Cumulus Media has come under the microscope of late for a variety of reasons. One of the bigger issues has been a 2026 debt maturity wall, and the desire to swap new debt for old debt, push the due date out by three years, while increasing the interest rate by two percentage points.
Debtholders were resistant to Cumulus’ offers. As such, “Plan B” was put forth. That proved to be the charm.
Speaking on the Cumulus Q1 2024 earnings call, Cumulus President/CEO Mary Berner commented, “We are thrilled to have refinanced our capital structure to secure five-year maturities with favorable terms through a successful debt exchange and
ABL Facility upsize and extension.”
Late Thursday (5/2) Cumulus formally announced the expiration and final results of subsidiary Cumulus Media New Holdings Inc. plan to exchange its 6.750% Senior Secured First-Lien Notes due 2026 (the “Old Notes”) for new 8% Senior Secured First-Lien Notes due 2029 (the “New Notes”) under amended terms codified on April 18, after the original February 27 offer was met with few takers.
This time, even with a condition that a minimum of 95% of all of the Old Notes be exchanged, 94% had been tendered by the expiry date of May 1. That was good enough for Cumulus, which waived the minimum participation condition to get the job done.
Berner did not directly note the contentious environment seen by Cumulus over the past two months, only noting, “This is an excellent outcome for the company, especially given the generally difficult financing environment for legacy media companies.”
Approximately $325.7 million in aggregate principal amount of the Old Notes were exchanged by Cumulus’ debtholders. And, like trading Euros for U.S. dollars, the exchange rate from Old Notes to New Notes is the equivalent of trading $1 and getting 94 cents in return.
CUMULUS’ CAPITAL STRUCTURE REFINANCING SPECIFICS
- Maturities are extended to 2029
- The principal amount of outstanding debt is reduced by approximately $33 million
- Interest rates rise to 8%, from 6.75%, which Cumulus deems “attractive”
- A structure free of financial maintenance covenants is established
- Increased capacity of 25% for Cumulus’ ABL facility
When all is said and done, Cumulus now has until 2029 to repay the nearly $326 million it is borrowing from its lenders.
The refinancing of Cumulus’ capital structure comes after a late February decision by the company’s Board of Directors to sign off on a plan to prevent a hostile takeover of the audio content creation and distribution company led by Mary Berner. This was prompted by the desire of 5-Hour Energy founder Manoj Bhargava, who has funded the growth of the NewsNet 24/7 digital multicast television network, to snap up Cumulus shares — and perhaps gain control of the radio station owner.
