Back in early November, Cumulus CFO John Abbot said, “We have too much debt.” He’s been on the job for six months and has said Cumulus’ debt problem is what he was spending the majority of his time on. Since she took over as CEO, Mary Berner has also stressed the importance of reducing debt. She’s repeatedly pointed out that Cumulus’ over-levered capital structure was “real and will continue to limit our turnaround potential.” So here’s what Cumulus announced on Wednesday to reduce debt and extend debt maturity…
Cumulus announced a debt-for-equity swap offer with the holders of $349.7 million (57.3%) of the principal amount of its outstanding 7.75% senior notes that are due in 2019. Those former noteholders will then get a 33.3% equity stake in Cumulus. The deal will allow Cumulus to retire $610 million in debt while taking out $305 million in revolver loans. In short, this gives Cumulus another two years of runway to work on its turnaround, which is substantial. CEO Mary Berner has reported relatively flat to down revenue growth in the year since she’s been in charge. Lately, however, she has been reporting positive ratings growth in several PPM markets.
Read the refinance press release HERE.
