Cumulus Media has filed for Chapter 11 bankruptcy as part of a restructuring agreement between it and its lenders to reduce the company’s debt sheet by more than $1 billion.
Cumulus expects to continue all of its operations as normal through the bankruptcy period as it claims to have enough cash on hand and incoming revenue to support the company through its restructuring allowing it to not seek debtor-in-possession status. The company specifically states that employees will continue to receive pay and benefits and there won’t be any staff reductions or asset sales as a result of being in Chapter 11.
The prepackaged deal reached today was with the lenders that own nearly 69% of the $1.729 billion in term loans and $610 million in unsecured notes. The restructuring will include the cancellation of its common stock as those holders will see their stock eliminated in the reorganized company as the lenders take ownership stakes.
A FAQ sheet for those affected by the bankruptcy is available at https://www.cumulus.com/restructuring/ as well as a hotline at 1-844-429-1668.
Cumulus Media Inc. (OTCQX: CMLS) (the “Company,” “we,” “us,” or “our”) today announced that it has entered into a Restructuring Support Agreement (the “RSA”) with certain of its secured lenders, among others, holding, in the aggregate, approximately 69% of the Company’s term loan to reduce the Company’s debt by more than $1 billion. To implement the balance sheet restructuring contemplated by the RSA, the Company today filed voluntary petitions for reorganization under Chapter 11 of the Bankruptcy Code in the United States Bankruptcy Court for the Southern District of New York.
Cumulus 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.
Mary Berner, President and Chief Executive Officer of Cumulus Media Inc., 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.”
Ms. Berner continued, “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.”
Ms. Berner concluded, “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.”
Additional information is available at www.cumulus.com/restructuring or by calling Cumulus’s Restructuring Hotline, toll-free in the U.S. at 1-844-429-1668. (For calls originating outside of the U.S., please dial 1-503-597-5529.) In addition, court filings and other documents related to the court-supervised proceedings are available on a separate website administered by Cumulus’s claims agent, Epiq, at http://dm.epiq11.com/cumulus.
Paul, Weiss, Rifkind, Wharton & Garrison LLP is acting as legal counsel, PJT Partners, Inc. is acting as financial advisor to Cumulus, and Alvarez & Marsal is serving as restructuring advisor.