Audacy has started the long road to what it hopes is financial recovery by filing for reorganization in federal bankruptcy court.
On Sunday, just days after a Wall Street Journal report indicated that a filing was imminent, the second-largest radio owner in the United States (by revenue) announced a prepackaged Chapter 11 filing in U.S. Bankruptcy Court for the Southern District of Texas.
In doing so the company expects to take a big bite out of its total debt, reducing it by 80%, from a staggering $1.9 billion to $350 million, by “equitizing” the debt. As part of the voluntary bankruptcy filing, its debtholders will receive an ownership stake.
The company said it will “continue operating its business in the ordinary course without disruption to its advertisers, vendors, partners or employees.”
Audacy, which owns 230 radio stations in 46 markets, said it reached agreement with “a supermajority of its debtholders on a financial restructuring that will significantly deleverage Audacy’s balance sheet and further position Audacy for long-term growth.”
The company formerly known as Entercom acquired a great deal of debt when it acquired CBS Radio in 2017. But David Field, the chairman, president and CEO, said in an announcement that Audacy got caught up in the “perfect storm of macroeconomic challenges” that have troubled the entire broadcast industry. He sought to put a positive face on the development and on the company’s long-term outlook.
“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,” Field said in the press release.
Nevertheless the firm has been posting big losses over recent financial quarters. In November it said its operating loss for Q3 was $281.7 million. In Q2 it lost $135.3 million .
Audacy says it filed a proposed Plan of Reorganization that incorporates the terms of the reorganization and is subject to approval by the court.
“(The reorganization) 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,” it said in a statement.
The Philadelphia-based company expects the bankruptcy court to hold a confirmation hearing in February.
Audacy is the third of the top three U.S. commercial radio companies to go through a Chapter 11 process in the past seven years. iHeartMedia’s 15-month Chapter 11 proceeding concluded in May 2019. Cumulus, the third-largest radio company, emerged from a seven-month Chapter 11 process in June 2018.
Audacy says it will continue to operate in the usual manner during the process. The company’s stock will continue to trade over-the-counter under the symbol “AUDA” after it was delisted by the New York Stock Exchange in November.
“Audacy continues business as usual and does not expect any operational impact from the restructuring. Trade and other unsecured creditors will not be impaired,” the radio company said.
