Online Radio Conglomerate Audacy Files for Chapter 11 Bankruptcy
Radio company Audacy has officially filed for Chapter 11 bankruptcy, unveiling a prepackaged deal with a supermajority of lenders
Radio company Audacy has officially filed for Chapter 11 bankruptcy, unveiling a prepackaged deal with a supermajority of lenders to slash its debt from $1.9 billion to $350 million. The agreement, previously disclosed by The Wall Street Journal, will result in debt holders receiving equity in the reorganized company. Chapter 11 proceedings have commenced in the United States Bankruptcy Court for the Southern District of Texas.
Audacy’s proposed plan of reorganization, aligned with the lender agreement, anticipates a confirmation hearing in February. The company aims to exit bankruptcy upon securing FCC approval. To sustain operations during the process, some lenders have committed $57 million in debtor-in-possession financing.
Following court approval, Audacy’s current board of directors will give way to a new board, tasked with implementing a management incentive plan for employees and directors. This plan allocates 10% of new common stock for various equity-based awards.
The financial struggle leading to bankruptcy traces back to Audacy’s 2017 merger with CBS Radio, which expanded its business but significantly increased debt. Market challenges and a sharp reduction in cumulative radio ad spending exacerbated the situation, according to David J. Field, Audacy’s chairman/president/CEO.
This development has impacted nearly half of Audacy’s remaining equity value, as the company’s share price plummeted by 47.1% to $0.1058 on Monday. The Philadelphia-based company, with a portfolio of approximately 230 radio stations and podcasting brands, including Cadence13 and Pineapple Street Studios, faces a significant restructuring journey in the wake of this financial setback.