Audacy, the troubled radio and audio-streaming company, said Sunday it filed plans for Chapter 11 bankruptcy reorganization to slash its debt.
Audacy, founded in 1968 as Entercom Communications, is the second-largest radio broadcaster in the U.S. (after iHeartMedia) with 235 owned radio stations across 48 markets.
Through the restructuring, Audacy expects to eliminate $1.6 billion of funded debt — a 80% reduction from approximately $1.9 billion — to $350 million. The Philadelphia-based company said it filed prepackaged Chapter 11 proceedings in the U.S. Bankruptcy Court for the Southern District of Texas on Jan. 7, 2024. Audacy’s debtholders will receive equity in reorganized company. Audacy expects the court will hold a hearing to consider the approval of the bankruptcy plan in February and to emerge from bankruptcy once regulatory approval is obtained from the FCC.
David Field, Audacy’s chairman, president and CEO, cited a “perfect storm” of macroeconomic challenges for the bankruptcy reorg.
“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,” Field said in a statement. “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.”
Audacy said it expects to “continue operating its business in the ordinary course without disruption to its advertisers, vendors, partners or employees. Audacy expects to operate normally during this restructuring process under its current leadership team.”
During the Chapter 11 process, certain of Audacy’s existing lenders have committed to provide $57 million in debtor-in-possession (“DIP”) financing, comprised of $32 million of a new term loan and a $25 million upsize of the Company’s existing accounts receivables financing facility from $75 million to $100 million. Subject to the Court’s approval, the DIP financing and the Company’s cash from operations and available reserves is expected to enable Audacy to fulfill commitments to employees, advertisers, partners and vendors.
Audacy’s stock was delisted from the New York Stock Exchange in November 2023. The company’s shares will continue to trade over-the-counter under the symbol “AUDA” through the Chapter 11 process. The shares are expected to be canceled and receive no distribution as part of Audacy’s restructuring, the company said.
PJT Partners is acting as investment banker, FTI Consulting is acting as financial advisor and Latham & Watkins LLP is acting as legal counsel to Audacy. Greenhill & Co., LLC is acting as financial advisor and Gibson, Dunn & Crutcher LLP is acting as legal counsel to the DIP financing lenders and the ad hoc group of first lien debtholders. Evercore Groupis acting as financial advisor and Akin Gump Strauss Hauer & Feld is acting as legal counsel to the ad hoc group of second lien debtholders.