What Will Cumulus Do?


All radio eyes are on Cumulus this week as a 30-day deadline approaches before the company possibly goes into an “Event of Default.” Friday is the end of the 30 days that was set into motion on November 1 when the company decided not to make a $23.6 million interest payment on 7.75% senior notes due in 2019. That was followed up by Cumulus disclosing a previously confidential term sheet that includes pre-packaged Chapter 11 details, and later in the month, being delisted by NASDAQ. Although Friday is the 30-day deadline, it is possible we could hear that the company and its lenders are negotiating to fix the debt issue, therefore delaying an “event of default.”

An “Event of Default” means lenders can demand full repayment of the entire loan sooner than it was originally due. It also enables the lenders to seize any collateral that has been pledged and sell it to recoup the loan. The decision not to make the interest payment was made “in support of the Company’s efforts to develop and implement a restructuring that will allow the Company to continue its operations.”

The term sheet filed with the SEC this month was being provided “as part of a proposed comprehensive restructuring transaction.” The company is also hopeful an out-of-court agreement can be made with lenders.

Under the plan, senior lenders, who are owed $1.72 billion, will receive $350 million plus cash on the company’s balance sheet to pay down part of the loan. The remaining amount will be reinstated. 98% of the bondholders would need to agree to the restructuring plan to complete the restructuring outside of bankruptcy court.

4 key points from the proposed restructure in the term sheet were:
– Bondholders will invest $350 million, the proceeds of which will be used to pay down the Term Loan.
– 100% of the $610 million of outstanding bonds will be converted into the common equity of Cumulus.
– The Term Loan interest rate will be increased to LIBOR + 6.0%.
– The company will use excess cash, as of the effective date of the restructuring, to pay down the Term Loan.

Negotiations are ongoing with creditors, however there is no indication that this proposal will be accepted or rejected. The SEC filing says the company will be restructured through either an out-of-court restructuring consistent with the terms and conditions described in the term sheet, or a voluntary pre-packaged Chapter 11 Bankruptcy.


  1. I wonder if there is anyone on this thread who wouldn’t want to own a radio station? Over 93% of the population tune in to radio…and you’re selling air

  2. According to my understanding of TheBigA’s comment, Cumulus must be unique in some way, whereas the rest of the industry is just hunky dory? Where such an assertion of certainty comes from boggles me.
    In a few ranching jurisdictions, if some cattle are found to have Mad Cow disease, one of the options is described as “Shoot, shovel and shut up.
    That has never ended well.

    • The rest of the industry isn’t talking about bankruptcy. The Cumulus situation appears unique in that they have cash on hand to meet their payment. But there appears to be an internal battle going on between two of the lenders. This is an internal situation that has nothing to do with the industry.

      • Others are right here, BigA …whatever your real name is. Don’t be so dismissive of THE FACTS…Cumulus is at the doorstep of bankruptcy, albeit not caused by current management, but by Lew Dickey’s utter incompetence, Iheart is mired with 23 billion dollars debt with them begging the creditors for more time and leniency, CBS gives up on radio… yet those in denial like you, say there is nothing wrong. You are a troll, for sure.

        • All of the companies you listed own a fraction of the radio industry. Around 10%. The rest are doing just fine. You don’t hear about them because they don’t make news. They just make money. BTW CBS still owns 70% of Entercom, and they just launched a bunch of syndicated radio shows from its news division. So they’ve hardly given up on radio. If you knew what was going on, you wouldn’t write such negative crap.

          • Wow. “Negative crap”?? You are not only hostile, you must resort to vulgar name-calling. Get the facts boy. According to Miller Kaplan revenue reports, Cumulus and Iheart radio stations combined represent 23% of all radio revenues!! Got it??? And when 2 companies that represent almost 1/4 of an industry’s revenues are on the verge of insolvency, that loudly states that something is wrong, and the industry needs major overhauling and changes. That is not “negative crap,” that is reality. Deal with it.

          • Who’s calling people names, “Robert?” You called me a troll, remember? I didn’t call you anything. You want major overhauling for the industry, but the two companies you focus on have each replaced the people that created their debt. So they have dealt with their problems as best as they can. As I said, the specific issue with Cumulus has nothing to do with insolvency. They have cash on hand to make the $23 million payment. They’re dealing with an internal battle from the CEO who got the company into this problem in the first place. This story is about how the company will ultimately handle the debt he created.

          • What an assanine statement you make when you say “the specific issue with Cumulus has nothing to do with insolvency.”
            Really??????!!!!!!! Cumulus is on the crest of loan defaulting…that IS symptomatic of IMMINENT insolvency. It is absolutely absurd and hilarious that you would pretend this has nothing to do with insolvency, or looming bankruptcy. STOP obfuscating reality. Just stop.

          • “Robert” you don’t know the full story, or you’re purposely ignoring it. Read the article slowly. They purposely withheld a payment. They have the money. The rest of the loan isn’t due for two more years. So no, they’re not “insolvent.” This is high stakes poker. A very different situation. Rather than yell at me, just watch the story develop. I suspect it will play out in two weeks. At that point, you’ll have a better idea exactly what I’m talking about.

  3. What it says, Robert, is that the industry – although given every opportunity – has not had and does not now have a clue as how, specifically, to drive the business into a position where it no longer is accepting leftovers, and is dining on the meager provisions of the hind tit.

    As to Cumulus: A smarter commentator than me has already opined: “It’s all over except for the yelling.”

  4. It’s sad and pathetic when one of the top stories in the radio industry is about everyone watching to see if one of the biggest companies in the industry is going bankrupt. What does this say about the condition of the radio industry?


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