Add Cumulus Media to the list of audio content and distribution companies with radio at its roots that has all but recovered from the economic Slip-and-Slide brought forth by the COVID-19 pandemic.
The Atlanta-based company on Thursday (6/24) submitted what’s called an “irrevocable paydown notice” to the administrative agent of its Term Loan to officially make a required paydown of $23 million.
The good news? This represents the remainder of the initial amount of the Cumulus’ Tender Offer that was not validly tendered prior to the expiration date.
For the groups that lent Cumulus the money, holders of the Term Loan are expected to receive their pro rata portion from the paydown on Monday.
With the payment, Cumulus completed its previously announced actions to pay down $175 million of debt — using cash on hand to do so.
Cumulus’ debt reduction actions began on May 17. That’s when the company completed a $60 million repayment of its ABL Revolver due 2025, which represented the entirety of the amount outstanding under the facility. Following the paydown, the ABL Revolver due 2025 is undrawn and available as liquidity for general corporate purposes.
Then, on May 25, Cumulus paid down approximately $89 million of its Term Loan Credit Facility due 2026 related to a mandatory prepayment obligation arising from the company’s sale of the former WMAL-AM tower site. The property, located in Bethesda, Md., was sold in June 2020 after years of wrangling with local leaders over the future use of the land for new home construction. Cumulus also completed a sale of towers and related assets in September 2020.
Pursuant to the terms of its 6.75% Senior Secured First Lien Notes due 2026, Cumulus one day later launched a tender offer to repurchase approximately $26 million of the Notes at par. This, Cumulus says, represents the pro rata amount required to be offered from the proceeds of the tower sale.
As of the expiration of the Tender Offer, approximately $3 million of Notes were validly tendered, accepted for payment and subsequently cancelled.
Giving effect to the impact of the Tender Offer, approximately $450 million principal amount of notes remains outstanding.
“As the improvement in economic and public health conditions continues to drive momentum in business trends, we felt it appropriate to accelerate several debt repayments in order to expedite our balance sheet de-levering, reduce interest expense, and increase our free cash flow generation,” said Frank López-Balboa, the EVP/CFO at Cumulus.
He believes this “better leverage and free cash flow profile,” along with more than $200 million of available liquidity “and solid rebound trajectory” are “significantly enhancing our financial flexibility.”
The liquidity represents $294 million of unrestricted cash on hand as of March 31, less $175 million used to paydown debt — plus $83 million of availability under the ABL Revolver due 2025.
With the news from Cumulus, its shares continued to rise, reaching levels last seen in January 2020. As of 2:18pm Eastern, CMLS was trading at $13.68, up 2.5% from Thursday.
On Aug. 3, 2020, a $3.94 closing price was seen for Cumulus.
That’s an incredible 247% gain in just 11 months.
