Radio company Audacy has reached an agreement with a supermajority of creditors on a prepackaged Chapter 11 bankruptcy deal that will reduce its debt from $1.9 billion to $350 million, the company said. was announced Sunday (Jan. 7). The deal, first revealed last week by The Wall Street Journalwill give Audacy debt holders equity in the reorganized company.
The Chapter 11 proceeding began Sunday in the United States Bankruptcy Court for the Southern District of Texas. Audacy submitted a proposed reorganization plan incorporating the terms of the agreement with lenders. The company expects the court to hold a confirmation hearing in February and exit the bankruptcy process once it receives FCC approval.
Some of Audacy's lenders have committed to provide $57 million in debt financing – $32 million from a term loan and $25 million from an increase in an existing accounts receivable financing facility. The funding, along with the company's cash from operations, will help Audacy maintain its operations and pay its employees, vendors and partners.
Once the plan is approved by the court, the terms of the current board will expire and a new board will be appointed. The reorganization plan asks the new board of directors to adopt a management incentive plan to reward the employees and managers of the reorganized company. The plan will set aside 10% of the new common stock for stock options, restricted stock, appreciation rights and other stock-based awards.
A 2017 merger with CBS Radio helped Audacy — then called Entercom — expand its operations but also increased its debt. Interest payments would be more manageable in a growing business, but “the perfect storm of persistent macroeconomic challenges over the past four years facing the traditional advertising market has led to a sharp decline of several billion dollars in cumulative radio ad spending.” David J. Field, president/president/CEO of Audacy, said in a statement. “These market factors have seriously affected our financial condition and necessitated the restructuring of our balance sheet.”
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.
Sunday's announcement wiped out nearly half of Audacy's remaining stock value as the company's share price fell 47.1% to $0.1058 on Monday. Audacy has been trading over the counter since it was delisted from the New York Stock Exchange in May. A 30-for-1 reverse stock split boosted the stock price from $0.07 to $2.13 on June 30, but the stock lost nearly all of its value over the next six months as financial woes mounted.
from our partners at https://www.billboard.com/business/radio/audacy-reveals-bankruptcy-agreement-lenders-1235578001/