Cumulus Reaches Deal With Lenders, Files For Chapter 11

Deal

CUMULUS MEDIA has reached a pre-packaged bankruptcy deal with holders of 69% of its term loan, allowing it to reduce its debt by more than $1 billion; the company has filed voluntary petitions for reorganization under Chapter 11 in U.S. Bankruptcy Court for the Southern District of NEW YORK TODAY (11/29).

The Restructuring Support Agreement with secured lenders holding about 69% of the Company’s term loan was reached TODAY, and CUMULUS said in a release that it "expects all operations, programming and sales to continue as normal throughout this restructuring process. The Company has ample cash on hand, combined with funds generated from ongoing operations, to support the business during the financial restructuring process, and as a result, it does not intend to seek debtor-in-possession (DIP) financing."

In the company's FAQs about the process, stockholders are being told, "Based upon the terms of the agreement that has been reached with our secured lenders, the Company’s current common stock will be canceled and will not receive a recovery in the restructuring. Once effectuated pursuant to an approved plan of reorganization, our existing secured lenders will become our new majority shareholders."  The stock will continue to trade on the OTC market, which it moved to after NASDAQ delisting last week.  The company will also cease paying interest on bonds or interest that will accrue on bonds during the financial restructuring process, according to the posting.

Pres./CEO MARY BERNER said,  “Over the last two years, we have focused on implementing a business turnaround to reverse the Company’s multi-year ratings, revenue and EBITDA declines, create a culture that fosters motivated and engaged employees, and build an operational foundation to support the kind of performance we believe CUMULUS is capable of delivering. As we have demonstrated in many measurable ways – including increased ratings, revenue market share gains, improved employee satisfaction, reduced employee turnover and, over the last several quarters, our return to year-over-year EBITDA and revenue growth – that turnaround has not only been successful but is continuing. However, as we have noted consistently, the debt overhang left by previous years of underperformance remains a significant financial challenge that we must overcome for our operational turnaround to proceed.

“The actions we are taking today to address our balance sheet are a critical step forward for CUMULUS. We will use this restructuring process to relieve the financial constraints on our continued progress, allowing us to focus our resources on investing in our business and people to strengthen our competitiveness and ultimately drive growth. We have ample cash to support our operations and service our advertisers, vendors and affiliates during this period, and we look forward to becoming an even stronger partner to all of them when we complete this important phase of our turnaround strategy.

“We appreciate the tremendous efforts of the CUMULUS team throughout the business turnaround and thank our employees for continuing to be the true force driving our success.”

« see more Net News