Moody's looking favorably on Cumulus-Citadel deal


Moody’s Investors Service has noted the pending deal to have Cumulus Media acquire Citadel Broadcasting. The credit rating agency is looking favorably on the transaction and has put its ratings of Cumulus on review for a possible upgrade.

“Moody’s believes that the potential for lower leverage, synergies and favorable diversification from the proposed acquisition improves the financial profile of the company. The acquisition terms include a $500 million equity infusion, and Moody’s expects Cumulus’s adjusted debt/EBITDA leverage will decrease by more than one turn, from leverage of 7.6x [trailing 12 months as of 9/30/10],” Moody’s said in a statement.

The proposed deal will have Cumulus acquire Citadel’s 225 radio stations in over 50 markets and also the Citadel Media business, which is among the largest radio networks in the US, Moody’s noted. “After giving effect to the proposed acquisition, Cumulus would operate approximately 570 radio stations, and would be well-diversified given the combination of Cumulus, CMP Susquehanna, and Citadel stations across 120 markets nationally,” Moody’s noted. 

“The review of Cumulus’s ratings will focus on improvements in performance of the combined broadcasters (including the recent assimilation of CMP Susquehanna) following the addition of numerous markets in addition to the Company’s expected deleveraging,” Moody’s said.

Here are the ratings under review for possible upgrade:

..Issuer: Cumulus Media Inc.

….Probability of Default Rating, Placed on Review for Possible Upgrade, currently Caa2

….Corporate Family Rating, Placed on Review for Possible Upgrade, currently Caa1

….Senior Secured Bank Credit Facility, Placed on Review for Possible Upgrade, currently Caa1/LGD 3-34%

Outlook Actions:

..Issuer: Cumulus Media Inc.

….Outlook, Changed To Rating Under Review From Stable