Cumulus Media says it has reached an agreement with a group of lenders to eliminate approximately US$600 million in debt through a prepackaged Chapter 11 restructuring process.
The United States-based radio broadcaster said the agreement, known as a restructuring support agreement, is intended to substantially reduce its debt burden and strengthen its financial position. According to the company, the process is designed to proceed without disrupting operations.
Mary G. Berner, president and CEO of Cumulus Media, said the company had continued to perform strongly in several areas despite broader industry pressures. “While we have outperformed the market on many of our most important metrics, including share gains in both local and digital revenue, the broader macroeconomic and industry-wide pressures we have faced have remained unrelenting,” Berner said. “Against that backdrop, it became clear that Cumulus’s remaining debt burden limited our ability to fully realize the Company’s potential, and this agreement represents a major step forward.”
To implement the agreement, Cumulus Media and certain subsidiaries filed prepackaged Chapter 11 petitions on March 5 in the U.S. Bankruptcy Court for the Southern District of Texas. The company said it has filed a proposed plan of reorganization that reflects the terms of the restructuring support agreement and is subject to the court’s approval. Cumulus said a majority of debtholders have committed to support the plan.
The prepackaged process is intended to address the Company’s debt efficiently with no disruption to our operations, our people and our strategies
Mary G. Berner, president and CEO of Cumulus Media
Operations to continue as normal
According to the company, the plan would cancel 100% of its existing funded debt in exchange for all of the equity in the reorganized company and $50 million in new convertible notes. The proposal also includes amendments to the company’s asset-based revolving credit facility to provide ongoing liquidity.
Berner said the restructuring is intended to strengthen the company’s financial foundation while allowing operations to continue as normal. “The prepackaged process is intended to address the Company’s debt efficiently with no disruption to our operations, our people and our strategies,” Berner said. “On emergence, a stronger financial foundation will better position Cumulus to continue investing in premium content, enriched audience experiences, advertiser performance enhancements and the ongoing growth of our digital marketing offerings.”
Cumulus said it expects the court to consider approval of the restructuring plan within 60 days of the filing date. The company said it anticipates emerging from bankruptcy following court approval and required regulatory clearance from the U.S. Federal Communications Commission.
Additional information about the restructuring is available on the Cumulus Media website here.
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