Audacy Chooses Grace Period On 2029 Notes Interest Payment

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On June 30, Philadelphia-headquartered audio content creation and distribution company Audacy completed a 1-for-30 reverse stock split, designed to avert a delisting from the New York Stock Exchange that couldn’t be stopped. Since then, the company founded as Entercom by Joseph Field continues to experience fiscal strain. On Friday, shares closed at $0.43 a share, even after the stock split one quarter ago.


Now, the company has shared that it “continues to engage in discussions with lenders to deleverage its balance sheet,” while confirming that it has elected to use a 30-day grace period for a cash interest payment on its Senior Secured 2029 Notes — funds that were originally payable by the close of Monday.

In a pre-sunrise announcement distributed by Audacy via Business Wire, the company today led by David Field, the founder’s son, says its conversations with lenders also include ways to improve the capital structure at Audacy, positioning the radio station owner and parent of podcast companies Pineapple Street and Cadence13, for long-term growth.

Audacy makes no bones about its desire to refinance its debt, and as of June 30 the company’s long-term debt as stated in its 10-Q filing with the U.S. Securities and Exchange Commission grew to $1,921,115,000 from $1,880,362,000.

Within the more than $1.92 billion in long-term debt accrued by Audacy are two series of Notes: 6.5% notes due May 1, 2027; and 6.75% notes due March 31, 2029.

It is the latter notes of which a cash interest payment of approximately $18 million was due on September 30, with the actual payable date being October 2. Audacy had an option to use a 30-day grace period given to the company, should it need to do so.

The company needs the grace period, during which the company will “continue its dialogue with lenders regarding a potential plan to strengthen its capital structure to support Audacy’s strong operating business and position Audacy for long-term growth.”

The 2029 Notes are valued at $540 million; the amount owed on the 2027 Notes declined to $462.85 million as of the end of the second quarter, from $463.22 million as of the end of 2022.

Then, there is Audacy’s credit facility, comprised of a Revolver that expanded to $219 million from $180 million between December 31, 2022 and June 30, 2023; and a Term B-2 Loan, due November 17, 2024, of $632.42 million. Additionally, the facility includes a “plus amortized premium” of $975,000, down from $1.116 million at the end of 2022.

In the statement, Audacy states that its decision to initiate the 30-day grace period “does not impact any of its business operations or obligations to advertisers, employees, suppliers or other stakeholders.” The owner of such radio brands as WFAN in New York, KROQ in Los Angeles, WIP in Philadelphia and “Power 96” in Miami adds that it “continues to focus on growing and enhancing its capabilities as a leading, multi-platform audio content and entertainment company.”

In prepared comments, Field reiterated much of those general statements from Audacy, adding, “We remain focused on investing in our people, platform, content and technology capabilities to serve our listeners and customers.”

STOCK EROSION ACCELERATES

Finally, Audacy notes that the decision to use the grace period “will not trigger an event of default under the indenture covering the notes,” and that the company “retains the right to make the interest payment to the holders of the Notes through the end of the grace period.”

What do shareholders think? Given the volume of trading and the high volatility of what amounts to a penny stock, looking at AUDA’s current activity isn’t the fairest gauge. While the stock was down 27.8% to just $0.3103 as of 9:54am Eastern, volume sat at a mere 110 shares.

With Monday’s Closing Bell, AUDA was down 2 cents to $0.41, on volume of 14.19k shares. The company’s market cap sits at $61.64 million.

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