights of holders of shares of Jacor Preferred Stock as may be
outstanding from time to time. Certain restrictions on the payment of dividends
are imposed under the Credit Facility. See "Risk Factors--Lack of Dividends;
Restrictions on Payments of Dividends."
Jacor's Certificate of Incorporation provides that outstanding shares of
Common Stock held by a Disqualified Holder (as defined below) are subject to
redemption by the Company, by action of the Jacor Board of Directors to the
extent necessary to prevent the loss or secure the reinstatement of any license
or franchise from any governmental agency held by the Company or any of its
subsidiaries, which license or franchise is conditioned upon some or all of the
holders of the Company's stock possessing prescribed qualifications and/or
restrictions. The Certificate of Incorporation prescribes the following terms
and conditions for such redemption: (a) the redemption price of the shares to be
redeemed shall be equal to the lesser of (i) the Fair Market Value (as defined
below) of such shares or (ii) if such stock was purchased by such Disqualified
Holder within one year of the redemption date, such Disqualified Holder's
purchase price for such shares; (b) the redemption price of such shares may be
paid in cash, securities (valued according to a specified method) or any
combination thereof; (c) if less than all the shares held by Disqualified
Holders are to be redeemed, the shares to be redeemed will be selected in such
manner as is determined by the Jacor Board of Directors, which may include
selection first of the most recently purchased shares thereof, selection by lot
or selection in any other manner determined by the Jacor Board of Directors; (d)
at least 30 days written notice of the redemption date must be given to the
record holders of the shares selected to be redeemed (unless waived in writing
by such holder), provided that the redemption date may be the date on which
written notice is given to such record holders if the cash or securities
necessary to effect the redemption shall have been deposited in trust for the
benefit of such record holders and subject to immediate withdrawal by them upon
surrender of the stock certificates for their shares to be redeemed; (e) from
and after the redemption date, any and all rights of whatever nature, which may
be held by the owners of shares called for redemption (including without
limitation any rights to vote or participate in dividends declared on stock of
the same class or series as such shares), shall cease and terminate and they
shall thenceforth be entitled only to receive the cash or securities payable in
respect of such redemption; and (f) such other terms and conditions as the Jacor
Board of Directors may determine.
For purposes of the foregoing provisions of the Certificate of
Incorporation, the following meanings are assigned to certain terms:
"Disqualified Holder" means any holder of shares of capital stock of the Company
whose holding of such stock, either individually or when taken together with the
holding of shares of stock of the Company by any other holders, may result, in
the judgment of the Jacor Board of Directors, in the loss of, or the failure to
secure the reinstatement of, any license or franchise from any governmental
agency held by the Company or any of its subsidiaries to conduct any portion of
the business of the Company or its subsidiaries. "Fair Market Value" of the
Company's stock of any class or series of stock means the average closing price
for such a share for each of the 45 most recent days on which the shares of
stock of such class or series were traded preceding the day on which notice of
redemption was given, except that if such shares of stock of such class or
series are not traded on any securities exchange or in the over-the-counter
market, "Fair Market Value" is any value determined by the Jacor Board of
Directors in good faith. See "Risk Factors -- FCC Regulation of Broadcasting
Industry."
JACOR CLASS A AND CLASS B PREFERRED STOCK
No shares of Jacor Preferred Stock have been issued. The Class A Preferred
Stock has full voting rights. The Class B Preferred Stock has no voting rights
except as otherwise provided by law or as lawfully fixed by the Jacor Board of
Directors with respect to a particular series.
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Jacor's Certificate of Incorporation authorizes the Jacor Board of Directors
to provide from time to time for the issuance of the shares of Jacor Preferred
Stock and by resolution to establish the terms of each such series, including
(i) the number of shares of the series and the designation thereof, (ii) the
rights in respect of dividends on the shares, (iii) liquidation rights, (iv)
redemption rights, (v) the terms of any purchase, retirement or sinking fund to
be provided for the shares of the series, (vi) terms of conversion, if any,
(vii) restrictions, limitations and conditions, if any, on issuance of
indebtedness of Jacor, (viii) voting rights; and (ix) any other preferences and
other rights and limitations not inconsistent with law, the Certificate of
Incorporation, or any resolution of the Jacor Board of Directors.
The issuance of Jacor Preferred Stock, while providing flexibility in
connection with the possible acquisitions and other corporate purposes, could
among other things adversely affect the rights of holders of Jacor Common Stock,
and, under certain circumstances, make it more difficult for a third party to
gain control of Jacor. In the event that shares of Jacor Preferred Stock are
issued and convertible into shares of Jacor Common Stock the holders of Jacor
Common Stock may experience dilution.
The Prospectus Supplement for any series of Jacor Preferred Stock will state
the terms, if any, on which shares of that series are convertible into shares of
another series of Jacor Preferred Stock or Jacor Common Stock or exchangeable
for another series of Jacor Preferred Stock, Jacor Common Stock or other debt
securities issued hereunder.
JACOR DEPOSITARY SHARES
Jacor may, at its option, elect to offer fractional shares of Class A or
Class B Preferred Stock, rather than full shares of Class A or Class B Preferred
Stock. In the event such option is exercised, Jacor will issue receipts for
Jacor Depositary Shares, each of which will represent a fraction (to be set
forth in the Prospectus Supplement relating to the Class A or Class B Preferred
Stock) of a share of such Jacor Preferred Stock.
The share of Class A or Class B Preferred Stock represented by Jacor
Depositary Shares will be deposited under a Deposit Agreement (the "Deposit
Agreement") between Jacor and a bank or trust company selected by Jacor having
its principal office in the United States and having a combined capital and
surplus of at least $50,000,000 (the "Depositary"). Subject to the terms of the
Deposit Agreement, each owner of a Depositary Share will be entitled, in
proportion to the applicable fraction of a share of Class A or Class B Preferred
Stock represented by such Depositary Share, to all the rights and preferences of
the Class A or Class B Preferred Stock represented thereby (including dividend,
voting, redemption, conversion and liquidation rights).
The above summary description of the Jacor Depositary Shares does not
purport to be complete and is subject to, and qualified in its entirety by
reference to, the description in the applicable Prospectus Supplement and the
detailed provisions of the Deposit Agreement (which will contain the form of
Depositary Receipt). A copy of the form of Deposit Agreement is available upon
request.
CITICASTERS WARRANTS
Jacor issued warrants (the "Citicasters Warrants") pursuant to the terms of
its February 1996 agreement to acquire Citicasters Inc. through a merger (the
"Citicasters Merger") of JCC (formerly JCAC, Inc.) with and into Citicasters
Inc. ("Citicasters"). If all of the Citicasters Warrants are exercised,
4,400,000 shares of Jacor Common Stock would be issued. Each Citicasters Warrant
initially entitles the holder thereof to purchase .2035247 of a share of Jacor
Common Stock at a price of $28.00 per full share (the "Citicasters Price"). The
Citicasters Price and the number of shares of Jacor Common Stock issuable upon
the exercise of each Citicasters Warrant are subject to adjustment in certain
events described below. Each Citicasters
Warrant may be exercised until 5:00 p.m., Eastern Time, on September 18, 2001
(the "Citicasters Expiration Date") in accordance with the terms of the
Citicasters Warrants and Citicasters Warrant Agreement. To the extent that any
Citicasters Warrant remains outstanding after such time, such unexercised
Citicasters Warrant will automatically terminate.
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Citicasters Warrants may be exercised by surrendering to the warrant agent a
signed Citicasters Warrant certificate together with the form of election to
purchase on the reverse thereof indicating the warrant holder's election to
exercise all or a portion of the Citicasters Warrants evidenced by such
certificate. Surrendered certificates must be accompanied by payment of the
aggregate Citicasters Price in respect of the Citicasters Warrant to be
exercised, which payment may be made in cash or by certified or bank cashier's
check drawn on a banking institution chartered by the government of the United
States or any state thereof payable to the order of Jacor. No adjustments as to
cash dividends with respect to the Jacor Common Stock will be made upon any
exercise of Citicasters Warrants.
If fewer than all of the Citicasters Warrants evidenced by any certificate
are exercised, the warrant agent will deliver to the exercising warrant holder a
new Citicasters Warrant certificate representing the unexercised Citicasters
Warrants. Jacor will not be required to issue fractional shares of Jacor Common
Stock upon exercise of any Citicasters Warrant and in lieu thereof will pay in
cash an amount equal to the same fraction of the closing price per share of the
Jacor Common Stock, determined as provided in the Citicasters Warrant Agreement.
Jacor has reserved for issuance a number of shares of Jacor Common Stock
sufficient to provide for the exercise of the rights of purchase represented by
the Citicasters Warrants.
A Citicasters Warrant may not be exercised in whole or in part if in the
reasonable opinion of counsel to Jacor the issuance of Jacor Common Stock upon
such exercise would cause Jacor to be in violation of the Communications Act or
the rules and regulations in effect thereunder.
The number of shares of Jacor Common Stock purchasable upon the exercise of
each Citicasters Warrant and the Citicasters Price are subject to the adjustment
in connection with (i) the issuance of a stock dividend to holders of Jacor
Common Stock, a combination or subdivision or issuance by reclassification of
Jacor Common Stock; (ii) the issuance of rights, options or warrants to all
holders of Jacor Common Stock without charge to such holders to subscribe for or
purchase shares of Jacor Common Stock at a price per share which is lower than
the current market price; and (iii) certain distributions by Jacor to the
holders of Jacor Common Stock of evidences of indebtedness or of its assets
(excluding cash dividends, or distributions out of earnings or out of surplus
legally available for dividends) or of convertible securities, all as set forth
in the Citicasters Warrant Agreement. Notwithstanding the foregoing, no
adjustment in the number of shares of Jacor Common Stock issuable upon the
exercise of Citicasters Warrants will be required until such adjustment would
require an increase or decrease of at least one percent (1%) in the number of
shares of Jacor Common Stock purchasable upon the exercise of each Citicasters
Warrant. In addition, Jacor may at its option reduce the Citicasters Price.
In case of any consolidation or merger of Jacor with or into another
corporation, or any sale, transfer or lease to another corporation of all or
substantially all of the property of Jacor, the Citicasters Warrant Agreement
requires that effective provisions be made so that each holder of an outstanding
Citicasters Warrant will have the right thereafter to exercise the Citicasters
Warrant for the kind and amount of securities and property receivable in
connection with such consolidation, merger, sale, transfer or lease by a holder
of the number of shares of Jacor Common Stock for which such Citicasters Warrant
were exercisable immediately prior thereto.
The Citicasters Warrant Agreement may be amended or supplemented without the
consent of the holders of Citicasters Warrants to cure any ambiguity or to
correct or supplement any defective or inconsistent provision contained therein,
or to make such other necessary or desirable changes which shall not adversely
affect the interests of the warrant holders. Any other amendment to the
Citicasters Warrant Agreement requires the consent of warrant holders
representing not less than 50% of the Citicasters Warrants then outstanding
provided that no change in the number or nature of the securities purchasable
upon the exercise of any Citicasters Warrant, or the Citicasters Price therefor,
or the acceleration of the Citicasters Expiration Date, and no change in the
antidilution provisions which would adversely affect the interest of the holders
of Citicasters Warrants, shall be made without the consent of the holder of such
Citicasters Warrant, other than such changes as are specifically prescribed by
the Citicasters Warrant Agreement or are made in compliance with the applicable
law.
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No holder of Citicasters Warrants is entitled to vote or receive dividends
or be deemed for any purpose the holder of Jacor Common Stock until the
Citicasters Warrants are properly exercised as provided in the Citicasters
Warrant Agreement.
REGENT WARRANTS
Jacor issued warrants (the "Regent Warrants") pursuant to the terms of its
October 1996 merger agreement (the "Regent Merger Agreement") with Regent
Communications, Inc. ("Regent"), whereby Regent merged with and into Jacor. If
all such Regent Warrants are exercised, 500,000 shares of Jacor Common Stock
would be issued. Each Regent Warrant initially entitles the holder thereof to
purchase .11271 (the "Fraction") of a share of Jacor Common Stock at a price of
$40.00 per full share (the "Regent Price"). The Regent Price and the number of
shares of Jacor Common Stock issuable upon the exercise of each Regent Warrant
are subject to adjustment in certain events described below. Each Regent Warrant
may be exercised until 5:00 pm., Eastern Time, on February 27, 2002 (the "Regent
Expiration Date") in accordance with the terms of the Regent Warrants and the
Regent Warrant Agreement; PROVIDED, HOWEVER, if any of the Regent Warrants are
called for redemption by Jacor, at a price per Regent Warrant equal to $12.00
multiplied by the Fraction, as adjusted from time to time under the terms of the
Regent Warrant Agreement, on or after February 27, 2000, the right to so redeem
the Regent Warrants shall expire at the close of business, New York time, on
such redemption date. To the extent that any Regent Warrant remains outstanding
after such time, such unexercised Regent Warrant will automatically terminate.
Regent Warrants may be exercised by surrendering to the warrant agent a
signed Regent Warrant certificate together with the form of election to purchase
on the reverse thereof indicating the warrant holder's election to exercise all
or a portion of the Regent Warrants evidenced by such certificate. Surrendered
certificates must be accompanied by payment of the aggregate Regent Price in
respect of the Regent Warrants to be exercised, which payment may be made in
cash or by certified or bank cashier's check drawn on a banking institution
chartered by the government of the United States or any state thereof payable to
the order of Jacor. No adjustments as to cash dividends with respect to the
Jacor Common Stock will be made upon any exercise of Regent Warrants.
If fewer than all the Regent Warrants evidenced by any certificate are
exercised, the warrant agent will deliver to the exercising warrant holder a new
Regent Warrant certificate representing the unexercised Regent Warrants. Jacor
will not be required to issue fractional shares of Jacor Common Stock upon
exercise of any Regent Warrant and in lieu thereof will pay in cash an amount
equal to the same fraction of the closing price per share of Jacor Common Stock,
determined as provided in the Regent Warrant Agreement. Jacor has reserved for
issuance a number of shares of Jacor Common Stock sufficient to provide for the
exercise of the rights of purchase represented by the Regent Warrants.
A Regent Warrant may not be exercised in whole or in part if in the
reasonable opinion of counsel to Jacor the issuance of Jacor Common Stock upon
such exercise would cause Jacor to be in violation of the Communications Act or
the rules and regulations in effect thereunder.
The number of shares of Jacor Common Stock purchasable upon the exercise of
each Regent Warrant and the Regent Price are subject to adjustment in connection
with (i) the issuance of a stock dividend to holders of Jacor Common Stock, a
combination or subdivision or issuance by reclassification of Jacor Common
Stock; (ii) the issuance of rights, options or warrants to all holders of Jacor
Common Stock without charge to such holders to subscribe for or purchase shares
of Jacor Common Stock at a price per share which is lower than the current
market price; and (iii) certain distributions by Jacor to the holders of Jacor
Common Stock of evidences of indebtedness or of its assets (excluding cash
dividends or distributions pursuant to an announced policy of Jacor payable out
of earnings or out of surplus legally available for dividends) or of convertible
securities, all as set forth in the Regent Warrant Agreement. Notwithstanding
the foregoing, no adjustment in the number of shares of Jacor Common Stock
issuable upon the exercise of the Regent Warrants will be required until such
adjustment would require an increase or decrease of at least
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one percent (1%) in the number of shares of Jacor Common Stock purchasable upon
the exercise of each Regent Warrant. In addition, Jacor may at its option reduce
the Regent Price to any amount deemed appropriate by the Jacor Board of
Directors.
In case of any consolidation or merger of Jacor with or into another
corporation, or any sale, transfer or lease to another corporation of all or
substantially all the property of Jacor, the Regent Warrant Agreement requires
that effective provisions be made so that each holder of an outstanding Regent
Warrant will have the right thereafter to exercise the Regent Warrant for the
kind and amount of securities and property receivable in connection with such
consolidation, merger, sale, transfer or lease by a holder of the number of
shares of Jacor Common Stock for which such Regent Warrant were exercisable
immediately prior thereto.
The Regent Warrant Agreement may be amended or supplemented without the
consent of the holders of Regent Warrants to cure any ambiguity or to correct or
supplement any defective or inconsistent provision contained therein, or to make
such other necessary or desirable changes which shall not adversely affect the
interests of the warrant holders. Any other amendment to the Regent Warrant
Agreement shall require the consent of warrant holders representing not less
than 50% of the Regent Warrants then outstanding provided that no change in the
number or nature of the securities purchasable upon the exercise of any Regent
Warrant, or the Regent Price therefor, or the acceleration of the Regent
Expiration Date, and no change in the antidilution provisions which would
adversely affect the interests of the holders of Regent Warrants, shall be made
without the consent of the holder of such Regent Warrant, other than such
changes as are specifically prescribed by the Regent Warrant Agreement or are
made in compliance with applicable law.
No holder of Regent Warrants is entitled to vote or receive dividends or be
deemed for any purpose the holder of Jacor Common Stock until the Regent
Warrants are properly exercised as provided in the Regent Warrant Agreement.
DELAWARE ANTITAKEOVER STATUTE
Jacor is subject to the "business combination" statute of the Delaware
General Corporation Law (Section 203). In general, such statute prohibits a
publicly held Delaware corporation from engaging in various "business
combination" transactions with any "interested stockholder" for a period of
three years after the date of the transaction in which the person became an
"interested stockholder," unless (i) such transaction is approved by the Board
of Directors prior to the date the "interested stockholder" obtains such status,
(ii) upon consummation of the transaction the interested stockholder
beneficially owned at least 85% of the voting stock of the corporation
outstanding at the time the transaction commenced, excluding for purposes of
determining the number of shares outstanding those shares owned by (a) persons
who are directors and also officers and (b) employee stock plans in which
employee participants do not have the right to determine confidentially whether
shares held subject to the plan will be tendered in a tender or exchange offer
or (iii) the "business combination" is approved by the Board of Directors and
authorized at an annual or special meeting of stockholders by the affirmative
vote of at least 66 2/3% of the outstanding voting stock which is not owned by
the "interested stockholder." A "business combination" includes mergers, asset
sales and other transactions resulting in a financial benefit to an "interested
stockholder." An "interested stockholder" is a person who, together with
affiliates and associates, owns (or within three years, did own) 15% or more of
the corporation's voting stock. The statute could prohibit or delay mergers or
other takeover or change in control attempts with respect to Jacor and,
accordingly, may discourage attempts to acquire Jacor.
REGISTRAR AND TRANSFER AGENT
ChaseMellon Shareholder Services LLC is the registrar and transfer agent for
the Jacor Common Stock and the warrant agent for the Citicasters Warrants and
the Regent Warrants.
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DESCRIPTION OF INDEBTEDNESS
The summaries contained herein of certain of the indebtedness of Jacor and
JCC do not purport to be complete and are qualified in their entirety by
reference to the provisions of the various agreements and indentures related
thereto, which are filed as exhibits to the Registration Statement of which this
Prospectus is a part and to which reference is hereby made.
CREDIT FACILITY
JCC amended and restated its credit facility with a syndicate of banks and
other financial institutions on September 16, 1997 (the "Credit Facility"). The
Credit Facility provides availability of up to $1.15 billion of loans to JCC in
two components: (i) a revolving credit facility of up to $750.0 million with
mandatory semi-annual commitment reductions beginning June 30, 2000 and a final
maturity date of December 31, 2004; and (ii) a term loan of $400.0 million with
scheduled semi-annual reductions beginning December 31, 1999 and a final
maturity date of December 31, 2004. The Credit Facility bears interest at a rate
that fluctuates with an applicable margin based on Jacor's leverage ratio plus a
bank base rate or a Eurodollar base rate, as applicable.
The loans under the Credit Facility are guaranteed by each of Jacor's direct
and indirect subsidiaries other than certain immaterial subsidiaries. JCC's
obligations under the Credit Facility are secured by a first priority lien on
the capital stock of Jacor's and JCC's subsidiaries, an assignment of all
intercompany debt and of certain time brokerage agreements, and by the guarantee
of JCC's parent, Jacor.
The Credit Facility contains covenants and provisions that restrict, among
other things, JCC's ability to: (i) incur additional indebtedness; (ii) incur
liens on its property; (iii) make investments and advances; (iv) enter into
guarantees and other contingent obligations; (v) merge or consolidate with or
acquire another person or engage in other fundamental changes; (vi) engage in
certain sales of assets; (vii) engage in certain transactions with affiliates;
and (viii) make restricted junior payments. The Credit Facility also requires
the satisfaction of certain financial performance criteria (including a
consolidated interest coverage ratio, a debt-to-operating cash flow ratio and a
consolidated operating cash flow available for fixed charges ratio) and the
repayment of loans under the Credit Facility with proceeds of certain sales of
assets and debt issuances.
Events of default under the Credit Facility include various events of
default customary for such type of agreement, such as failure to pay scheduled
payments when due, cross defaults on other indebtedness, change of control
events under other indebtedness (including the LYONs, 10 1/8% Notes, 9 3/4%
Notes and 8 3/4% Notes) and certain events of bankruptcy, insolvency and
reorganization. In addition, the Credit Facility includes events of default for
JCC relating to the cessation of any lien on any of the collateral under the
Credit Facility as a perfected first priority lien and the failure of
Zell/Chilmark designees to represent at least 30% of the Jacor Board of
Directors.
For purposes of the Credit Facility, a change of control includes the
occurrence of any event that triggers a change of control under the LYONs,
10 1/8% Notes, 9 3/4% Notes or 8 3/4% Notes. Such change of control under the
Credit Facility would constitute an event of default which would give the
syndicate the right to accelerate the unpaid principal amounts due under the
Credit Facility. Upon such acceleration, there is no assurance that JCC will
have funds available to fund such repayment or that such funds will be available
on terms acceptable to JCC.
10 1/8% NOTES
In June 1996, JCAC, Inc. (a predecessor to JCC) conducted an offering (the
"10 1/8% Notes Offering") whereby JCAC, Inc. issued and sold 10 1/8% Senior
Subordinated Notes due 2006 (the "10 1/8% Notes") in an aggregate principal
amount of $100.0 million. The 10 1/8% Notes were issued pursuant to an Indenture
between JCAC, Inc. and First Trust of Illinois, National Association, as Trustee
(the "10 1/8% Note Indenture"). The 10 1/8% Notes have interest payment dates of
June 15 and December 15, commencing on December 15, 1996, and mature on June 15,
2006.
41
<PAGE>
The 10 1/8% Note Indenture contains certain covenants which impose certain
limitations and restrictions on the ability of JCC and the Subsidiary Guarantors
to incur additional indebtedness, pay dividends or make other distributions,
make certain loans and investments, apply the proceeds of asset sales (and use
the proceeds thereof), create liens, enter into certain transactions with
affiliates, merge, consolidate or transfer substantially all its assets and make
investments in unrestricted subsidiaries.
If a change of control occurs, JCC will be required to offer to repurchase
all outstanding 10 1/8% Notes at a price equal to 101% of their principal
amount, plus accrued and unpaid interest, if any, to the date of repurchase.
There can be no assurance that JCC will have sufficient funds to purchase all of
the 10 1/8% Notes in the event of a change of control offer or that JCC would be
able to obtain financing for such purpose on favorable terms, if at all. In
addition, the Credit Facility restricts JCC's ability to repurchase the 10 1/8%
Notes, including pursuant to a change of control offer. Furthermore, a change of
control under the 10 1/8% Note Indenture will result in a default under the
Credit Facility.
As used herein, a "Change of Control" will mean (i) any merger or
consolidation of JCC with or into any person or any sale, transfer or other
conveyance, whether direct or indirect, of all or substantially all of any of
the assets of JCC, on a consolidated basis, in one transaction or a series of
related transactions, if, immediately after giving effect to such
transaction(s), any "person" or "group" (as such terms are used for purposes of
Sections 13(d) and 14(d) of the Exchange Act, whether or not applicable) (other
than an Excluded Person) is or becomes the "beneficial owner," directly or
indirectly, of more than 50% of the total voting power in the aggregate normally
entitled to vote in the election of directors, managers, or trustees, as
applicable, of the transferee(s) or surviving entity or entities, (ii) any
"person" or "group" (as such terms are used for purposes of Sections 13(d) and
14(d) of the Exchange Act, whether or not applicable) (other than an Excluded
Person) is or becomes the "beneficial owner," directly or indirectly, of more
than 50% of the total voting power in the aggregate of all classes of Capital
Stock of JCC then outstanding normally entitled to vote in elections of
directors, or (iii) during any period of 12 consecutive months after the Issue
Date, individuals who at the beginning of any such 12-month period constituted
the Board of Directors of JCC (together with any new directors whose election by
such Board or whose nomination for election by the shareholders of JCC was
approved by a vote of a majority of the directors then still in office who were
either directors at the beginning of such period or whose election or nomination
for election was previously so approved) cease for any reason to constitute a
majority of the Board of Directors of JCC then in office.
The events of default under the 10 1/8% Note Indenture include various
events of default customary for such type of agreement, including the failure to
pay principal and interest when due on the 10 1/8% Notes, cross defaults on
other indebtedness for borrowed monies in excess of $5.0 million (which
indebtedness would therefore include the Credit Facility, LYONs, 9 3/4% Notes
and 8 3/4% Notes) and certain events of bankruptcy, insolvency and
reorganization.
LIQUID YIELD OPTION-TM- NOTES DUE 2011
Also in June 1996, Jacor conducted an offering (the "LYONs Offering")
whereby Jacor issued and sold Senior Liquid Yield Option-TM- Notes due June 12,
2011 (the "LYONs due 2011") in the aggregate principal amount at maturity of
$259.9 million. Each LYON due 2011 had an Issue Price of $443.14 and a principal
amount at maturity of $1,000. The LYONs due 2011 were issued pursuant to an
Indenture between Jacor and The Bank of New York, as Trustee (the "1996 LYONs
Indenture").
Each LYON due 2011 is convertible, at the option of the Holder, at any time
on or prior to maturity, unless previously redeemed or otherwise purchased, into
Jacor Common Stock at a conversion rate of 13.412 shares per LYON due 2011. The
conversion rate will not be adjusted for accrued original issue discount, but
will be subject to adjustment upon the occurrence of certain events affecting
the Jacor Common Stock. Upon conversion, the Holder will not receive any cash
payment representing accrued original issue discount; such accrued original
issue discount will be deemed paid by the Jacor Common Stock received by the
Holder on conversion.
42
<PAGE>
The LYONs due 2011 are not redeemable by Jacor prior to June 12, 2001.
Thereafter, the LYONs due 2011 are redeemable for cash at any time at the option
of Jacor, in whole or in part, at redemption prices equal to the issue price
plus accrued original issue discount to the date of redemption.
The LYONs due 2011 will be purchased by Jacor, at the option of the Holder,
on June 12, 2001 and June 12, 2006, for a Purchase Price of $581.25 and $762.39
(representing issue price plus accrued original issue discount to each date),
respectively, representing a 5.50% yield per annum to the Holder on such date,
computed on a semiannual bond equivalent basis. Jacor, at its option, may elect
to pay the purchase price on any such purchase date in cash or Jacor Common
Stock, or any combination thereof. In addition, as of 35 business days after the
occurrence of a change in control of Jacor occurring on or prior to June 12,
2001, each LYON due 2011 will be purchased for cash, by Jacor, at the option of
the Holder, for a change in control purchase price equal to the issue price plus
accrued original issue discount to the change in control purchase date set for
such purchase. The change in control purchase feature of the LYONs due 2011 may
in certain circumstances have an antitakeover effect.
Under the 1996 LYONs Indenture, a "Change in Control" of Jacor is deemed to
have occurred at such time as (i) any person (as the term "person" is used in
Section 13(d)(3) or Section 14(d)(2) of the Exchange Act) other than
Zell/Chilmark, Jacor, any Subsidiary of Jacor, or any employee benefit plan of
either Jacor or any Subsidiary of Jacor, files a Schedule 13D or 14D-1 under the
Exchange Act (or any successor schedule, form or report) disclosing that such
person has become the beneficial owner of 50% or more of the Jacor Common Stock
or other capital stock of Jacor into which such Jacor Common Stock is
reclassified or changed, with certain exceptions, or (ii) there shall be
consummated any consolidation or merger of Jacor (a) in which Jacor is not the
continuing or surviving corporation or (b) pursuant to which the Jacor Common
Stock would be converted into cash, securities or other property, in each case,
other than a consolidation or merger of Jacor in which the holders of Jacor
Common Stock immediately prior to the consolidation or merger own, directly or
indirectly, at least a majority of Jacor Common Stock of the continuing or
surviving corporation immediately after the consolidation or merger. A Change of
Control under the 1996 LYONs Indenture constitutes an event of default under the
Credit Facility. See "-- The Credit Facility."
The 1996 LYONs Indenture includes various events of default customary for
such type of agreement, such as cross defaults on other indebtedness for
borrowed monies in excess of $10.0 million (which indebtedness would therefore
include the Credit Facility, 9 3/4% Notes, 10 1/8% Notes and 8 3/4% Notes) and
certain events of bankruptcy, insolvency and reorganization.
9 3/4% NOTES
In December 1996, JCC conducted an offering (the "9 3/4% Notes Offering")
whereby JCC issued and sold 9 3/4% Senior Subordinated Notes due 2006 (the
"9 3/4% Notes") in an aggregate principal amount of $170.0 million. The 9 3/4%
Notes were issued pursuant to an Indenture between JCC and The Bank of New York,
as Trustee (the "9 3/4% Note Indenture"). The 9 3/4% Notes have interest payment
dates of June 15 and December 15, commencing on June 15, 1997, and mature on
December 15, 2006.
The 9 3/4% Note Indenture contains certain covenants which impose certain
limitations and restrictions on the ability of JCC and the Subsidiary Guarantors
to incur additional indebtedness, pay dividends or make other distributions,
make certain loans and investments, apply the proceeds of asset sales (and use
the proceeds thereof), create liens, enter into certain transactions with
affiliates, merge, consolidate or transfer substantially all its assets and make
investments in unrestricted subsidiaries.
If a change of control occurs, JCC will be required to offer to repurchase
all outstanding 9 3/4% Notes at a price equal to 101% of their principal amount,
plus accrued and unpaid interest, if any, to the date of repurchase. There can
be no assurance that JCC will have sufficient funds to purchase all of the
9 3/4% Notes in the event of a change of control offer or that JCC would be able
to obtain financing for such purpose on favorable terms, if at all. In addition,
the Credit Facility restricts JCC's ability to repurchase the 9 3/4% Notes,
including pursuant to a change of control offer. Furthermore, a change of
control under the 9 3/4% Note Indenture will result in a default under the
Credit Facility.
43
<PAGE>
As used herein, a "Change of Control" will mean (i) any merger or
consolidation of JCC with or into any person or any sale, transfer or other
conveyance, whether direct or indirect, of all or substantially all of any of
the assets of JCC, on a consolidated basis, in one transaction or a series of
related transactions, if, immediately after giving effect to such
transaction(s), any "person" or "group" (as such terms are used for purposes of
Sections 13(d) and 14(d) of the Exchange Act, whether or not applicable) (other
than an Excluded Person) is or becomes the "beneficial owner," directly or
indirectly, of more than 50% of the total voting power in the aggregate normally
entitled to vote in the election of directors, managers, or trustees, as
applicable, of the transferee(s) or surviving entity or entities, (ii) any
"person" or "group" (as such terms are used for purposes of Sections 13(d) and
14(d) of the Exchange Act, whether or not applicable) (other than an Excluded
Person) is or becomes the "beneficial owner," directly or indirectly, of more
than 50% of the total voting power in the aggregate of all classes of Capital
Stock of JCC then outstanding normally entitled to vote in elections of
directors, or (iii) during any period of 12 consecutive months after the Issue
Date, individuals who at the beginning of any such 12-month period constituted
the Board of Directors of JCC (together with any new directors whose election by
such Board or whose nomination for election by the shareholders of JCC was
approved by a vote of a majority of the directors then still in office who were
either directors at the beginning of such period or whose election or nomination
for election was previously so approved) cease for any reason to constitute a
majority of the Board of Directors of JCC then in office.
The events of default under the 9 3/4% Note Indenture include various events
of default customary for such type of agreement, including the failure to pay
principal and interest when due on the 9 3/4% Notes, cross defaults on other
indebtedness for borrowed monies in excess of $5.0 million (which indebtedness
would therefore include the Credit Facility, LYONs due 2011, 10 1/8% Notes and
8 3/4% Notes) and certain events of bankruptcy, insolvency and reorganization.
8 3/4% NOTES
In June 1997, JCC conducted an offering (the "8 3/4% Notes Offering")
whereby JCC issued and sold 8 3/4% Senior Subordinated Notes due 2007 (the
"8 3/4% Notes") in an aggregate principal amount of $150.0 million. The 8 3/4%
Notes were issued pursuant to an Indenture between JCC and The Bank of New York,
as Trustee (the "8 3/4% Note Indenture"). The 8 3/4% Notes have interest payment
dates of June 15 and December 15, commencing on December 15, 1997, and mature on
June 15, 2007.
Upon issuance, the 8 3/4% Notes were subject to certain trading restrictions
but were eligible for trading in the Private Offering, Resales and Trading
through Automated Linkages market. JCC and the Subsidiary Guarantors agreed, for
the benefit of the holders of the 8 3/4% Notes, that they would use their
reasonable best efforts to file a registration statement within 90 days of the
date of issuance of the 8 3/4% Notes relating to a registered exchange offer of
the 8 3/4% Notes for new 8 3/4% Notes with substantially identical terms except
that the new 8 3/4% Notes will not contain terms with respect to transfer
restrictions. JCC and the Subsidiary Guarantors are expected to commence the
exchange offer on or about December 1, 1997.
The 8 3/4% Note Indenture contains certain covenants which impose certain
limitations and restrictions on the ability of JCC and the Subsidiary Guarantors
to incur additional indebtedness, pay dividends or make other distributions,
make certain loans and investments, apply the proceeds of asset sales (and use
the proceeds thereof), create liens, enter into certain transactions with
affiliates, merge, consolidate or transfer substantially all its assets and make
investments in unrestricted subsidiaries.
If a change of control occurs, JCC will be required to offer to repurchase
all outstanding 8 3/4% Notes at a price equal to 101% of their principal amount,
plus accrued and unpaid interest, if any, to the date of repurchase. There can
be no assurance that JCC will have sufficient funds to purchase all of the
8 3/4% Notes in the event of a change of control offer or that JCC would be able
to obtain financing for such purpose on favorable terms, if at all. In addition,
the Credit Facility restricts JCC's ability to repurchase the 8 3/4% Notes,
including pursuant to a change of control offer. Furthermore, a change of
control under the 8 3/4% Note Indenture will result in a default under the
Credit Facility.
As used herein, a "Change of Control" will mean (i) any merger or
consolidation of JCC with or into any person or any sale, transfer or other
conveyance, whether direct or indirect, of all or substantially all or
44
<PAGE>
any of the assets of JCC, on a consolidated basis, in one transaction or a
series of related transactions, if, immediately after giving effect to such
transaction(s), any "person" or "group" (as such terms are used for purposes of
Sections 13(d) and 14(d) of the Exchange Act, whether or not applicable) (other
than an Excluded Person) is or becomes the "beneficial owner," directly or
indirectly, of more than 50% of the total voting power in the aggregate normally
entitled to vote in the election of directors, managers, or trustees, as
applicable, of the transferee(s) or surviving entity or entities, (ii) any
"person" or "group" (as such terms are used for purposes of Sections 13(d) and
14(d) of the Exchange Act, whether or not applicable) (other than an Excluded
Person) is or becomes the "beneficial owner," directly or indirectly, of more
than 50% of the total voting power in the aggregate of all classes of Capital
Stock of JCC then outstanding normally entitled to vote in elections of
directors, or (iii) during any period of 12 consecutive months after the Issue
Date, individuals who at the beginning of any such 12-month period constituted
the Board of Directors of JCC (together with any new directors whose election by
such Board or whose nomination for election by the shareholders of JCC was
approved by a vote of a majority of the directors then still in office who were
either directors at the beginning of such period or whose election or nomination
for election was previously so approved) cease for any reason to constitute a
majority of the Board of Directors of JCC then in office.
The events of default under the 8 3/4% Note Indenture include various events
of default customary for such type of agreement, including the failure to pay
principal and interest when due on the 8 3/4% Notes, cross defaults on other
indebtedness for borrowed monies in excess of $5.0 million (which indebtedness
would therefore include the Credit Facility, LYONs due 2011, 10 1/8% Notes and
9 3/4% Notes) and certain events of bankruptcy, insolvency and reorganization.
45
<PAGE>
PLAN OF DISTRIBUTION
Jacor and/or JCC may sell the Securities to one or more underwriters for
public offering and sale in the United States or eligible foreign jurisdictions
by them or may sell the Securities to investors directly or through agents. Any
such underwriter or agent involved in the offer and sale of Securities will be
named in the applicable Prospectus Supplement. Jacor and JCC have reserved the
right to sell Securities directly to investors on its own behalf in those
jurisdictions where and in such manner as it is authorized to do so.
Underwriters may offer and sell Securities at a fixed price or prices, which
may be changed, at market prices prevailing at the time of sale, at prices
related to such prevailing market prices, or at negotiated prices. Jacor and/or
JCC also may, from time to time, authorize dealers, acting as Jacor's agents, to
offer and sell Securities upon the terms and conditions as are set forth in the
applicable Prospectus Supplement. In connection with the sale of Securities,
underwriters may receive compensation from Jacor and/or JCC in the form of
underwriting discounts or commissions and may also receive commissions from
purchasers of the Securities for whom they may act as agent. Underwriters may
sell Securities to or through dealers, and such dealers may receive compensation
in the form of discounts, concessions or commissions from the underwriters
and/or commissions from the purchasers for whom they may act as agent.
Any underwriting compensation paid by Jacor and/or JCC to underwriters or
agents in connection with the offering of Securities, and any discounts,
concessions or commissions allowed by underwriters to participating dealers,
will be set forth in the applicable Prospectus Supplement. Dealers and agents
participating in the distribution of Securities may be deemed to be
underwriters, and any discounts and commissions received by them and any profit
realized by them on resale of the Securities may be deemed to be underwriting
discounts and commissions. Underwriters, dealers and agents may be entitled,
under agreements entered into with Jacor and/or JCC, to indemnification against
and contribution toward certain civil liabilities, including liabilities under
the Securities Act.
If so indicated in the Prospectus Supplement, Jacor and/or JCC will
authorize dealers acting as Jacor's and/or JCC's agents to solicit offers by
certain institutions to purchase the Securities from Jacor and/or JCC at the
public offering price set forth in the applicable Prospectus Supplement pursuant
to delayed delivery contracts ("Contracts") providing for payment and delivery
on the date or dates stated in such Prospectus Supplement. Each Contract will be
for an amount not less than the amounts stated in the applicable Prospectus
Supplement. Institutions with whom Contracts, when authorized, may be made
include commercial and savings banks, insurance companies, pension funds,
investment companies, educational and charitable institutions, and other
institutions but will in all cases be subject to the approval of Jacor and/or
JCC. Contracts will not be subject to any conditions except (i) the purchase by
the institution of the Securities covered by its Contract shall not at the time
of delivery be prohibited under the laws of any jurisdiction in the United
States to which such institution is subject, and (ii) if the Securities are
being sold to underwriters, Jacor and/or JCC shall have sold to such
underwriters the total amount specified in the applicable Prospectus Supplement.
A commission indicated in the applicable Prospectus Supplement will be paid to
underwriters and agents soliciting purchases of Securities pursuant to Contracts
accepted by Jacor and/or JCC.
Underwriters and dealers may engage in passive market making transactions in
Jacor Common Stock in accordance with Rule 103 of Regulation M promulgated by
the Commission. In general, a passive market maker may not bid for or purchase
Jacor Common Stock at a price that exceeds the highest independent bid. In
addition, the net daily purchases made by any passive market maker generally may
not exceed 30% of its average daily trading volume in Jacor Common Stock during
a specified two month prior period, or 200 shares, whichever is greater. A
passive market maker must identify passive market making bids on the Nasdaq
electronic inter-dealer reporting system. Passive market making may stabilize or
maintain the market price of Jacor Common Stock above independent market levels.
Underwriters and dealers are not required to engage in passive market making and
may end passive market making activities at any time.
46
<PAGE>
VALIDITY OF SECURITIES
Unless otherwise indicated in an applicable Prospectus Supplement relating
to the Securities, the validity of the Securities offered hereby will be passed
upon for Jacor, JCC and the Subsidiary Guarantors by Graydon, Head & Ritchey,
Cincinnati, Ohio.
EXPERTS
The consolidated balance sheets of Jacor Communications, Inc. and
Subsidiaries as of December 31, 1996 and 1995 and the related consolidated
statements of operations, shareholders' equity and cash flows for each of the
three years in the period ended December 31, 1996; the combined balance sheets
of EFM Media Management, Inc., EFM Publishing, Inc. and PAM Media, Inc. (the
"Combined EFM Companies") as of December 31, 1995 and 1996 and related combined
statements of operations, changes in retained earnings and cash flows for the
years ended December 31, 1994, 1995 and 1996; the balance sheets of Archon
Communications, Inc. as of December 31, 1996 and March 31, 1997 and related
statements of income, statements of changes in stockholders' equity and
statements of cash flows for the period July 6, 1995 (Date of Inception) to
December 31, 1995, the year ended December 31, 1996 and the three months ended
March 31, 1997; and the balance sheets of Synergy Broadcast Investment
Enterprises, L.L.C., Worldstar, Inc. and MultiVerse Networks, L.L.C. as of
September 28, 1997 and the combined balance sheets of Shanahan Broadcasting
Inc., Worldstar, Inc. and MultiVerse Networks, L.L.C. as of December 29, 1996
and December 31, 1995 and related statements of income, shareholders' equity and
cash flows for the nine month period ended September 28, 1997, the year ended
December 29, 1996 and the ten months ended December 31, 1995, each incorporated
by reference in this Registration Statement, have been incorporated by reference
herein in reliance on the reports of Coopers & Lybrand L.L.P., independent
accountants, given on the authority of that firm as experts in accounting and
auditing.
The consolidated financial statements of Premiere Radio Networks, Inc. at
December 31, 1996 and 1995, and for each of the three years in the period ended
December 31, 1996, appearing in Jacor Communications, Inc.'s Current Report on
Form 8-K(A) dated April 7, 1997, have been audited by Ernst & Young LLP,
independent auditors, as set forth in their report thereon included therein and
incorporated herein by reference. Such consolidated financial statements are
incorporated herein by reference in reliance upon such report given upon the
authority of such firm as experts in accounting and auditing.
The combined financial statements of Nationwide Communications as of
September 30, 1997 and December 31, 1996, and for the nine month period ended
September 30, 1997 and each of the years in the two year period ended December
31, 1996, appearing in Jacor Communications, Inc.'s Current Report on Form 8-K
dated January 5, 1998, as amended, have been audited by KPMG Peat Marwick LLP,
independent certified public accountants, as set forth in their report thereon
included therein and incorporated herein by reference. Such combined financial
statements are incorporated herein by reference in reliance upon such report
given upon the authority of said firm as experts in accounting and auditing.
The balance sheets of Jacor Broadcasting of Youngstown, Inc. (formerly WN
Broadcasting Corp.) as of December 31, 1996, 1995 and 1994 and the related
statements of operations, retained earnings and cash flows for each of the three
years in the period ended December 31, 1996, appearing in Jacor Communications,
Inc.'s Current Report on Form 8-K dated November 21, 1997, have been audited by
William T. Ogden, Inc., independent certified public accountants as set forth in
their report thereon included therein and incorporated herein by reference. Such
report and financial statements are incorporated herein by reference in reliance
upon such report given upon the authority of such firm as experts in accounting
and auditing.
47
<PAGE>
THE INSIDE BACK COVER PAGE OF THE PRELIMINARY PROSPECTUS SUPPLEMENT CONSISTS
OF JACOR'S LOGO, A BARKING DOG AND THE JACOR SLOGAN "THE NOISE YOU CAN'T
IGNORE."
<PAGE>
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NO DEALER, SALESPERSON OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS
PROSPECTUS SUPPLEMENT OR THE PROSPECTUS, AND, IF GIVEN OR MADE, SUCH INFORMATION
OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY JACOR OR
ANY OF THE UNDERWRITERS. THIS PROSPECTUS SUPPLEMENT AND THE PROSPECTUS DO NOT
CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF AN OFFER TO BUY THE SHARES BY
ANYONE IN ANY JURISDICTION IN WHICH SUCH OFFER OR SOLICITATION IS NOT
AUTHORIZED, OR IN WHICH THE PERSON MAKING THE OFFER OR SOLICITATION IS NOT
QUALIFIED TO DO SO, OR TO ANY PERSON TO WHOM IT IS UNLAWFUL TO MAKE SUCH OFFER
OR SOLICITATION. NEITHER THE DELIVERY OF THIS PROSPECTUS SUPPLEMENT AND THE
PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL CREATE ANY IMPLICATION THAT THE
INFORMATION CONTAINED HEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT TO ITS DATE.
------------------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PROSPECTUS SUPPLEMENT
<S> <C>
PAGE
Prospectus Supplement Summary.................. S-3
Transactions................................... S-10
Broadcasting Related Acquisitions.............. S-15
Use of Proceeds................................ S-17
Capitalization................................. S-18
Common Stock Market Price Information.......... S-19
Dividend Policy................................ S-19
Unaudited Pro Forma Financial Information...... S-20
Business....................................... S-27
Description of Common Stock.................... S-36
Shares Eligible for Future Sale................ S-36
Underwriting................................... S-38
Experts........................................ S-39
Legal Matters.................................. S-40
PROSPECTUS
Available Information.......................... 2
Incorporation of Certain Documents by
Reference..................................... 3
Risk Factors................................... 4
Business....................................... 8
Use of Proceeds................................ 8
Consolidated Ratios of Earnings to Fixed
Charges and Earnings to Combined Fixed Charges
and Preferred Stock Dividends................. 8
Description of Convertible Debt Securities and
JCC Debt Securities........................... 9
Description of Capital Stock................... 35
Description of Indebtedness.................... 41
Plan of Distribution........................... 46
Validity of Securities......................... 47
Experts........................................ 47
</TABLE>
3,800,000 SHARES
[LOGO]
[LOGO]
COMMON STOCK
---------------------
PROSPECTUS SUPPLEMENT
---------------------
DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION
GOLDMAN, SACHS & CO.
MORGAN STANLEY DEAN WITTER
SALOMON SMITH BARNEY
FEBRUARY , 1998
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