Cumulus Media Moves To Protect Stockholders From A Hostile Takeover

Bylaw Change

Is CUMULUS MEDIA prepping to prevent a hostile takeover? Perhaps, say some WALL STREETERS, as CUMULUS filed an 8-K form with the SECURITIES AND EXCHANGE COMMISSION, "Amendments to Articles of Incorporation or Bylaws; Change in Fiscal Year," which seems designed to protect current stockholders. 

CUMULUS wrote, "On JUNE 5, 2017, the Board of Directors (the “Board”) of CUMULUS MEDIA INC. (the “Company”) declared a dividend of one preferred share purchase right (a “Right”), payable on JUNE 15, 2017, for each share of Class A Common Stock, par value $0.01 per share (the “Common Shares”), of the Company outstanding on JUNE 15, 2017 (the “Record Date”) to the stockholders of record on that date. In connection with the distribution of the Rights, the Company entered into a Rights Agreement (the “Rights Agreement”), dated as of JUNE 5, 2017, between the Company and COMPUTERSHARE TRUST COMPANY, N.A., as Rights Agent. Each Right entitles the registered holder to purchase from the Company one one-thousandth of a share of Series R Preferred Stock, par value $0.01 per share (the “Preferred Shares”), of the Company at a price of $2.50 per one one-thousandth of a Preferred Share represented by a Right (the “Purchase Price”), subject to adjustment."

Explaining the filing, CUMULUS added, "The Rights Agreement is designed to protect the Company’s substantial net operating loss carryforwards in order to preserve the Company’s long-term value and maintain the integrity of the Company’s ongoing restructuring process. The Rights Agreement is also intended to promote the fair and equal treatment of all stockholders of the Company and to ensure that the Board remains in the best position to discharge its fiduciary duties. The Rights Agreement is not intended to prevent any action that the Board determines to be in the best interests of the Company and is not being adopted in response to any specific action or proposal."

The details note, "Rights will initially trade with the Company’s Class A common stock and will generally become exercisable only if any person (or any persons acting in concert or as a group) acquires a voting or economic position in 4.99% or more of the Company’s outstanding Class A common stock. If the Rights become exercisable, all holders of Rights (other than any triggering person) will be entitled to acquire shares of Class A common stock at a 50% discount or the Company may exchange each Right held by such holders for one share of Class A common stock. Under the Rights Agreement, any person that currently owns more than 4.99% of the Company’s outstanding Class A common stock may continue to own its shares of Class A common stock but may not acquire a voting or economic interest in any additional shares of Class A common stock without triggering the Rights Agreement."

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