Exchanging new debt for old debt is something commonly seen by companies seeking to reduce their leverage, especially if it is a favorable move that can bring more cash to the coffers.
That’s exactly what Cumulus Media plans to do through an offering of $300 million in senior secured first-lien notes due 2026.
The offering is through Cumulus Media New Holdings, an indirect wholly owned subsidiary of the audio company that holds AM and FM radio stations and the Westwood One national radio entity.
Net proceeds of the offering will be used to partially repay Cumulus’ indebtedness under its senior secured term loan facility.
Market reaction to the offering was mixed in morning trading on Nasdaq, with CMLS initially rising until taking a big dip at 10:34am Eastern. Then, a recovery was seen within the next 20 minutes.
As of 11:37am Eastern Cumulus shares are up 1.2% to $16.62.
The note offering comes just six days after Cumulus took a giant step in further reducing its outstanding debt, making a voluntary prepayment of $115 million on its first lien senior secured term loan.
This means that since its emergence from debtor-in-possession status, Cumulus has reduced its total outstanding debt by $200 million.
Additionally, Cumulus’ net leverage has now declined from approximately 5.8x at emergence to approximately 4.8x with this payment.