Radio content and entertainment company Audacy entered into a restructuring support agreement with a supermajority of its debtholders on the terms of a restructuring that will deleverage its balance sheet. Through the restructuring, Audacy and its debtholders will undertake a deleveraging transaction to equitize approximately $1.6 billion of funded debt, a reduction of 80% from approximately $1.9 billion to approximately $350 million. The company does not expect any operational impact from the restructuring, and trade and other unsecured creditors will not be impaired.
“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,” David J. Field, chairman, president and CEO of Audacy, said. “While our transformation has enhanced our competitive position, the perfect storm of sustained macroeconomic challenges over the past four years facing the traditional advertising market has led to a sharp reduction of several billion dollars in cumulative radio ad spending. These market factors have severely impacted our financial condition and necessitated our balance sheet restructuring. With our scaled leadership position, our uniquely differentiated premium audio content and a robust capital structure, we believe Audacy will emerge well positioned to continue its innovation and growth in the dynamic audio business.”
To implement the deleveraging transaction contemplated in the RSA, Audacy and certain of its subsidiaries commenced prepackaged Chapter 11 proceedings in the U.S. Bankruptcy Court for the Southern District of Texas on Jan. 7. In conjunction with the Chapter 11 petitions, Audacyfiled a proposed plan of reorganization that incorporates the terms of the RSA and is subject to approval by the court. Under the terms of the RSA, a supermajority of debtholders committed to vote in favor of the plan, which, when approved, will reduce Audacy’s funded debt from approximately $1.9 billion to approximately $350 million. Audacy’s debtholders will receive equity in reorganized Audacy. Audacy expects that the court will hold a hearing to consider the approval of the plan in February and to emerge from bankruptcy once regulatory approval is obtained from the Federal Communications Commission.
Audacy filed with the court a series of customary first day motions to obtain court authority for the company to continue operating its business in the ordinary course without disruption to its advertisers, vendors, partners or employees. Audacy expects to operate normally during this restructuring process under its current leadership team.
During the Chapter 11 process, certain of Audacy’s existing lenders committed to provide $57 million in debtor-in-possession financing, comprised of a new $32 million new term loan and a $25 million upsize of the company’s existing accounts receivables financing facility from $75 million to $100 million. Subject to the court’s approval, the DIP financing and the company’s cash from operations and available reserves is expected to enable Audacy to fulfill commitments to employees, advertisers, partners and vendors.
Audacy’s common stock will continue to trade over-the-counter under the symbol “AUDA” through the pendency of the Chapter 11 process. The shares are expected to be canceled and receive no distribution as part of Audacy’s restructuring.
PJT Partners is acting as investment banker, FTI Consulting is acting as financial advisor and Latham & Watkins is acting as legal counsel to Audacy.
Greenhill is acting as financial advisor and Gibson, Dunn & Crutcher is acting as legal counsel to the DIP financing lenders and the ad hoc group of first lien debtholders.
Evercore Group is acting as financial advisor and Akin Gump Strauss Hauer & Feld is acting as legal counsel to the ad hoc group of second lien debtholders.