Those are words we haven’t heard up until now, from Cumulus CEO Mary Berner and CFO John Abbot, but they are hardly unexpected, as the company negotiates with lenders to try pull the company out from under $2 Billion of debt. And while they say Berner’s turnaround is working, this is surely going to have an impact on the thousands of employees around the country who show up to work every day.
Abbot told investors and analysts on Thursday that there was nothing new to report on the negotiations with lenders on a refinance, other than discussions continue. He did say a resolution could be something done out of court, or in a Chapter 11 Bankruptcy. The company reported to the SEC that a Chapter 11 “could result in a significant or complete loss of value to the holders of our common stock.”
Last week, the Cumulus Board of Directors authorized the company to intentionally miss a $23.6 million interest payment on 7.75% senior notes due 2019, most likely to force lenders to come to the table and get serious. By missing the interest payment on November 1, a 30-day clock started ticking. That’s the grace period Cumulus has, giving the company one month to make the payment or go into what is called an “Event of Default.” An “Event of Default” means lenders can demand full repayment of the entire loan sooner than it was originally due. An “Event of Default” also enables the lenders to seize any collateral that has been pledged and sell it to recoup the loan. The filing says the decision was made “in support of the Company’s efforts to develop and implement a restructuring that will allow the Company to continue its operations.”
Here’s the exact wording from the latest company SEC document filed Thursday, November 9.
We are engaged in discussions with our lenders and the holders of our 7.75% Senior Notes regarding restructuring or refinancing our debt obligations. In connection with the restructuring or refinancing of those obligations, we may seek to effectuate a restructuring under the protection of Chapter 11 of the U.S. Bankruptcy Code. Any such action could result in a significant or complete loss of value to the holders of our common stock.
As previously disclosed, the Company, with the assistance of outside advisors, is in private discussions with its lenders and the holders of our 7.75% Senior Notes to proactively restructure its balance sheet and reduce its debt. In connection with the Company’s ongoing discussions with creditors, on October 30, 2017, the Restructuring Committee of the Board of Directors authorized the Company to forego the scheduled interest payment on the 7.75% Senior Notes which was due on November 1, 2017, thereby entering into the applicable 30-day grace period under the terms of the indenture governing such notes. This non-payment constitutes a “default” under the terms of the indenture governing the 7.75% Senior Notes, which matures into an “Event of Default” if such “default” is not cured or waived before the expiration of the 30-day grace period on December 1, 2017. Upon the occurrence of an Event of Default, the trustee under the indenture governing the 7.75% Senior Notes, or the holders of a specified percentage of 7.75% Senior Notes, may declare all outstanding amounts immediately due and payable. Such an Event of Default would also constitute an event of default under the Credit Agreement, which would give the lenders thereunder the right to declare all amounts outstanding under the Credit Agreement to be immediately due and payable.
Read the Cumulus Q3 earnings press release HERE
Read the 52-page 10Q HERE
That TheBigA would even attempt to defend the incompetencies of the thousands and thousands of inept presenters on the air today while using the the ol’ “years of experience”-dodge might suggest a pervasive, crippling attitude in the business.
Presenters, generally, have not been and are not now trained in the basics, never mind the nuances, of communicating to a broadcast audience. Nor are they even given the time or opportunities to experiment.
I am convinced that Programming executives can neither make or articulate any of the necessary distinctions required that would motivate the actions that would move radio out of its own mud bog.
Practically, TheBigA and others who share his position are howling at the moon. That’s about as useful as dancing around a circle of bones next to the campfire.
Lucky, however, are those few impressive talents who really can deliver .
Too many in management treat the addition of “live & local” talent as a simple “plug & play” element – find some people with a pulse and stick ’em on the air. Yeah, that will do it. No, it won’t.
Is the radio leadership so naive and/or uninformed they can’t appreciate the local talent that might be presented MUST also be appealing and effective?
Of course, they are – they have nary a clue. And they demonstrate the premise every day.
“Is the radio leadership so naive and/or uninformed they can’t appreciate the local talent that might be presented MUST also be appealing and effective?”
Maybe you can give specific examples of people you feel are UN-appealing and IN-effective? And specific examples of how they do this. The people Mike McVay and the local PDs have been hiring have many years of experience at lots of companies. They’re not “plug & play.”
Mary is righting the ship the “Dick”ey’s messed up BIG time. It’s been two years and Mary continues to make all the right moves. I expect her, and her team, to get the debt and get Cumulus back on track. The turn in ratings, in a short period of time, is HUGE. Lots of bashers and chumps here. Lets get Cumulus back on track!
People over process. Great Products over process. So simple. So lost in the modern age of radio
Mary is so far removed from how radio works that there is no way this company pulls itself out of this hole. Cut from the top down and free up money to reinvest in talent again and bring back true radio the way it was when it was making a profit. When sales dictates programming your in for a downward spiral. the lack of talent on air and throughout the networks is cause for the decline in revenue. Cumulus stations have become nothing more than a pubic ipod for music with commercials. If I want nothing but music, Ill pick my own songs with no commercials… entertain me and keep me tunes in by giving more than just music that you pick out for me! #clueless
“Cut from the top down and free up money to reinvest in talent again and bring back true radio the way it was when it was making a profit.”
“They chose to cut instead of invest. Starting with live and local talent.”
That may have been true of the previous CEO, but since Mary came in, she went out of her way to return control to the local stations, who have hired a lot of local talent. Unfortunately the investment in local talent hasn’t yielded the anticipated results. Listeners are using Pandora or Spotify because they want local talent. They don’t pay for Sirius because they want local talent. Maybe hiring local talent isn’t the solution some people think it is.
I meant to say Listeners aren’t using Pandora or Spotify because they want local talent.
Cumulus had all the infrastructure to be a great full service media company. They chose to cut instead of invest. Starting with live and local talent. The very fabric of the radio industry. It’s like Amazon saying they won’t deliver to your home anymore.
Now the FCC is going allow radio companies not to have studios in the market they serve? Crazy. It will get worse. Serve the local community first. Ratings and money will follow.
When you hear MGMT talk about “Blocking and tackling” in a changing digital world, it is code for….”We are all out of new ideas”
Cumulus is exactly where they should be based on their actions since 2010
Lee. Good point. And case in point. Cumulus is 5 years behind the digital explosion. And they want to make Those 5 years up in 5 months with NO investment. Citadel was ahead of where Cumulus is now in 2008. Cumulus has no vision. No next big idea. Just take, take take..
In June of this year we presented a plan to Cumulus that would have resulted in 20 – 25 million in revenue company wide from the largest source of local advertising in every US market. And multiples of that as years and months go on. It was outlined to a Cumulus market manager in New York. It was ignored. I am told he “rolled his eyes” The same proposal was made to another Cumulus market manager. It too was swept aside. We are about to start it now with Cumulus competitors. Here’s a basic principle of business: “You cannot cut, negotiate, or even bankrupt yourself into a profit ” Cumulus market Managers are afraid to bring a big idea to corporate. And their corporate is making sure they are unapproachable.
Sit in a meeting of one of the top Capo’s in Cumulus. After one BW meeting you would know instantly where this was going to end
Where did they say they feel like they don’t have to pay their bills? Under what statute would the FCC seize their radio stations and auction them off? The US Constitution prevents the government from doing that. Both companies have been paying principle and interest on their loans for years. So they are paying their bills. Maybe you need to learn how to read.
This is nonsense. Companies like Cumulus and iHeart/Cleae Channel need to HONOR THEIR OBLIGATIONS AND PAY THEIR BILLS!!! Or, the FCC should seize all their radio stations…every one of them…and auction them off. No doubt, Mary Berner and Bob Pittman expect their advertisers to pay them…so why do they feel they don’t have to pay THEIR bills?????