S&P rates Cumulus Media loan B

S&P said it assigned the B- corporate credit rating to Cumulus Media Inc.

The outlook is stable.

The agency also assigned a B issue-level rating and 2 recovery rating to the company's senior secured term loan due 2022. The 2 recovery rating indicates 70% to 90% expected default recovery.

The B- corporate credit rating reflects Cumulus's high leverage and lack of diversification away from broadcast radio advertising revenue, which is in secular decline.

Cumulus is expected to emerge from bankruptcy by June 30 and is issuing a new $1.3 billion senior secured term loan due 2022 to capitalize the reorganized company, the agency said.

The restructuring will reduce the company's outstanding debt by about $1 billion by eliminating its $610 senior unsecured notes and reducing its senior secured term loan obligations by roughly $429 million.

Upon emergence from bankruptcy, the company's leverage is expected to decrease from more than 10x as of March 31, 2017 to about 6x, the agency said.

Cash flows are also expected to improve by roughly $37 million due to the reduction in cash interest expense.

While the agency said it believes that this level of leverage is high for a broadcast radio company, it expects the company to generate sufficient cash flow to reduce leverage over the next two to three years to a level at which is considered the capital structure to be more sustainable, barring an economic downturn.

The stable outlook reflects an expectation that Cumulus will emerge from bankruptcy with high leverage of roughly 6x, S&P said.

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