NAPLES, FLA. — The publicly traded audio-focused media company founded by George Beasley and today led by his daughter, CEO Caroline Beasley, is moving forward with an exchange offer that swaps out old debt for new debt — at a slightly higher interest rate.
Beasley Media Group, which trades under its original operating name “Beasley Broadcast Group” on the Nasdaq market, is offering the following plan to its debtholders:
- Existing noteholders may swap their outstanding 8.625% Senior Secured Notes due 2026 for newly issued 9.2% Senior Secured Notes due August 1, 2028
The exchange ratio proposed by Beasley is at 95% of the aggregate principal amount of the existing notes tendered for exchange.
As such, debtholders are being asked to take a small discount into consideration in order for the plan to take hold.
The terms also call for a pro rata share of 3,588,495 shares of Beasley Class A common stock, trading as “BBGI,” and a $5 consent fee for every $1,000 of the existing notes that would be tendered, serving as official exchange consideration.
As of 12:25pm Eastern on Friday (9/6), Beasley shares were trading at roughly 60 cents per share. The company’s lead institutional investor is Gamco Investors Inc., led by Mario Gabelli. As of June 30, Gamco held 5.04% equity interest in Beasley.
Regarding the debt swap offer, Beasley says “a holder of approximately 73% of the existing notes” has signed off on a transaction support agreement. This includes a minimum participation condition that requires all of the current noteholders to participate in the tender offer.
Caroline Beasley commented, “We are very pleased with the announcement of both the launch of this transaction and the support of a holder of approximately 73% of our outstanding indebtedness. We believe this transaction, when consummated, will provide meaningful long-term improvements to our balance sheet and provide value to debt holders and equity holders alike. This transaction is the product of several months of negotiations and represents a significant initial step forward in our long-term plan to reduce leverage and position the Company for future success.”
Pushing out the debt repayment by two years gives Beasley more time as it searches for ways to maximize its revenue generation while carrying out expense reduction initiatives. This includes various changes at its Boston station group, where the Rock format on September 3 shifted from WBOS-FM 92.9 to an AM with an FM translator in place of Bloomberg Radio. The arrangement is expected to bring Beasley millions of dollars in lease payments, offsetting expenses tied to its largest billing station, WBZ-FM “98.5 The Sports Hub.” Meanwhile, WXTU/Philadelphia morning host Andie Summers is now being syndicated to other markets, eliminating local hosts that those stations.
In connection with the debt swap offer, Beasley Broadcast Group wholly owned subsidiary Beasley Mezzanine Holdings LLC has moved ahead with a tender offer to purchase up to $68 million of the current notes to holders to choose to exchange all of them for new notes at a purchase price of 62.5%, plus accrued and unpaid interest if applicable.
Should more than $68 million of the existing note holders choose this option, they’ll get repaid in cash with an amount totaling $42.5 million on a pro rata basis.
Beasley notes that the accepted amount will be rounded to the nearest $1,000 and the remaining Existing Notes exchanged by such holders will be exchanged for the Exchange Consideration.
The Tender Offer will be funded with $12.5 million of cash from the balance sheet and proceeds from the New Notes.
Finally, Beasley Mezzanine Holdings LLC intends to move forward with a “new notes offer” to go along with the exchange offer and tender offer. This new notes offer is for $30 million aggregate principal amount of 11% “Superpriority Senior Secured Notes” due August 1, 2028.
Participation is open pro rata exclusively to existing noteholders who fully participate in the exchange.
Beasley says the “new notes offer” will be fully backstopped by a majority holder of the current notes.
“The New Notes Offer and the Supporting Holders’ obligation to backstop the New Notes Offer are conditioned upon the consummation of the Offers and Consent Solicitation as well as certain conditions in the Transaction Support Agreement with respect to the backstop obligations,” the company notes. “Each recipient of New Notes will be entitled to receive a participation premium equal to 3.0% of the aggregate principal amount of New Notes purchased by such recipient, payable by the Issuer either, in its sole discretion, in the form of in cash or in-kind in the form of additional New Notes.”
There’s more.
Beasley Mezzanine Holdings LLC is presenting a Consent Solicitation that adopts proposed amendments to the existing indenture. This, Beasley explains, would eliminate substantially all of the restrictive covenants “as well as certain events of default and related provisions therein applicable to such series of Existing Notes for which the applicable Proposed Amendments are adopted.”
This is critical for Beasley, as it would indeed bring relief to the company should a default on its current notes take place —although such a possibility is low given the plan proposed by the company.
Furthermore, the proposed amendments will release all liens on the collateral securing Beasley’s existing notes.
As Beasley explains:
The Proposed Amendments to the Existing Indenture governing the Existing Notes requires, in the case of the elimination of covenants and default conditions, the Consent of holders of a majority in aggregate principal amount of the Existing Notes outstanding (excluding any Existing Notes held by the Issuer or its affiliates) and, in the case of the release of liens, the Consent of holders of two-thirds in aggregate principal amount of the Existing Notes (collectively, the “Requisite Consent”). Any Existing Noteholder who tenders Existing Notes pursuant to an Exchange Offer or the Tender Offer must also deliver a corresponding Consent to all of the Proposed Amendments of the Existing Notes pursuant to the related Consent Solicitation. Existing Noteholders may not deliver Consent without tendering their Existing Notes in the Offers.
The New Notes will be issued under a new indentureand will be fully and unconditionally secured by substantially all of the assets, other than certain excluded property of the Issuer and the guarantors on a senior secured first-priority lien basis, subject to certain exceptions, limitations and permitted liens.
The “new notes offer” is expected to close on October 4, subject to customary conditions, as is the exchange offer.
The Exchange Notes will be issued under a new indenture and will be fully and unconditionally secured by liens on the collateral on a senior secured second-priority lien basis, subject to certain exceptions, limitations and permitted liens, Beasley confirms.
