Audacy stands to receive roughly $25 million in proceeds from its equity stake in BMI following the acquisition of the performance rights organization from a shareholder group led by New Mountain Capital. Among those shareholders are several radio companies. However, due to Audacy’s ongoing chapter 11 restructuring, it first needs to get approval from U.S. Bankruptcy Court for a settlement agreement with BMI to move forward.
On Wednesday, Audacy filled an Emergency Motion with the court seeking authorization to enter into a settlement agreement with BMI and Otis Parent Inc., one of the affiliates of New Mountain Capital. A hearing on the matter is set for Monday, Feb. 5.
On Nov. 22, a New Mountain Capital-led shareholder group said it will acquire the performance rights organization in a transaction that is expected to occur by the end of first quarter 2024.
In December, Audacy began reviewing BMI’s corporate books, its own records and publicly available info to determine how many shares of BMI it owned as result of the various radio groups it acquired over the years.
Audacy said in a court filing that it was prepared to sue to prevent the sale of BMI until it resolved outstanding questions regarding its stockholdings in BMI.
Audacy is trying to fast track the matter and get the court’s blessing for the agreement by Feb.14 because “any delay” could risk postpone the closing of BMI’s sale and that would “put in jeopardy the Debtors’ receipt of the substantial funds at the center of the compromise.”
Complicating matters, BMI has unsettled claims against Audacy. An earlier audit of Audacy’s licensing fees from 2017-2019 found the broadcaster owed $1.68 million in unpaid fees plus an additional $9.26 million for interest and unpaid fees for 2020. Audacy has disputed that claim and has been negotiating with the PRO to settle the matter.
Under a compromise agreement signed by both parties, BMI would pay Audacy a total of $25.4 million for its stake in the PRO. Audacy could pocket an additional $13.58 million from additional shares of BMI it says it owns, if they are not contested by another party claiming ownership.
Audacy has also agreed to pay BMI $550,00 to settle the licensing fee audit claims.
Audacy says members of both its first lien and second lien lender groups support the settlement agreement with BMI.
Audacy’ ownership stake in BMI dates back decades ago when radio and TV broadcasters first invested in BMI as a non-profit organization to collect royalties for songwriters. The company formerly known as Entercom was founded in 1968.
In November, iHeartMedia said it would receive $100 million in proceeds from its equity interest in BMI following the acquisition by New Mountain Capital. iHeart was BMI’s third largest shareholder with about a 10% ownership stake.
Audacy on Jan. 7 began prepackaged chapter 11 proceedings in U.S. Bankruptcy Court for the Southern District of Texas to restructure its balance sheet and slash its total debt from $1.9 billion to $350 million.”