Happy holidays, Cumulus Media bondholders.
On the Friday before Christmas and the first night of Hanukkah (12/23), the Atlanta-based owner of radio stations across the U.S. announced it has extended the early tender date of its private exchange offer for its 7.75% Senior Notes due 2019 by more than two weeks.
The new Early Tender Date and time is 11:59 p.m. Eastern, on Jan. 10, 2017.
The original Early Tender Date and time was 5 pm Eastern on Dec. 23.
This is a big benefit for bondholders that wish to take action on their notes. By participating in an early tender, holders will receive total exchange consideration.
Eligible holders that have already validly tendered and not validly withdrawn their outstanding notes need not re-tender their outstanding notes — they are locked in.
The Exchange Offer is subject to, and conditioned upon, the satisfaction or waiver of the conditions set out in the Offering Memorandum and related letter of transmittal, subject to the Company’s right to amend or terminate the Exchange Offer prior to the Expiration Date.
Why is the exchange offer being extended?
Cumulus did not offer an explanation. However, the end-of-year holiday period could be attributing to a smaller-than-expected number of takers. Additionally, bondholders may wish to make their exchange in the 2017 tax year.
Meanwhile, Cumulus shares have been volatile of late; as of 11:10 a.m. Tuesday (12/27), CMLS shares were up a penny, to $1.01.
Then, there is the Cumulus lawsuit against JP Morgan Chase & Co. filed close to midnight Dec. 12 in U.S. District State Court for the Southern District of New York.
Cumulus argues that JP Morgan Chase has breached a 2013 credit agreement and is “unreasonably” withholding consent to certain components of its planned refinancing.
This is directly tied to the exchange offer that has just been extended to bondholders, as it is the key for Cumulus’ Refinancing Support Agreement with supporting noteholders of approximately $349.7 million, or 57.3%, of the aggregate principal amount of its outstanding 7.75% Senior Notes due 2019.
Upon completion of the exchange offer, a debt-for-equity swap will have transpired. Former Cumulus noteholders will hold one-third of the company’s common equity, by way of Class A shares.
In return, Cumulus will have retired $610 million in outstanding unsecured indebtedness.
But, here’s what is of paramount concern to JP Morgan Chase: Cumulus will be taking on $305 million in new debt, represented by new revolving loans due 2020 under the company’s existing credit agreement, in order to pay down the old debt. The transfer of funds from a $200 million revolving credit line is also necessary, and Cumulus says JP Morgan Chase is preventing this from happening.
Tapping the revolving credit line was agreed to by bondholders, and would give Cumulus the all-important ability to steer clear of a “springing maturity” on a $1.84 billion loan that would transpire if more than $200 million of the notes are outstanding in January 2019, the lawsuit said.
No borrowings are outstanding under its revolving credit facility, which is what Cumulus wants to tap into.
However, Cumulus is saddled by both its $1.8 billion outstanding in first lien term loans and its 7.75% of senior notes due January 2019.
When the exchange offer is concluded, Cumulus says the participation interests will automatically be deposited into a Delaware statutory trust created for the deal, the “Cumulus Pass Through Trust,” in exchange for an equal aggregate principal amount of new trust certificates due 2020, representing fractional undivided interests in the property of the trust.
Cumulus is currently dealing with some $2.4 billion in debt.