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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).
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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.

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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!
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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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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.
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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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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.
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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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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.
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Re: Cumulus debt restructuring proposal announced!

Post by Radio Sucks » Tue Dec 19, 2017 5:57 am

Seems the Chicago deal is way up in the air!!!!!
“Tom Taylor Now newsletter on Tuesday” wrote:The other challenge is from Chicago station owner Merlin Media, which protests the classification of its long-planned sale of classic rock WLUP/97.9 and alternative WKQX/101.1 to Cumulus as a “subordinated claim.” In other words, Merlin wants its $50 million in cash.
Here's the link to the entire newsletter this morning, which contains more info.


Image
Last edited by Radio Sucks on Tue Dec 19, 2017 6:28 am, edited 1 time in total.

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Re: Cumulus debt restructuring proposal announced!

Post by audiophile » Tue Dec 19, 2017 6:14 am

Rutro! Here was the other half of that story....

The Official Committee of Unsecured Creditors basically tells the bankruptcy judge that the December 9 “Joint Plan of Reorganization” filed by management “would significantly overcompensate the term loan lenders, to the detriment of unsecured creditors.” Remember the proposed split – the lenders would exchange their roughly $1.73 billion (face value) of debt for 83.5% of the re-organized Cumulus. Leaving the noteholders 16.5%. The committee’s also taking issue with the use of the cash collateral to fund the Chapter 11 process.
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Re: Cumulus debt restructuring proposal announced!

Post by MWmetalhead » Tue Dec 19, 2017 4:19 pm

I peeled this onion weeks before the clueless trade media.

I'm gonna wear out my arm patting myself on the back! ;)

This case is gonna turn ugly.
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Re: Cumulus debt restructuring proposal announced!

Post by MWmetalhead » Tue Dec 19, 2017 5:52 pm

Some fun reading can be found here:
http://document.epiq11.com/document/get ... &source=DM

By the way, I'm not 100% sure that the interpretation of Merlin's legal counsel as to Cumulus' intentions are correct here. Then again, I'm not privy to any conversations that may have transpired between Randy Michaels (on the one hand) and Mary Berner or John Abbot (on the other hand).

I believe Cumulus views the unpaid "Put" amount as a secured claim and only the unpaid LMA fees & related items as unsecured claims.

Here's what I do know - Mary Berner sure as hell does NOT want to fork over the $50 million that's due & owing right now. She wants to use that cash instead to fund operating expenses during bankruptcy.

If the judge decides that Cumulus needs to fork over the $50 million if & when FCC approval occurs, that is bad news for Mary. Why? Because it greatly increases the likelihood that Cumulus will need Debtor-in-Possession financing. If the incumbent Senior Secured lenders provide such financing, she can breathe a sigh of relief.

However, if they are unwilling to do so - and if Crestview is also unwilling to do so - that leaves the door wide open for the Dickster (of the Lew variety) to swoop right in, provide such financing himself, and receive a priming lien ahead of all pre-petition creditors. As I explained previously, this would provide him a great deal of bargaining leverage.
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Re: Cumulus debt restructuring proposal announced!

Post by audiophile » Thu Dec 21, 2017 8:34 am

I think we can expect Lew to do that...

There is challenge to the Nielsen after-bankruptcy contract, among others...
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Re: Cumulus debt restructuring proposal announced!

Post by MWmetalhead » Fri Dec 22, 2017 8:30 pm

Prediction - Merlin Media doesn't want its stations back. By that, I mean they don't want to be responsible for day-to-day operations.

I think they'll reach a deal with Cumulus whereby Merlin effectively finances Cumulus' purchase of WLUP and WKQX on a short-term basis, say until the earlier of (a) plan confirmation or (b) 270 days.

If the FCC ownership transfer application can be voided, that opens the door to additional possibilities, such as an extension of the LMA period and renegotiation of the purchase price.

I'd be surprised to see the $50 million dollar purchase price go down. If anything, I think there's a better chance it will be raised. Perhaps such an increase would occur in indirect fashion. For example, if the LMA period were to be extended, maybe only 75 cents on the dollar get credited toward the balloon payment instead of 100 cents on the dollar.

Some creditors may object against the use of cash collateral for performance of "new" LMA payments to Merlin. That would be a tough argument for them to win, I would think, because presumably ad revenue from WKQX and WLUP would be sufficient to service such payments. I don't see how Cumulus can continue to keep such proceeds if (a) they don't pay Merlin what's owed to Merlin and (b) the prior LMA has expired. In other words, I don't see how Cumulus can "keep its cake and eat it, too." The fact the FCC is involved certainly throws a monkey wrench into the mix and makes the legal arguments difficult to predict!

If I were Merlin's legal counsel, I'd be on the phone with the FCC pleading with them to postpone any action on the ownership transfer request until this mess is sorted out.
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Re: Cumulus debt restructuring proposal announced!

Post by Radio Sucks » Thu Jan 04, 2018 12:01 pm

Hew MW, can you decipher this article for us financial idiots?

https://seekingalpha.com/article/413534 ... bankruptcy

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