Audacy Filed For Bankruptcy

[TheBigA]

It's official, the company made the announcement Sunday morning:

Announcement - Strengthening Audacy

Audacy Reaches Agreement with a Supermajority of its Debtholders on Balance Sheet Deleveraging Transaction that Will Equitize Over 80% of it's Debt

forward.audacyinc.com

A supermajority isn't everybody. That means there will be some lawsuits and challenges to this agreement.

The creditors are named here:

Audacy Agrees To Restructuring With Debt Holders; Files For Chapter 11 Bankruptcy Protection

Audacy has reached agreement with its debt-holders on a prepackaged restructuring and filed for Chapter 11 bankruptcy protection. As part

radioinsight.com

 

[RadioGuy1864]

There's no information about how much equity the creditors get, and how much the Field's get to keep. With 80% of debt going into equity, I think it's a safe bet the Creditors will be exercising majority control of Audacy

 

[Lefty61]

They chose same venue in Texas that handled IHeart reorg, which will help expedite process which will still be lengthy. Issues with approval will likely come from unsecured "Trade" creditors committee, top four in filing are Katz Media owed $9.8MM, BMI $3.5MM, CBS Interactive $2.3MM and Cox Reps $2.3MM. Also listed in top 30 is New Orleans Saints at $600K.

 

[Lefty61]

There's no information about how much equity the creditors get, and how much the Field's get to keep. With 80% of debt going into equity, I think it's a safe bet the Creditors will be exercising majority control of Audacy

Old stock will be complete wipeout, maybe they appease with some Newco non-voting warrants.

 

[Kelly A]

There's no information about how much equity the creditors get, and how much the Field's get to keep. With 80% of debt going into equity, I think it's a safe bet the Creditors will be exercising majority control of Audacy

But that's assuming they want it. It's a safe bet that none of these lenders are interested in owning a piece of a traditional radio company.

 

[TheBigA]

But that's assuming they want it. It's a safe bet that none of these lenders are interested in owning a piece of a traditional radio company.

They have to get something in exchange for relieving this debt. They're not just walking away. According to Lance, two lenders will take the lead:

Two of its lenders have secured claims and are set to become the company’s shareholders with WSFS Bank of Wilmington DE owed $882,817,913 for Audacy’s credit facility, Deutsche Bank Trust Company Americas owed $480,846,944 for notes due in 2027 and $559,338,750 for notes due in 2029.

So that means seats on the board and equity in the new company,

 

[Kelly A]

They have to get something in exchange for relieving this debt. They're not just walking away. According to Lance, two lenders will take the lead:



So that means seats on the board and equity in the new company,

I get how the process works, but having to figure out how to extract what's owed from a struggling industry without further investment usually means parting it out. Trying to do the iHeart model with a focus on digital is a been there, done that.
As we've discussed here; it's not like larger groups, that aren't EMF, are able or willing to pay top dollar or multiples for radio properties. So, no options for future growth. Nobody interested in picking up stations no longer worth what was paid.
What's left?

 

[Deus Ex Machiato]

Earlier on I made an analogy about how Audacy buying the CBS stations and then cleaning house was like a smaller restaurant company buying a chain of high end steakhouses, firing all the chefs, and not understanding why things didn't work out so well. Well maybe they can't cook a good steak, but I gotta hand it to David Field and the kitchen at Audacy. This is an epic corporate word salad:

Audacy Chairman/CEO/President David Field says in the press release, “Over the past few years, we have strategically transformed Audacy into a leading, scaled multi-platform audio content and entertainment company through our acquisition of CBS Radio and by building leading complementary positions in podcasting, audio networks, live events, digital marketing solutions and our direct-to-consumer streaming platform. While our transformation has enhanced our competitive position, the perfect storm of sustained macroeconomic challenges over the past four years facing the traditional advertising market has led to a sharp reduction of several billion dollars in cumulative radio ad spending. These market factors have severely impacted our financial condition and necessitated our balance sheet restructuring. With our scaled leadership position, our uniquely differentiated premium audio content and a robust capital structure, we believe Audacy will emerge well positioned to continue its innovation and growth in the dynamic audio business.”

 

[TheBigA]

Nobody interested in picking up stations no longer worth what was paid.
What's left?

Cash. Broadcasting throws off a lot of cash, and you keep getting it until you feel satisfied. Then you sell your equity to someone else who deals in long term debt. Similar to dealing in annuities. Who in their right mind would get in that business? Lots of people do.

 

[Larry]

Another article I saw mentioned this is the time for Audacy to renegotiate real estate (and possibly other) leases. I wonder if this is the prelude to a number of AM stations being shut down. If there are no potential buyers, the stations aren’t profitable or contribute to a cluster and they occupy Audacy owned real estate this might be the time to make a move.

 

[TheBigA]

Another article I saw mentioned this is the time for Audacy to renegotiate real estate (and possibly other) leases. I wonder if this is the prelude to a number of AM stations being shut down. If there are no potential buyers, the stations aren’t profitable or contribute to a cluster and they occupy Audacy owned real estate this might be the time to make a move.

It sounds like you're talking about tower land. They identified several of those sites a year ago in Audacy Atlas. But they don't have a lot of total money losers. WWKB in Buffalo might be one. The tower site there is one they own, not lease. But if they want to keep the station active, they can just combine the towers on a single site.

 

[Rusty Muck]

It sounds like you're talking about tower land. They identified several of those sites a year ago in Audacy Atlas. But they don't have a lot of total money losers. WWKB in Buffalo might be one. The tower site there is one they own, not lease. But if they want to keep the station active, they can just combine the towers on a single site.

Haven't WGR and WWKB been diplexed on the same site for nearly 80 years?

 

[Theater of My Mind]

Official site with lots of word salad:

Forward Audacy - Strengthening Audacy | For the Future

Audacy has taken strategic action to significantly deleverage its balance sheet and further position the Company for long-term growth.

forward.audacyinc.com

 

[TheBigA]

Haven't WGR and WWKB been diplexed on the same site for nearly 80 years?

Correct. Here's what the Atlas filing says:

Those tower holdings can be split into two categories with some of them such as WCCO and WGR/WWKB in places where sales for redevelopment may be possible or sites that have additional tenants where the company is either looking to protect them from a bankruptcy process or selling to a tower management company like Vertical Bridge or Crown Castle.

But those are land sales, not lease renewals. I was surprised how many studios they own. I had been led to believe the Phoenix building was leased, but no, it's owned. At least for now.

 

[BoboKnight]

They chose same venue in Texas that handled IHeart reorg, which will help expedite process which will still be lengthy. Issues with approval will likely come from unsecured "Trade" creditors committee, top four in filing are Katz Media owed $9.8MM, BMI $3.5MM, CBS Interactive $2.3MM and Cox Reps $2.3MM. Also listed in top 30 is New Orleans Saints at $600K.

Same bankruptcy judge as the Bally Sports networks bankruptcy cases.

 

[TheBigA]

Same bankruptcy judge as the Bally Sports networks bankruptcy cases.

LOL That guy has gone through the wringer on that one.

 

[Rusty Muck]

LOL That guy has gone through the wringer on that one.

If he managed to survive putting up with all the antics in that case, this should be easy peasy lemon squeezey.

 

[MarkW]

It's official, the company made the announcement Sunday morning:

Announcement - Strengthening Audacy

Audacy Reaches Agreement with a Supermajority of its Debtholders on Balance Sheet Deleveraging Transaction that Will Equitize Over 80% of it's Debt

forward.audacyinc.com

A supermajority isn't everybody. That means there will be some lawsuits and challenges to this agreement.

The creditors are named here:

Audacy Agrees To Restructuring With Debt Holders; Files For Chapter 11 Bankruptcy Protection

Audacy has reached agreement with its debt-holders on a prepackaged restructuring and filed for Chapter 11 bankruptcy protection. As part

radioinsight.com

The named lenders are simply the administrative agents. The various debt tranches are split between numerous lenders.

I will try to look at the plan of reorganization later today.

 

[Kelly A]

Cash. Broadcasting throws off a lot of cash, and you keep getting it until you feel satisfied.

But cash from where that doesn't harm the operation to bring in that cash? And since Audacy has already visited several rounds of sacrificial cutting, it's not like the banks are in a position to cut below the bone.

Then you sell your equity to someone else who deals in long term debt. Similar to dealing in annuities. Who in their right mind would get in that business? Lots of people do.

But that used to spell private equity. The thought of private equity purchasing for broadcast properties went away after 2008.

 

[TheBigA]

The thought of private equity purchasing for broadcast properties went away after 2008.

Nobody says it's easy. That's why it took a year to work out.