Cumulus Shares Sink Following Voluntary Chapter 11 Move

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Cumulus Media shares plummeted during Thursday’s trading on the OTC exchange, following the Atlanta-based company’s Wednesday evening announcement that it has elected to file for reorganization under Chapter 11 of the U.S. Bankruptcy Code. 

The filing by the nation’s No. 2 radio broadcasting company by number of stations was made in U.S. Bankruptcy Court for the Southern District of New York. 

The decision to make the bankruptcy filing allows Cumulus Media to enter into a Restructuring Support Agreement “with certain of its secured lenders, among others, holding, in aggregate, approximately 69% of the company’s term loan” to reduce Cumulus’ debt by more than $1 billion.


“This is an important and positive step forward for Cumulus,” a company spokesperson said. “Cumulus is using the court-supervised Chapter 11 process to remove the company’s financial constraints, which will provide the flexibility needed to make investments that will strengthen competitiveness and drive growth.”

To help answer questions, the website www.cumulus.com/restructuring has been set up for public access. Additionally, there is a Cumulus Restructuring Hotline — available toll-free at 1-844-429-1668; calls originating outside of the U.S. may dial 503-597-5529.

In addition, court filings and other documents related to the court-supervised proceedings were made available on a website administered by Cumulus’s claims agent, Epiq: http://dm.epiq11.com/cumulus.

Paul, Weiss, Rifkind, Wharton & Garrison LLP is acting as legal counsel.

PJT Partners Inc. is acting as financial advisor to Cumulus.

Alvarez & Marsal is serving as restructuring advisor.

In a release distributed Wednesday evening, Cumulus Media President/CEO Mary Berner commented, “Over the last two years, we have focused on implementing a business turnaround to reverse the company’s multi-year ratings; revenue and EBITDA declines; create a culture that fosters motivated and engaged employees; and build an operational foundation to support the kind of performance we believe Cumulus is capable of delivering.”

She then said that Cumulus’ turnaround “has not only been successful but is continuing,” with increased ratings, revenue market share gains, improved employee satisfaction, reduced employee turnover and, over the last several quarters, “our return to year-over-year EBITDA and revenue growth.”

But, as Cumulus has noted “consistently,” the “debt overhang left by previous years of underperformance remains a significant financial challenge that we must overcome for our operational turnaround to proceed.”

Berner continued, “The actions we are taking today to address our balance sheet are a critical step forward for Cumulus. We will use this restructuring process to relieve the financial constraints on our continued progress, allowing us to focus our resources on investing in our business and people to strengthen our competitiveness and ultimately drive growth.”

She noted that Cumulus has “ample cash” to support its operations and service the company’s advertisers, vendors and affiliates during this period, and that Cumulus looks forward “to becoming an even stronger partner to all of them when we complete this important phase of our turnaround strategy.”

Cumulus expects all operations, programming and sales to continue as normal throughout the restructuring process. It does not intend to seek debtor-in-possession (DIP) financing.

Cumulus shares finished Wednesday’s trading at $0.1549.

With Thursday’s Opening Bell, the company’s stock began its dramatic plunge. As of 2:21pm Eastern, CMLS shares were off 7 cents — to 8 cents per share.

Had the company’s 1-for-8 reverse stock split conducted in mid-October 2016 not occurred, Cumulus shares would be valued at one penny.

With minutes to go before the Closing Bell on Wall Street, Cumulus shares were down by 35.4%, to 10 cents per share.


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