Cumulus Media on Friday (12/30) confirmed that it has completed a discounted prepayment of a portion of its $1.8 billion senior secured term loan facility due December 2020.
Cumulus successfully purchased $28.7 million of face value of its senior secured term loan for $20 million — a 30% discount. The transaction closed on Friday.
As a result, Cumulus will see a one-time non-operating gain of approximately $8.7 million in its fiscal Q4 and FY2016 earnings.
Additionally, Cumulus’ annual interest expense will be reduced as a result of the completion of this transaction.
J.P. Morgan Securities acted as sole advisor to Cumulus regarding this transaction.
The prepayment on Cumulus’ towering first lien term loans is a positive sign, and a step in the right direction for both Cumulus and J.P Morgan.
Cumulus seeks to steer clear of a “springing maturity” on a $1.84 billion loan that would transpire if more than $200 million of the notes are outstanding in January 2019.
That’s why the nation’s second-biggest owner of radio stations on Dec. 12 sued JPMorgan Chase & Co., claiming that it has breached a 2013 credit agreement and is “unreasonably” withholding consent to certain components of its planned refinancing.
At issue is $305 million in new debt, represented by new revolving loans due 2020 under the company’s existing credit agreement.
Cumulus says J.P. Morgan has not allowed for the transfer of funds from its $200 million revolving credit line.
Thus, while the $28.7 million prepayment is welcome news for investors, tapping into the revolving credit line remains a critical and essential need for Cumulus.
The prepayment comes one week after Cumulus on Dec. 23 announced it has extended the early tender date of its private exchange offer for its 7.75% Senior Notes due 2019 by more than two weeks.
Cumulus shares ended the final trading session of 2016 at $1.02.