Radio broadcaster Audacy files for Chapter 11

March 2024 | DEALFRONT | BANKRUPTCY & CORPORATE RESTRUCTURING

Financier Worldwide Magazine

March 2024 Issue

Amid a plunging advertising market, one of the largest operators of commercial radio stations in the US, Audacy, Inc., along with 47 of its subsidiaries, has filed for Chapter 11 bankruptcy protection.

The filing will allow Philadelphia-based Audacy, which owns more than 200 stations across the US, to implement a prepackaged restructuring support agreement (RSA) with a supermajority of its debtholders that will allow it to reduce its debt.

The company says the RSA will reduce its debt by 80 percent from around $1.9bn to approximately $350m. Under this agreement, debtholders will receive equity in the reorganised company.

The RSA will also enable Audacy to continue its digital transformation and capitalise on its position as a scaled, leading multi-platform audio content and entertainment company differentiated by its exclusive, premium audio content.

As well as operating one of the US’ two scaled radio broadcasting groups and one of the largest podcast studios – the Audacy direct-to-consumer streaming platform and multiple audio networks – Audacy is also a major event producer, a digital marketing solutions provider and the unrivalled leader in local news and sports radio.

While the company owns hundreds of radio stations across the US, including WFAN and WINS in New York, KROQ in Los Angeles and KCBS in San Francisco, Audacy reportedly picked up most of its debt after its merger with CBS Radio in 2017.

“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 advertising spending,” said David J. Field, chief executive of Audacy. “These market factors have severely impacted our financial condition and necessitated our balance sheet restructuring.”

During the Chapter 11 process, certain of Audacy’s existing lenders have committed to provide $57m in debtor in possession (DIP) financing, comprised of $32m of a new term loan and a $25m upsize of the company’s existing accounts receivables financing facility from $75m to $100m.

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 fulfil commitments to employees, advertisers, partners and vendors. The company expects to operate normally during this restructuring process under its current leadership team.

Moreover, Audacy’s common stock will continue to trade over the counter under the symbol ‘AUDA’ through the pendency of the Chapter 11 process. Shares are expected to be cancelled and receive no distribution as part of Audacy’s restructuring.

Audacy shares were delisted from the New York Stock Exchange in November 2023, and are now traded over the counter, with the stock plummeting by 97 percent over the past 12 months. However, the company said that it expects to emerge from bankruptcy after obtaining approval by the Federal Communications Commission.

Mr Field concluded: “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.”

Fraser Tennant