Audacy Inc., in an early Sunday announcement, confirmed that the company has reached an agreement with a supermajority of its debtholders on a financial restructuring that the publicly traded company says “will significantly deleverage Audacy’s balance sheet and further position Audacy for long-term growth.”
Among the key takeaways from the restructuring, which the United States Bankruptcy Court for the Southern District of Texas will be overseeing:
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The agreement is what Audacy calls “a very positive outcome to ongoing discussions Audacy initiated with its lenders last year.” The company headed by David Field and CFO Rich Schmaeling said the moves “will establish a robust capital structure that enables Audacy to capitalize on its strategic transformation into a scaled, leading multi-platform audio content and entertainment company.”
Additionally,
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Audacy and its debtholders will undertake a deleveraging transaction that will equitize approximately $1.6 billion of funded debt, a reduction of 80% from approximately $1.9 billion to approximately $350 million.
To implement the agreement, Audacy has commenced a prepackaged Chapter 11 process.
Such a move was anticipated, given reports last week across the media. This, Audacy says, “demonstrates debtholders’ strong support for Audacy’s future and will allow for a quicker and more streamlined process.”
As a debtor-in-possession, Audacy expects that the U.S. Bankruptcy Court will hold a confirmation hearing in February and to emerge from bankruptcy once it receives FCC approval.
Meanwhile, Audacy stresses that it is “business as usual” and does not expect any operational impact from the restructuring.
Trade and other unsecured creditors will not be impaired, Audacy said.
“Over the past few years, we have strategically transformed Audacy into a leading, scaled multi-platform audio content and entertainment company through our acquisition of CBS Radio and by building leading complementary positions in podcasting, audio networks, live events, digital marketing solutions and our direct-to-consumer streaming platform,” said Field, Chairman, President and CEO of Audacy. “While our transformation has enhanced our competitive position, the perfect storm of sustained macroeconomic challenges over the past four years facing the traditional advertising market has led to a sharp reduction of several billion dollars in cumulative radio ad spending. These market factors have severely impacted our financial condition and necessitated our balance sheet restructuring. With our scaled leadership position, our uniquely differentiated premium audio content and a robust capital structure, we believe Audacy will emerge well positioned to continue its innovation and growth in the dynamic audio business.”
During the Chapter 11 process, some of Audacy’s existing lenders have committed to provide $57 million in debtor-in-possession financing, comprised of $32 million of a new term loan and a $25 million upsize of the company’s existing accounts receivables financing facility from $75 million to $100 million.
Subject to the Court’s approval, the DIP financing and Audacy’s cash from operations and available reserves is expected to enable Audacy to fulfill commitments to employees, advertisers, partners and vendors.
What’s the situation for Audacy stockholders? Not good. While Audacy common stock will continue to trade over-the-counter under the symbol “AUDA” through the pendency of the Chapter 11 process, the company confirms that all shares are expected to be canceled and receive no distribution as part of Audacy’s restructuring.
