Cumulus Restructuring Financing

Cumulus Media Inc. said Monday a group of bondholders has agreed to pump $350 million of new capital into the struggling radio station operator after the company missed an interest payment on Nov. 1, according to The Wall Street Journal.

Cumulus plans to file a so-called prepackaged bankruptcy or push through an out-of-court debt-for-equity swap with bondholders if it can win sufficient backing from creditors.

The company would need 98% of bondholders to consent to the restructuring plan in order to complete a balance-sheet restructuring outside of bankruptcy court. Cumulus’s lenders wouldn’t be entitled to vote on the plan since their holdings would be deemed unimpaired.

Under bankruptcy law, only those creditors whose holdings are impaired are entitled to vote on a chapter 11 plan.

Mary Berner

Under the plan disclosed Monday in a regulatory filing, the company’s senior lenders, who are owed $1.72 billion, will receive a $350 million plus cash on the company’s balance sheet to pay down part of the loan. The remaining amount will be reinstated, according to Cumulus’s filings.

The company’s $610 million in bond debt, which matures in 2019, last traded at 24 cents on the dollar on Nov. 9, according to MarketAxess. Its loans are up a point at 87 cents on the dollar, according to IHS Markit.

The filing with the SEC also sheds some new light into financial maneuvers by the company in recent weeks. It says Cumulus noteholders agreed to waive all interest owed to them on Nov. 1 until “the occurrence of certain agreed upon events,” including a designated time period or the termination of what are known as restructuring support agreements. This may help explain why Cumulus elected not to make a previously scheduled $23.6 million loan repayment, according to InsideRadio.

Berner spoke about efforts to restructure Cumulus’ debt and the toll it is taking during the company’s third-quarter earnings call last week. “Our heavy debt load constrains our ability to do business in the short term and to achieve our full potential in the long term,” she told investors Nov. 9. “So it’s imperative that we explore all available options to restructure our balance sheet and reduce our leverage with minimal disruption to our operations and the progress we are continuing to make.”