Cumulus Media‘s nearly 10-week legal fight against JPMorgan Chase & Co. over its desire to proceed with a $305 million refinancing plan designed to deleverage the No. 2 radio company by number of stations has been brought to a halt.
In a decision released Friday (2/24) by Katherine Polk Failla, U.S. District Judge for Southern District of New York, Cumulus’ attempt to move forward with the plan was rejected.
The news was first reported by Reuters. A PacerMonitor indicating docket updates for the case, “Cumulus Media Holdings Inc. et al v. JPMorgan Chase Bank, N.A., U.S. District Court, Southern District of New York, No. 16-09591,” had not yet been updated as of 3:15 p.m. Eastern on Friday.
On Dec. 12, 2016, Cumulus filed a complaint in the Federal court against JPMorgan Chase as Administrative Agent under its Dec. 2013amended and restated credit agreement. It sought a declaration that it is authorized to proceed with the refinancing plan, and that JPMorgan Chase has “unreasonably withheld consent to certain components” of Cumulus’ refinancing plan.
JPMorgan Chase did not agree with Cumulus’ assertion, and several other creditors joined JPMorgan in siding against Cumulus and its efforts.
Ultimately, Failla agreed with the financiers.
“I do not believe it permits the proposed refinancing,” she said, according to Reuters.
The noon hour verdict against Cumulus led to an immediate free-fall of CMLS shares on Nasdaq, sliding as low as 60 cents by 1:23pm Eastern before a slight recovery. As of 3:23pm Eastern Cumulus was off a whopping 28%, to 72 cents per share. Cumulus shares finished the day at 76 cents.
Cumulus was represented by Steven F. Molo, one of the country’s leading courtroom advocates and a founding partner of the national litigation boutique MoloLamken LLP.
Late Friday, Cumulus issued a statement on the U.S. District Court decision. It states, “While we are certainly disappointed by the court’s decision, we will continue to review all available options to address our balance sheet issues. We are making solid progress in our turnaround, and remain focused on exploring strategies that would give us the runway needed to fully execute our plan.”