MODERNIZE: On Sunday (Jan. 7), Audacy said it will file for Chapter 11 bankruptcy protection to reduce the company’s debts. The radio giant said in a statement that the deal with debt holders would reduce its debt by about 80%, from $1.9 billion to $350 million, according to The Hollywood Reporter. Audacy does not expect any operational impact due to the bankruptcy and restructuring.
Audacy is expected to file for Chapter 11 bankruptcy after reaching an agreement with its creditors, according to report in the Wall Street Journal. The prepackaged bankruptcy would be financed by the lenders, who would take ownership of the radio company after the restructuring, the report said.
A representative for Audacy had no comment when contacted Advertising sign.
Audacy, formerly Entercom, is saddled with $2 billion in debt mostly acquired from its 2017 merger with CBS Radio. That deal boosted Audacy’s revenue, but it also nearly quadrupled its debt from $468 million at the end of 2016 to $1.86 billion at the end of 2017.
The Philadelphia-based company’s portfolio of approximately 230 radio stations includes WCBS in New York, KROQ in Los Angeles, WFAN Sports Radio in New York and WBBM Newsradio in Chicago. Audacy’s podcasting brands include two studios, Cadence13 and Pineapple Street Studios, and Popcorn, an online marketplace for connecting creators and brands.
The company sounded the alarm in May when it warned that a weak economic outlook could cause it to default on its debt. In an SEC filing, the company said that “macroeconomic conditions,” such as rising interest rates and declining advertising revenue, “have created, and may continue to create, significant uncertainty in operations.” As a result, its projected revenues were “unlikely to be sufficient” to maintain its debt covenants.
Third-quarter revenue of $299.2 million was down 5.6% year-over-year, and as of early November, fourth-quarter revenue was down 9% from the year-ago period. Noting the company’s “current challenges,” CEO David J. Field he said Audacy has been in talks with its lenders to recapitalize its balance sheet.
In recent months, Audacy has entered into agreements with several lenders to extend grace periods for interest payments on outstanding credit facilities and bonds.
Audacy was delisted from the New York Stock Exchange in May for violating the exchange’s minimum share price rules. It has been trading on the fund ever since. Although a 30-for-1 reverse stock split boosted the stock price from $0.07 to $2.13 on June 30, the stock lost nearly all of its value over the next six months.
On Thursday, Audacy stock closed at $0.1896 per share, giving the company a market capitalization of less than $900,000.