The management agreement between Beasley Broadcast and GGB Las Vegas will have an initial term of three years. In addition, GGB Las Vegas has granted Beasley Broadcast an option, with a term concurrent with the management agreement, to purchase KOAS-FM and KVGS-FM for $8.5 million (its cost) plus any losses incurred until such time that Beasley Broadcast elects to exercise the option. The management agreement and other terms of the transaction were first approved by the Audit Committee of the Board of Directors of Beasley Broadcast Group, Inc. and then by the full Board.
Commenting on the agreement, George Beasley, stated, "This transaction allows Beasley Broadcast Group to leverage its existing Las Vegas operating and management capabilities to immediately generate new cash flow through a structure that requires no capital commitment.
"Our existing Las Vegas cluster is benefiting from the focus we placed on identifying the right management leadership, and the 24% increase in revenue generated by our three stations in the market in the 2010 first quarter significantly exceeded the overall market which remains economically challenged. Notwithstanding the current economic and market challenges, we continue to believe that Las Vegas remains one of the most vibrant and promising radio markets in the country and this transaction is intended to benefit all Beasley Broadcast shareholders both near-term and long-term as the local economy rebounds. On an immediate basis, the Company will generate guaranteed management fee revenue while the option to purchase these stations at an attractive price presents potential further upside to Beasley Broadcast Group. Finally, KOAS-FM and KVGS-FM complement our existing Las Vegas station cluster as their current oldies and alternative rock formats, respectively, do not overlap with our existing stations in the market."
Michael J. Bergner of Bergner & Co. acted as an adviser to George Beasley in the transaction.Beasley Broadcast Group currently owns three radio stations in Las Vegas including Coyote Country 102.7 KCYE-FM, Classic Hits 96.3 KKLZ-FM, and NewsTalk 720 KDWN-AM.