Cumulus said it was looking for some financial breathing room — and it has received $325.7 million’s worth. That’s how much of its debt was set to come due in 2026 but has been pushed back to 2029 under an exchange offer. The move took a “Plan B” and it achieved about 94% of the company’s targeted $346 million, enough of what Cumulus was after. It will not further extend the offer.
In connection with the exchange, lenders also agreed to eliminate nearly all of the restrictive covenants on the debt, as well as eliminate certain events of default, modify or eliminate certain other provisions, and release all the collateral securing the old notes.
First announced in February, Cumulus initially offered lenders a swap that carried an interest rate two points higher than the 6.75% rate Cumulus is currently paying. But it would have cut the amount owed as lenders would get $800 for every $1,000 owed by the company. That offer is now off the table.
After several weeks of looking to swap $346 million, Cumulus said it only had $15 million in loan swaps, and so in late April the company announced a Plan B.
The new offer pays lenders $940 for every $1,000 owed by the company. And while Cumulus will pay a higher interest rate, it won’t go up as much as proposed in the first offer. Instead, Cumulus will pay an 8% rate versus the current 6.75% but will gain more time to pay what’s owed. The loans will not mature until July 1, 2029, 36 months later than when the current notes are set to come due.
It has done the trick, with approximately 94% of the total outstanding principal amount tendered for exchange. Cumulus earlier said that if it didn’t hit its 95% goal it might pull the offer. But it has decided that the swap was a success. That $325.7 million will now be due in 2029. It represents nearly half of the $672.4 million owed to debtholders by Cumulus as of Dec. 31, 2023.
Cumulus CFO Frank Lopez-Balboa said during the company’s quarterly earnings call in February that reducing the total owed and proactively pushing the 2026 debt maturities back three years would “enhance the company’s long-term strategic and financial flexibility.”
The company reports Q1 earnings on Friday (May 3). It said last month that it expects to report net revenue declined 2.3% to 3.3% during the quarter.