According to the Wall Street Journal, Audacy, the radio and podcast giant, he was announced that it has filed for Chapter 11 bankruptcy protection to repay a portion of its $2 billion debt.
According to the company, the restructuring deal will enable Audacy to reduce its overall debt by 80%, bringing it down to approximately $350 million from the previous level of around $1.9 billion.
"Prepackaged Bankruptcy Plan"
Audacy has been missing loan interest payments since late last year to repay an accrued debt during the merger of former Entercom Communications with CBS Radio in 2017. According to the Wall Street Journal, Audacy, with $632 million in first lien debt due in November 2024, has struck a deal with its lenders for a "prepackaged bankruptcy plan," which lenders are expected to support financially.
"Perfect Storm" of Macroeconomic Challenges
Audacy, among the most significant U.S. radio owners with 230 stations in 46 markets, has recently undergone format changes leading to substantial job losses due to the consolidation of on-air positions but still experiences financial losses, including a $281.7 million loss in the third quarter of 2023 as indicated in its recent quarterly report. Audacy has filed a proposed reorganization plan outlining the terms and awaits court approval in February.
With a "perfect storm" of economic challenges affecting the entire broadcast industry, the company has secured an agreement with a "supermajority" of its debtholders for a financial restructuring that aims to substantially reduce Audacy's debt and position the company for long-term growth, according to David Field.
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"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 Field, CEO of Audacy, said in a statement.
Strategic Firm's Multi-Platform Transformation
As mentioned in the statement, the financial reorganization will create a strong capital structure that leverages the company's strategic transformation into a prominent multi-platform audio content and entertainment firm.
Chapter 11 Filing of Other Radio Companies
Audacy is the third among the top three commercial radio companies in the U.S. to undergo a Chapter 11 process in the last seven years. iHeartMedia completed its 15-month Chapter 11 proceeding in May 2019. While Cumulus, the third-largest radio company, emerged from a seven-month Chapter 11 process in June 2018.
Reassurance of Normal Operations During The Process
Audacy states it will maintain regular operations throughout the process. The company's stock, with the symbol "AUDA," will continue trading over-the-counter, having been delisted by the New York Stock Exchange in November.
Audacy reassures normal operations and anticipates no effects from the restructuring. According to the radio company, trade and other unsecured creditors will also not face any impairment.
The Philadelphia company is a leading radio broadcaster in the United States that owns numerous radio stations, such as WFAN Sports Radio, New York's 1010 WINS, and KCBS.
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