Cumulus Media Partners completes debt swap


Cumulus Media Partners (CMP) has reduced its debt by completing a swap for most of its senior subordinated notes. Even so, Moody’s Investors Service maintains its negative outlook and says there is a “high probability of further default.”

CMP is a private radio company operating in nine larger markets. It is managed by publicly traded Cumulus Media, but only a minority stake is owned by Cumulus Media. The rest is owned by private equity funds. And, under the just-completed swap, former holders of the company’s 9-7/8% senior subordinated notes due 2104 now hold warrants to claim nearly 40% of the equity.

All of the $175,464,000 face value of notes tendered were accepted, leaving only $12.1 million of the issue outstanding. The noteholders who tendered now own $14,031,000 of new variable rate senior subordinated secured second lien notes due 2014, 3,273,633 shares of new preferred stock and warrants which can be exercised to acquire 3,740,893 shares of common stock.

Moody’s Investors Service had already downgraded CMP, calling the swap “tantamount to a default.” Following completion of the swap, the ratings agency said it would maintain its Caa3 probability of default rating, “to reflect our view that CMP faces a high probability of further default.” Moody’s said the rating outlook for CMP is negative.

Moody’s took these rating actions affecting approximately $700 million of debt securities:

Corporate Family Rating — affirmed at Caa3

Probability of Default Rating — changed to Caa3 / LD from Caa3

Senior subordinated notes due 2014 — affirmed at Ca (LGD6, adjusted to

Ratings downgraded:

Senior secured credit facilities due 2012 / 2013 — to Caa3 (LGD3, 48%)
from Caa2 (LGD3, 39%)

CMP’s SGL-4 liquidity rating is unaffected by this rating action.

The rating outlook is negative.