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Dial Global Hails Lender Agreement

Radio content provider says debt restructuring gives it greater flexibility

Dial Global is getting some financial breathing room.

Calling it a “significant step forward for the company,” DG said it won an agreement with lenders and some stockholders to recapitalize its credit facilities and other obligations.

CEO Spencer Brown said in the announcement, “Once these transactions close, we will have de-levered our balance sheet and decreased cash interest expense. The agreements will provide us with greater flexibility to actively manage and grow our business.” Closing is expected next month.

Dial Global is a provider and distributor of audio content to 8,500 radio stations. It merged with Westwood One in 2011. Its major investors include Oaktree Capital Management and The Gores Group.

In recent months, Dial Global’s financial headlines have involved net losses, worries about the health of the talk radio industry and concerns about meeting loan covenants. In November the company decided to delist from the Nasdaq Global Market; its stock now trades on the OTC Pink Sheets. In February it suspended reporting obligations under the Securities Exchange Act.

One part of the credit package involves a $15 million paydown of existing loan and credit commitments. Another part gives the company an additional $31.5 million through a term loan facility; in connection with that, its lenders get penny warrants to purchase 7.5% of its common stock.

Further, lenders agreed to restructure $93 million in obligations. To do that, they’ll provide a five-year, $30 million term loan; they’ll also exchange $63 million in obligations for a new series of preferred stock, which will bring them more of a say in corporate governance. These lenders also get warrants to purchase 12% of the company common stock, to be used if Dial Global does not meet certain conditions.

And holders of certain company shares have agreed to exchange their notes for equity securities and to make an additional equity infusion of $16.5 million.

Read the press release.