Cumulus Restructure Nears Finish Line

Hopes to emerge from debt protection by end of June
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Cumulus Media says it is planning to emerge from Chapter 11 by the end of June now that a bankruptcy judge has confirmed its restructuring plan.

The deal will trim the reorganized broadcaster’s debt by just over $1 billion. Judge Shelley C. Chapman signed off on an agreement between stakeholders and Cumulus that gives senior lenders 83.5% of the new equity plus $1.3 billion in “take-back” debt, which means the secured lenders get debt in exchange for their current debt (as opposed to Cumulus issuing new debt). The folks holding unsecured debt, which consists mostly of senior note holders, are left with a much smaller piece (13.5%) of the new Cumulus. The radio company is expected to be valued at $1.675 billion once it emerges from bankruptcy.

Cumulus CEO Mary Berner got what she wanted with the court’s approval, which is a “complete the balance sheet restructuring that is critical to the success” of its turnaround strategy.

“With a firmer financial foundation in place, we look forward to continuing to implement the business initiatives that have already taken this company so far,” Berner said in a Cumulus press release.

Cumulus, the ’s third-largest U.S. radio group by station count with 446 owned-and-operated stations in 90 U.S. markets, will now have greater financial flexibility with which to support its ongoing business transformation, according to the press release.

The broadcaster’s November 2017 reorganization filing also included subsidiaries Westwood One Inc. and Broadcast Software International. They along with several other entities are expected to exit Chapter 11, according to a person familiar with the process.

Cumulus says there are still conditions of the restructuring plan that need to be met before it completes the process. “The company expects to emerge from Chapter 11 before the end of the quarter, after the conditions to the plan are satisfied,” according to a press release.

A June 30 effective date is entirely realistic, says one observer familiar with the Cumulus filing.  

“I do not see an issue with exiting on time. In order to stop emergence, an objecting party would need to seek and obtain a stay to stop the plan from being consummated within the 14-day period following the entry of the confirmation order,” said Vickie Driver, a Texas-based partner in the insolvency department with Husch Blackwell.

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