Following completion of its recent swap of new notes, preferred stock and stock warrants to reduce its long-term debt load, Cumulus Media Partners says it should be in compliance with all of its loan covenants at least through the end of 2009. That’s despite the expected continued erosion of ad revenues this year.
RBR/TVBR had already reported on the Q4 results for Cumulus Media Partners, with revenues down 15.5% for the 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.
“As the capital and credit market crisis has worsened during the fourth quarter of 2008 and early 2009, and in conjunction with the development of our 2009 business plan, we continue to assess the impact of recent market developments on a variety of areas, including our forecasted advertising revenues and liquidity. In response to these conditions, we further refined our 2009 business plan to incorporate a further reduction in our forecasted 2009 revenues and additional cost reductions to mitigate the impact of our anticipated decline in 2009 revenue,” Cumulus Media Partners said in its annual report.
Based on actions the company has already taken, including the note swap and a head count reduction in Q4, Cumulus Media Partners management says it believes the company “will continue to be in compliance with all of its debt covenants through at least December 31, 2009 (which become more restrictive effective September 30, 2009 and December 31, 2009).”
As of the end of 2008 Cumulus Media Partners had long-term debt outstanding of $941.8 million. The recent exchange offer reduced the outstanding amount of senior subordinated notes from $187.6 million to $12.1 million. Had it not done so, the company said it would have been in violation of the total leverage ratio covenant of its senior debt agreement as of March 31, 2009.