Townsquare Media on Tuesday (12/15) moved forward with initiating a $550 million bond offering — a move that prompted the local media company to pre-release its fourth quarter earnings well ahead of schedule.
What does the owner of radio stations in small and mid-sized markets, which has excelled in programmatic and local digital across its markets, have to report with two weeks remaining in 2020?
Townsquare Media COO/Local Media Erik Hellum (pictured) tells RBR+TVBR, “Given the challenges that our industry and our company have faced in 2020, we are really excited about and proud of these results.”
He pointed to comments made on Townsquare’s third quarter earnings call from CEO Bill Wilson, who said that his fourth quarter goal was to cut the company’s Q3 2020 net revenue decline of 15% in half in Q4.
Guess what? Preliminary Q4 net revenue is forecast to be between $107 million and $109 million, a decline of between 2.7% to 4.5%, “significantly outperforming that goal.”
Thus, the financial rebound for Townsquare Media is exceptional.
“For full context, our net revenues declined 35% in Q2, during the worst of the pandemic and resulting shutdowns, and we more than cut that decline in half in Q3 (to -15%), and will more than cut that Q3 decline in half again in Q4,” Hellum says.
Additionally, Townsquare’s adjusted EBITDA is expected to fall between $27 million and $28 million, Wilson shared in a formal statement. This represents growth of between 8.3% and 12.3%, year over year — beating 2019.
“This has been quite a year, and no doubt we are looking forward to turning the page to 2021, but we are excited to finish the year on a very positive note — returning to growth, benefitting from a diversified business with a large percentage of our business digital, using a combination of strong local brands/great ideas/first party data to help local clients get results, all driven by the most talented team we have had yet,” Hellum says.
A HALF-BILLION-PLUS NOTE SALE
Townsquare Media’s offering of $550 million in aggregate principal amount of senior secured notes due 2026 are considered senior secured obligations and will be guaranteed on a senior secured basis by direct and indirect wholly owned Townsquare subsidiaries.
Why is Townsquare engaging in the big bond offering? It intends to use the net proceeds along with cash on hand, to repay its existing senior secured credit facilities, to redeem all of its outstanding 6.5% senior notes due 2023, and to pay the premium, fees and expenses related to those notes.
Translation: It is a new debt for old debt move.
Townsquare also intends to terminate its existing senior secured credit facilities, including its existing revolving credit facility — a sign of fiscal health.
Early reaction on Wall Street is positive, with TSQ trading at $7.77, up 10 cents from Monday’s close.
Townsquare Media’s larger markets include Albany and Buffalo, N.Y.; El Paso; Fort Collins, Colo.; and Boise, Idaho.
