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Cumulus debt restructuring proposal announced!

Topics of general interest that just don't fit anywhere else.
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MWmetalhead
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Re: Cumulus debt restructuring proposal announced!

Post by MWmetalhead » Thu Nov 30, 2017 9:33 pm

To summarize - the $1 billion in debt reduction contemplated by Cumulus' Restructuring Term Sheet would come entirely from discharges granted by the bankruptcy court. There would be not one penny of cash paid by Cumulus to these lenders.

The Term Lenders (also known as the Senior Secured Lenders) would be required to forgive $400+ million in debt and would be granted an 83.5% equity interest in the reorganized company in exchange. $1.3 billion of their debt would survive.

The Bond Holders would be required to forgive their entire $610 million in debt in full and would be granted most of a 16.5% equity interest in the reorganized company (a small portion of the 16.5% would go to certain General Unsecured creditors, not bond holders).
C'mon iHeartRadio - do the RIGHT thing for once! Please cancel "Rover's Morning Glory" from WBFX in Grand Rapids.

Radio Sucks
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Re: Cumulus debt restructuring proposal announced!

Post by Radio Sucks » Thu Nov 30, 2017 11:28 pm

Excellent review of the deal MW. Thanks.

option1
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Re: Cumulus debt restructuring proposal announced!

Post by option1 » Fri Dec 01, 2017 9:55 am

All very informative info!

Off topic a little; what about the human toll? I find it hard to believe that contracts won’t be in the dumpster and or re-negotiated...of course downward. They are reassuring employees now but, lets be honest, working for this company is like not paying your car note and hiding the vehicle from the repo man. Eventually it’ll get towed.

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MWmetalhead
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Re: Cumulus debt restructuring proposal announced!

Post by MWmetalhead » Fri Dec 01, 2017 8:29 pm

I'm working to gain greater clarity on the WKQX/WLUP situation. I'm surprised someone like Robert Feder hasn't expounded on it.

Some people are refuting the notion that Cumulus hasn't already closed on the outright purchase of those two stations, but I've come across no confirmation that the closing has occurred and that the $50 million due was ever paid. Indeed, the info Audiophile posted several days back would suggest the closing hasn't occurred since FCC approval was still pending.

The reason the $45 million or $50 million may not have been listed as an Unsecured Claim on the petition is because, technically, it may not yet be an outstanding obligation owed by Cumulus. There may be termination provisions built into the Put and Call Agreement that are enforceable under certain conditions, such as a bankruptcy filing. Moreover, let's say the $50 million already came due (before the BK filing); how is Merlin Media owed any economic damages if they retain possession of WLUP & WKQX ? That $50 million "put" price is certainly below the combined fair market value of those two stations, I would think.

Of course, another reason the $45 million or $50 million may not have been listed as an Unsecured Claim is if it was, in fact, already paid!
C'mon iHeartRadio - do the RIGHT thing for once! Please cancel "Rover's Morning Glory" from WBFX in Grand Rapids.

Radio Sucks
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Re: Cumulus debt restructuring proposal announced!

Post by Radio Sucks » Mon Dec 04, 2017 6:35 am

MW, this is from "Tom Taylor Now" the daily radio newsletter, talking about the Cumulus bankruptcy and an upcoming hearing including -
.. reps for the 20 largest unsecured claims. That includes Nielsen (owed $6.65 million), BMI, the Broadcasters General Store (about $970,000) and Chicago station owner Merlin Media (about $145,000).
No one in the trade press is talking about the $45/50 million due to Merlin for the two stations except you. What are they missing?

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MWmetalhead
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Re: Cumulus debt restructuring proposal announced!

Post by MWmetalhead » Mon Dec 04, 2017 7:35 pm

The short answer is - they don't have a good understanding of how Chapter 11 works.

Unsecured claims are precisely that - unsecured claims. It's debt due & payable that is either uncollateralized or under-collateralized.

If Cumulus hasn't paid the $45/$50 million, Merlin is whole by virtue of the fact they retain the license and all physical & intangible property relating to WKQX and WLUP. The assets relating to those two radio stations certainly have aggregate value in excess of the $45 million to $50 million that is owing.

It is also possible that the Put and Call Agreement that Merlin attempted to exercise contains a termination clause in the event of bankruptcy.

The FCC database still shows a subsidiary of Merlin Media as the owner of record of both WKQX and WLUP. I've seen no confirmation anywhere that Cumulus actually forked over the payment that was due.

The $145,000 that is due & owing to Merlin Media likely pertains to unpaid LMA fees or maybe royalties of some kind.

If indeed the WLUP and WKQX acquisition by Cumulus was a "done deal," it seems to me they would've gone out of their way to confirm that fact to employees and ad agencies.
C'mon iHeartRadio - do the RIGHT thing for once! Please cancel "Rover's Morning Glory" from WBFX in Grand Rapids.

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Re: Cumulus debt restructuring proposal announced!

Post by Radio Sucks » Tue Dec 05, 2017 8:01 am

Here's the answer - the application has been filed to transfer the stations from Merlin to Cumulus, and the Put and Call agreement was posted (and somewhat redacted) with the application.
If on the Put Date any of the Buyers is subject to a bankruptcy, receivership or similar court proceeding that could materially limit Merlin’s right to exercise the Put under this Agreement, then the Put Date shall be extended until the date that is six months after the expiration of such proceeding.
Perhaps this says Cumulus doesn't have to do anything with Merlin until all this bankruptcy business is complete.

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MWmetalhead
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Re: Cumulus debt restructuring proposal announced!

Post by MWmetalhead » Thu Dec 07, 2017 6:48 pm

Nice detective work! :)

I think all we can conclude at this point is that the previous deal with Merlin is "up in the air" and may or may not move forward as previously structured.

However, if you are correct that the application has indeed been filed, then I would have to believe that the money to complete the deal is currently sitting in escrow, as Mr. Audiophile earlier postulated.

If Cumulus is able to financially move forward with the deal, they absolutely should. $50 million is a below market price for these two stations and would give Cumulus a decent platform for attracting ad buys when combined with WLS-A & WLS-F. I mean, if Cumulus doesn't round out their Chicago portfolio with these two stations, they are basically left with squat. WLS-F has always been a weak biller while 890 WLS will never return to the level of relevance it long enjoyed.
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Re: Cumulus debt restructuring proposal announced!

Post by audiophile » Fri Dec 08, 2017 6:19 pm

Cumulus has signed a multi-year deal with Nielsen for ratings.

This will need to have signed by the judge. Dummies..,renew ratings while the RF plant falls apart.
Last edited by audiophile on Fri Dec 08, 2017 11:45 pm, edited 1 time in total.
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Re: Cumulus debt restructuring proposal announced!

Post by Plate Cap » Fri Dec 08, 2017 10:21 pm

Can't say I would shed any tears for Nielson or BMI, but a million bucks (no doubt on HARD cost product sales) loss, plus legal expenses, to BGS could easily kill them. I've dealt with them for years; they are good operation and must be operating on a razor thin margin as they are usually the best deal on large-cost items like coax. Hope they get something.....but, in actuality, this has been coming for a long, long time and they 'should have known'.

Sigh.
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Re: Cumulus debt restructuring proposal announced!

Post by audiophile » Fri Dec 08, 2017 11:43 pm

I agree BGS could be put under by this. I hope it is lease and they can re-claim the equipment.
Ask not what your country can do FOR you; ask what they are about to do TO YOU!!

Radio Sucks
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Re: Cumulus debt restructuring proposal announced!

Post by Radio Sucks » Sat Dec 09, 2017 5:46 am

The Cumulus Nielsen deal is an admission by Nielsen that they have no other customers for their product, so they will take what they can get from the carcass left of Cumulus.

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MWmetalhead
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Re: Cumulus debt restructuring proposal announced!

Post by MWmetalhead » Sat Dec 09, 2017 7:46 am

Some Cumulus-owned stations in Mid-Michigan sound so ROTTEN from a technical standpoint.

Yes, I'm looking in the direction of WFBE. :)

Most high school stations have better sounding chains than Gnash FM 95.1. I don't how or why anyone would choose to listen to that station over WKCQ, WCEN or WITL.
C'mon iHeartRadio - do the RIGHT thing for once! Please cancel "Rover's Morning Glory" from WBFX in Grand Rapids.

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