Cumulus Media bankrupt, inks deal to cut debt by more than $1 billion

By Caroline Salls

Pittsburgh, Nov. 29 – Cumulus Media Inc. filed Chapter 11 bankruptcy Wednesday in the U.S. Bankruptcy Court for the Southern District of New York after entering a restructuring support agreement with secured lenders holding 69% of its term loan that reduces Cumulus’ debt by more than $1 billion, according to a news release.

No other information about the restructuring agreement had been filed as of late Wednesday evening.

Cumulus said it expects all operations, programming and sales to continue as normal throughout this restructuring process.

The company said it has ample cash on hand, combined with funds generated from ongoing operations, to support the business during the financial restructuring process. As a result, Cumulus said it does not intend to seek debtor-in-possession financing.

“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,” president and chief executive officer Mary Berner said in the release.

“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.

“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.”

As previously reported, Cumulus did not make the $23.6 million Nov. 1 interest payment on the 7¾% senior notes due 2019 issued by wholly owned subsidiary Cumulus Media Holdings Inc.

The restructuring committee of Cumulus Media’s board of directors authorized the company to forgo the interest payment due Wednesday in connection with its ongoing discussions with creditors.

The non-payment constituted a default under the notes’ indenture and becomes an event of default if that default was not cured or waived before the expiration of the 30-day grace period on Dec. 1.

According to court documents, Cumulus has $1 billion to $10 billion in both assets and debt.

The company’s largest unsecured creditors are U.S. Bank NA of Atlanta, with a $637.31 million 7¾% senior notes claim and Nielsen Audio, Inc. of Columbia, Md., with a $6.65 million trade debt claim.

Paul, Weiss, Rifkind, Wharton & Garrison LLP is acting as legal counsel, PJT Partners, Inc. is acting as financial adviser to Cumulus, and Alvarez & Marsal is serving as restructuring adviser.

Cumulus Media is an Atlanta-based radio broadcaster. The Chapter 11 case number is 17-13381.

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