In a little-noticed sidelight to the merger of Cumulus Media Partners (CMP) into Cumulus Media Inc. (CMI), a CMP subsidiary had cut a deal with its lenders back in February – long before the merger – to restructure its debt, which was in default. That Chapter 11 filing was originally expected to take place in Q3, but is now targeted for early 2012.
The subsidiary in question, CMP KC LLC, owns two Kansas City stations – KCHZ-FM and KMJK-FM (which Cumulus just retrieved from a trustee to return to its cluster) – and two in Houston – KFNC-FM and KHJK-FM.
CMP KC LLC has been in default on its debt since last year. Under the restructuring deal cut in February CMP KC LLC is to file a pre-packaged bankruptcy proceeding which will reduce its debt from $94.8 million (as of 3/31/11) to $20 million and the lenders will end up owning the equity. Cumulus Media will continue to manage the stations under a management agreement.
The rest of the former CMP stations were owned by a different subsidiary and their assets did not guarantee the CMP KC LLC debt.
CMI had already determined that it was not the primary beneficiary of CMP KC LLC, so its financials were not consolidated by CMI.