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"These transactions have been disclosed. They are tax-advantageous to the employee. It simply was a [promissory] note in exchange for the purchase of the shares. It passed muster with our board of directors, compensation committee and auditors."
——Alfred Liggins III, Radio One Chief Exec
RADIO ONE EXECS DENY WRONGDOING IN LOAN SCANDAL
Liggins Insists All Transactions Have Been Documented With FCC
The Washington Post reported that Radio One Inc. admitted it lent money to several executives last year to buy stock, including Chief Executive Alfred C. Liggins III and CFO Scott R. Royster, in an effort to retain employees who were being recruited by other companies.

Company executives addressed the firm's transactions in a conference call with analysts and investors yesterday. Radio One has also come under fire recently by the record industry for trying to find ways to siphon off money spent by the labels on independent promotion.

The issue of loans to executives to buy stock is being scrutinized after it was revealed Adelphia Communications Corp. and WorldCom Inc. lent billions of dollars without disclosing the transactions to shareholders.

Liggins insisted the Radio One loans were documented in filings with the SEC.

"These transactions have been disclosed. They are tax-advantageous to the employee. It simply was a [promissory] note in exchange for the purchase of the shares. It passed muster with our board of directors, compensation committee, auditors and Martha Stewart. Investors were concerned that they wanted to keep our team together."

Liggins received a $21.1 million loan to buy 1.5 million Class D shares for $14.07 a share, according to a SEC filing. As of Dec. 31, the loan's outstanding principal and interest was $22.1 million. The company also made a $7 million loan to Royster to buy 333,334 Class A shares and 666,666 Class D shares, each for $7 a share. The outstanding principal and interest on that loan was about $7.5 million, as of Dec. 31.

Company officials decided to grant the loans a few years ago during the technology boom when other firms tried to lure away Radio One employees or were offering attractive stock options and other incentives, Liggins said. When rumors arose that Royster, the chief financial officer, was receiving other job offers, the company's shares plummeted as low as $5.50.

Liggins was also granted a loan after he agreed not to take stock options for the first year after the company went public in 1999. He negotiated a deal with Radio One's board of directors and compensation committee in 2000 to receive the loan, in addition to his base salary of $500,000 a year and an annual bonus to be determined by the company's board.

The company's shares closed yesterday at $14.59, down 58 cents, or 3.8 percent, on Nasdaq.


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