Citadel Broadcasting Corp , the third-largest U.S. radio broadcaster, said on Sunday it filed for the bankruptcy protection, as the radio industry continues to be hard hit by depressed advertising revenue.

Citadel, whose network consists of 165 FM stations and 58 AM stations, filed for Chapter 11 bankruptcy protection under a prenegotiated deal with more than 60 percent of its senior lenders.

The deal would convert its $2.1 billion secured credit facility into a new term loan of $762.5 million, meaning about $1.4 billion of debt would be extinguished, it said.

As part of the deal, senior lenders would receive a share of the new term loan and 90 percent of the new common stock in reorganized Citadel. The company filed for bankruptcy protection in Manhattan.

Farid Suleman, Citadel's chief executive officer, said the company's business will continue as usual and it would seek to emerge from restructuring as quickly as possible.

Citadel, also the owner of ABC Radio Networks, which it took on debt to buy from the Walt Disney Co in 2006, has struggled along with the rest of the industry.

In the latest quarter, it reported a 14 percent drop in revenue to $183 million, and a quarterly loss of 8 cents per share versus a profit of 10 cents per share a year earlier.

Citadel said that to fund its restructuring it has reached an agreement with lenders to access about $36 million of cash on hand. It will also use all cash flow from operations, it said.

The company listed total assets of $1.4 billion and debts of $2.5 billion, according to a bankruptcy court document.

Buyout firm Forstmann Little & Co holds 28.7 percent of the company's shares, according to the document.

(Reporting by Paul Thomasch, additional reporting by Megan Davies, editing by Matthew Lewis and Carol Bishopric)