Audacy officially files for Chapter 11 reorganization

[MWmetalhead]

Filing occurred this morning, January 7. First day hearings are scheduled for Monday. The Judge to which this case has been assigned is the same judge who handled the Bally Sports (Diamond) case.

$57 million in Debtor-in-Possession financing has been provided, which will tide the company over from a cash standpoint until it can exit from Chapter 11.

The Plan of Reorganization, which I've not yet found online, proposes equitizing or forgiving the vast majority of the company's current $1.9 billion debt load. Opening funded debt of the reorganized company is expected to be $350 million, but it is unclear to me (since I've not yet seen the plan) if that $350 million figure will be subdivided between senior and subordinated debt. Also unclear is the ownership composition of the reorganized company, since the plan of reorganization is not yet available for public viewing.

https://dm.epiq11.com/case/audacy/info
https://forward.audacyinc.com/

[TC Talks]

Who eats 1.9 Billion without dissolving the assets?

Better yet, what lending institution thought funding Radio was a good idea in the first place?

[MWmetalhead]

Who eats 1.9 Billion without dissolving the assets?

It will be interesting to see how much of the equity in the new co is granted to the 1L Lenders. I would expect only select assets to be sold post-emergence from Chapter 11, much like what we saw with Cumulus. I also suspect a number of lenders who receive equity in the reorganized company will look to sell their stakes in the coming year.

A number of dopey lenders thought underwriting and/or funding an M&A transaction in a dying industry - and one that is highly sensitive to macroeconomic cycles to boot - at over 4x pro forma leverage would be a good idea. The thing is - Audacy has underperformed so spectacularly that even a deal levered at 2.5x pro forma EBITDA likely would have failed at some point. What was supposed to be a ~$425 million per year EBITDA company is now at or below a $100 million per year run rate.

[TC Talks]

Anyone who has paid marginal attention to operations would have seen the pending revenue issues. Those rev opportunities are now gone (to the socials) and won't come back with a "turn around".

[MWmetalhead]

Agreed. The long term trend will continue to be one of revenue decline. It won't be a smooth line, of course, but total radio broadcasting revenue ten years from now will almost certainly be lower than today in inflation adjusted dollars.

[whitebalance]

Just bad Trump like management. Buying stations you can't afford to run. Then avoiding your responsibilities by declaring bankruptcy.

[ProducerXM]

Just bad Trump like management. Buying stations you can't afford to run. Then avoiding your responsibilities by declaring bankruptcy.

Oh seriously, fuck off. Why you dorks always gotta make it about Trump? Can we not have one topic where you neurotic losers don’t make this shit political?

David Field is a self declared Democrat and champions Democrat causes. He’s no Trump.

[TC Talks]

David Field is a self declared Democrat and champions Democrat causes. He’s no Trump.

He's not Trump. David Field hasn't been charged with overstating the station's values.

Usually, funding comes with spending objectives. These investors wanted Audacity to aquire...

MW, who was the principal debt holder?

[Gertner]

Just bad Trump like management. Buying stations you can't afford to run. Then avoiding your responsibilities by declaring bankruptcy.

Haha it's so true

[MWmetalhead]

David Field is a self declared Democrat and champions Democrat causes. He’s no Trump.

He's not Trump. David Field hasn't been charged with overstating the station's values.

Usually, funding comes with spending objectives. These investors wanted Audacity to aquire...

MW, who was the principal debt holder?

I need to dig into the filings more deeply. Deutsche was lead lender on the 2027 and 2029 notes, if I remember correctly. JPMorgan Chase held substantial paper, too, but possibly unloaded its position.

[MWmetalhead]

The $350 million in exit debt will consist of a $100 million asset securitization facility (essentially a rollover of the existing facility), about $32 million in 1st lien, 1st out term loans (refinancing the DIP facility), and about $218 million in 1st lien, 2nd out term loans.

Prepetition 1st lien lenders (whose prepetition claim is in the $800 million to $900 million range) will share in 75 percent of pre-diluted equity in new co and in the 2nd out term loans.

Prepetition 2nd lien lenders (whose prepetition claims are close to $1 billion) will share in 15 percent of pre-diluted equity in new co.

The other 10 percent of pre-diluted equity in new co will be reserved for exit 1st lien lenders who are contributing "new money," if applicable.

The 2nd lien lenders are getting richer consideration than I expected. If this were a non pre-pack, they would've wound up with maybe 5 percent equity or less. The 1st lien lenders were persuaded not to fight in court, evidently.

86 percent of 1st lien claims and 73 percent of 2nd lien claims have already voted to accept the plan as presented. Now, it's a matter of the court certifying the classes, offering a period for objections to be filed and heard, etc.

Prepetition equity holders will get zero. They would need to commit money to the exit financing to receive even a small piece of new co equity.

[MWmetalhead]

PJT Partners ascribes an enterprise value range of $600 million to $800 million on a post-reorganization basis.

That is a far cry from the over $2B in capitalization that existed when the Reverse Morris Trust transaction with CBS Radio occurred.

Audacy was down to about $37 million in accessible cash when it filed. With the up sizing of the receivables securitization facility plus the $32 million DIP term loan, it should have plenty of dry powder to bridge to exit from Bankruptcy.

[TC Talks]

The stations have to be cash flowing positively. The debt is 350 million coming out?

[MWmetalhead]

No. The $100 million asset securitization facility will remain in place. $32 million of the $250 million exit term loan will repay the DIP term lenders. The other $218 million of the exit term loan plus a 75 percent equity stake will be used to settle the prepetition revolving line of credit and Term B-2 claims, which are pari passu prepetition 1st lien obligations (those claims are somewhere in the neighborhood of $900 million collectively, I believe).

[lidoshuffle]

Just bad Trump like management. Buying stations you can't afford to run. Then avoiding your responsibilities by declaring bankruptcy.

He resides in your head 24/7/365, doesn't he?
DJT resonates deep in your soul, consumes your daily thoughts and actions, doesn't he?