If Cumulus Media was looking for headlines on a day when iHeartMedia, Entercom and Beasley Broadcast Group attracted national attention, this was probably not the best way to do it.
The nation’s No. 2 radio broadcasting company by number of stations revealed in a Securities & Exchange Commission filing on Wednesday (11/1) that a scheduled interest payment of roughly $23.6 million on its 7.75% Senior Notes due 2019 — planned for payment on Nov. 1 — wasn’t paid.
The decision to forego the scheduled interest payment came from the Cumulus Board of Directors’ Restructuring Committee on Monday (10/30).
It’s not a default, however: There is a 30-day grace period worked into the loan agreement, codified in May 2011. Thus, nonpayment constitutes a default if payment is not made on Dec. 1.
Cumulus, with the assistance of outside advisors, is in private discussions with its lenders and noteholders to proactively restructure its balance sheet and reduce debt.
The company says the nonpayment was made in support of its efforts “to develop and implement a restructuring” that will allow Cumulus to continue its operational and financial momentum, “as evidenced” by the release of selected preliminary Q3 results on Oct. 26.
Cumulus says the decision to withhold payment during the grace period will not impact its operating constituents, including Cumulus’ employees, advertisers, network affiliates, vendors and content partners.
The SEC filing comes after Cumulus on Oct. 20 appointed D.J. “Jan” Baker to its Board of Directors. Baker retired as a partner from Latham & Watkins LLP in July, most recently serving as the law firm’s Global Co-Chair of the Corporate Restructuring Practice Group. Baker focused on advising public and private companies in out-of-court restructurings and court-supervised reorganization and restructuring proceedings, regularly advising boards of directors on issues related to corporate governance and fiduciary duties.