S&P downgrades Cumulus

S&P said it lowered the corporate credit ratings on Cumulus Media Inc. and its subsidiary Cumulus Media Holdings Inc. to CC from CCC.

The outlook is negative.

The downgrades follow news that Cumulus offered to exchange its 7¾% senior notes due 2019 for debt and common stock in the company, S&P said.

The company's debt is trading at significant discounts to par of up to 60%, and the agency said it believes its capital structure is unsustainable.

If Cumulus completes the exchange transaction, S&P said it views it as distressed and tantamount to a default.

The company offered to exchange its 7¾% notes due 2019 for common stock in the company and debt, the agency said.

If the offer successfully gets interest from 95% of noteholders, the transaction would reduce leverage to about 9.4x from an extremely high 10.7x as of Sept. 30, 2016, S&P said.

However, the agency said it still views the capital structure as unsustainable at these levels.

The outlook is negative.

S&P said it intends to lower the corporate credit rating to SD (selective default) and the senior note rating to D on completion of the exchange offer.

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