Salem Communications reported the results for fiscal year 2012 yesterday. At first sight the numbers don’t contain big surprises. Adjusted EBITDA is for Salem Communication a decent measure of the business performance relative to previous years, and with Adjusted EBITDA down 0.4% I think it’s clear that nothing really big happened. It’s a pretty stable business.
What is worth mentioning is that the company has launched a tender offer to buy back the $213.5M in debt that has a 9.63% interest rate. Salem is offering 110.654% of par, and that more or less seems to be a fair price considering the fact that the debt would have been callable December this year at 104.8% of par. Refinancing the debt could increase the free cash flow that the company is able to generate significantly. Last year it generated $21.3 million in free cash flow after paying $23.4 million in interest expense. We’ll have to see at what rate SALM will refinance, but there is a lot of room to improve the FCF yield (currently at 13%) by reducing the interest expense.