Cumulus Media notes mostly quiet; few bite amid exchange offers; DISH flat to higher

By Cristal Cody

Tupelo, Miss., April 22 – Cumulus Media Inc.’s 6¾% senior secured first-lien notes due 2026 (Caa1/CC) remain thinly traded amid an oft-continued exchange offer that initially attracted few takers.

The notes were not active on Monday.

On Friday, the notes traded down over 1 point from a week earlier in light activity.

“They are not very active, not too much at all,” a trader said.

Traders and investors have not been too interested in the distressed notes with the exchange offers this month.

“It’s not going to trade if you want to exchange bonds,” another trader told Prospect News. “There’s $346 million left – the original amount was $500 million. You could make the case the bonds last traded March 6.”

After only approximately $15 million of the bonds had been tendered in response to the exchange offer following numerous extensions since March, the amended debt swap announced Friday is expected to go through.

“Upon pressure from the majority of its debt holders, the company amended the terms of its debt swap, decreasing the discount on the debt from 80% to 94%, but also decreasing the interest rate from the previous plan of 8¾% to 8%,” Noble Capital Markets, Inc. senior research analyst Michael Kupinski said in a report Monday. “This plan for the debt conversion appears likely to be completed given that it is estimated that 90% plus of the holders have agreed to the terms. The company needs only 95% of its lenders to agree to the new terms by May 1 to complete the conversion.”

Cumulus Media announced in a regulatory filing on Friday that subsidiary Cumulus Media New Holdings Inc. amended the Feb. 27 offer to exchange its $346.23 million of outstanding bonds and extended the offer to May 1.

The offer has been extended numerous times since March 26, including to April 2, April 9, April 12, April 16, April 17 and April 18.

The original offer with a 20% to 23% discount from the principal would likely be viewed as a distressed debt exchange, Moody’s Investors Service had warned in March.

Cumulus Media continues to carry a high debt load.

“We note that the company’s debt leverage is relatively high at 6.7 times,” Kupinski said. “As of December 31, the company had $80 million in cash and $675 million in long-term debt. The company currently has a $200 million credit facility to offer liquidity should the economic situation deteriorate.

“We view favorably the company’s extension of its maturities to 2029 from 2026 for a portion of its debt, but it comes at a higher interest rate. We would note that the discount on the debt was relatively modest at 94% versus the original offer at 80%.”

The media, cable and telecom space has been pressured this year with one default logged in January from Audacy Inc., which filed for Chapter 11 bankruptcy after missing interest payments.

DISH DBS Corp.’s 7 3/8% senior notes due 2028 (Caa1/CCC) traded flat on Monday but were around ½ point better from a week ago.

DISH’s 5 1/8% senior notes due 2029 rose ¼ point over the session.

Distressed market signals have been lighter with positive rating actions outnumbering negative ones in April and a respite from defaults, S&P Global Ratings said Monday.

“After a brief pause, net positive rating developments picked up again last week, with positive rating actions or outlook revisions outnumbering the negative ones, 20 to 15,” S&P said. “There were no defaults for the first time in four weeks, after two straight weeks with year-to-date highs of six each. Credit pricing rose across the board as benchmark interest rates, bond spreads, and CDS spreads increased week on week, underscoring risks to credit performance.”

Market volatility retreated nearly 10% on Monday. The CBOE Volatility index finished down 9.46% to 16.94.

Stock indices all closed higher with the Nasdaq 1.11% better.

The iShares iBoxx High Yield Corporate Bond ETF rose 42 cents, or 0.55%, to $76.40.

The benchmark 10-year Treasury note yield was mostly unchanged at 4.62%.

Cumulus Media soft

Cumulus Media New Holdings Inc.’s 6¾% senior secured first-lien notes due 2026 (Caa1/CC) were not active on Monday and were thinly traded over the prior week, according to market sources.

On Friday, the notes were quoted at around 55 bid, 56 offered, down over 1 point from where the issue traded in the same session a week earlier.

The notes have declined from where the issue traded in March at 60 bid and with a 68 bid handle at the end of 2023.

Cumulus Media said that under the amended exchange offer the interest rate of the new senior secured first-lien notes was reduced to 8% from 8¾% and the maturity was amended and extended to July 1, 2029 from March 15, 2029.

The withdrawal deadline also was extended to 5 p.m. ET on Monday from March 11.

As of Thursday, about $15 million, or about 4.4%, of the notes had been tendered for exchange, unchanged from the amount tendered as of the original deadline.

However, certain holders representing approximately 80% of the aggregate principal amount of the old notes and approximately 97% of the aggregate principal amount of the old term loans have agreed to tender their old notes and participate in the transactions under a transaction support agreement dated Thursday.

Cumulus Media also is conducting a concurrent loan exchange to exchange old loans for new senior secured term loans issued under a new credit agreement.

Meanwhile, Cumulus Media announced on Thursday selected first-quarter preliminary operating results and said it will release full results on May 3.

Cumulus said it expects to report net revenue in a range of $199 million to $201 million, a net loss in a range of $14.9 million to $13.4 million and adjusted EBITDA in a range of $7.65 million to $9.15 million.

Noble Capital Markets said it is “tweaking” Cumulus Media’s full-year 2024 and 2025 estimates and “taking a cautious stance to the near-term fundamentals.”

“We believe that the prospect for the conversion of its debt will be viewed favorably by investors and provide a very near-term catalyst for the CMLS shares,” Kupinski said.

Cumulus shares (Nasdaq: CMLS) closed down 9.7% to $2.70 on Monday.

The Atlanta-based audio media company owns and operates 403 radio stations in 85 markets.

DISH notes mixed

DISH DBS’ 7 3/8% senior notes due 2028 (Caa1/CCC) treaded water on Monday with the paper flat over the afternoon on $8 million of secondary action, a source said.

The notes were quoted at 43½ bid, ½ point better from where the issue traded in the same session a week ago.

The issue went out Friday about 2 points lower on the week.

DISH’s 5 1/8% senior notes due 2029 rose ¼ point to 39 bid in light activity during the session.

DISH DBS’ credit default swap spreads widened over 400 basis points to more than 3,500 bps last week.

The company leads Fitch Ratings’ top 10 market concern bonds with $15.25 billion of debt outstanding, Fitch said Friday.

Parent EchoStar Corp. reported heavy fiscal 2023 losses in February following failed DISH bond exchange offers for four tranches of notes in January and two tranches of convertible bonds in February.

EchoStar currently is seeking funding to cover $1.98 billion of debt that matures in November.

The Englewood, Colo.-based satellite owner operates DISH, HughesNet, Boost Mobile and Sling TV.

Distressed index lower

S&P U.S. High Yield Corporate Distressed Bond index one-day total returns were negative 0.03% on Friday, improved from minus 0.52% of returns at the prior week’s start.

Month-to-date total returns declined to negative 3.26% as the week closed from negative 1.76% in the first session of the week.

Year-to-date total returns softened to minus 1.2% on Friday from 0.34% at the start of the prior week.

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