Townsquare Media has announced an agreement to repurchase 10 million of the 12.5 million shares held by Oaktree Capital Management L.P. for $6.40 per share.
The deal includes one third of Townsquare’s Class A stock, all of its Class B stock and the majority of its outstanding warrants. Townsquare also has an option to purchase the remaining shores held by Oaktree fifteen months after the closing of this deal for the same $6.40 per share price. The price represents a 19% discount from the $7.67 that the stock closed at on Friday.
Townsquare Media was formed in 2010 when Oaktree merged its two radio investments Regent Communications and Gap Broadcasting after Regent emerged from Chapter 11 bankruptcy giving Oaktree a majority stake in the company.
Townsquare Media, Inc. (NYSE: TSQ) (the “Company” or “Townsquare”) announced that it has entered into an agreement to repurchase a minimum of 10 million of the 12.5 million shares of Class A common stock, shares of Class B common stock and warrants held by funds managed by Oaktree Capital Management L.P. (collectively, “Oaktree”), for $6.40 per security, which reflects a 19% discount from the closing price of the Class A common stock on Friday, January 22, 2021. The repurchase was approved by the Board of Directors following the recommendation of a committee of independent and disinterested directors (the “Special Committee”). With this transaction, Oaktree will be selling approximately one third of its Class A common stock, all of its Class B common stock (each share of which is entitled to ten votes per share on each matter submitted to a vote of stockholders) and at least the majority of its warrants. The aggregate purchase price is expected to be at least $64 million, subject to the Company’s ability to elect to purchase additional securities at closing of the repurchase.
The closing of the repurchase is subject to the satisfaction of customary closing conditions, including short form approval by the Federal Communications Commission (the “FCC”). At closing, the repurchased securities will be retired and, subject to the Company’s election to repurchase additional securities, the Company’s outstanding securities will be reduced from approximately 28 million to approximately 18 million. At closing, the composition of the Company’s Board of Directors will remain the same.
Additionally, fifteen months after the closing of the repurchase, the Company has the option to purchase all of the remaining securities from Oaktree, and Oaktree has the option to sell all or a portion of its remaining securities to the Company, at a purchase price per security of $6.40 in cash. Such purchase would be subject to the satisfaction of customary closing conditions, including FCC short form approval.
“We appreciate the opportunity to facilitate this significant transaction with Oaktree and are excited about this repurchase, which secures the exit of a very long-term private equity majority shareholder that current and potential shareholders have described to me consistently as being an obstacle to investing more, or establishing a position, in Townsquare given the significant overhang Oaktree’s holding represented,” said Bill Wilson, the Company’s Chief Executive Officer. “This repurchase is immediately accretive to shareholders and we thank our Board of Directors for their vote of confidence in our medium and long-term business plan to grow revenue and profits.”
“Oaktree remains fully supportive of the Company and its prospects,” said David Quick, a Townsquare Board Member since the Company’s inception and Managing Director at Oaktree. “The Oaktree entities that own these shares are selling their interests in the Company because they are now beyond their fund life and are winding down.”
Houlihan Lokey Capital, Inc. served as financial advisor to the Special Committee in connection with the repurchase.
