Quick SALM update

SALM Communications released fourth quarter 2011 results yesterday and results are as expected. Compared to previous quarter total revenue is up 6.2%, EBITDA has remained constant and 12.5M of debt has been redeemed. The company also has announced that it intents to start paying a quarterly dividend of $0.035 per share, which would translate to a ~5% dividend yield. A good confirmation that the strong free cash flow is indeed there, as that is the main point of the investment thesis.

So far so good, and things are even a bit better than originally estimated. I missed the fact that the company has optional redemption clauses in their 9 5/8% notes that are due in 2016. The company is able to redeem 30M/year at 103% of par, and after December 2013 they can redeem all notes at 104.8% of par. The premium is lowered to 102.4% in 2014, and after that it can be redeemed at par. Given the fact that the company spends a lot of money on interest payments this is very good to read. Full details can be found in this S-4 form that was filed when the notes were issued.

Disclosure

Author is long SALM

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