🎧 Audacy files for bankruptcy, citing a $1.9 billion debt and a harsh 2023.

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After reaching a significant restructuring agreement with its debtholders, Audacy has, as anticipated, filed for bankruptcy. On Sunday morning, the business filed for Chapter 11 bankruptcy protection with the United States Bankruptcy Court for the Southern District of Texas.

The restructuring support agreement, also known as the "RSA" or the "Agreement," was signed by Audacy, Inc. (OTC: AUDA) and the majority of its debtholders today. The terms of the agreement include a comprehensive restructuring that will significantly reduce Audacy's balance sheet leverage and further position the company for long-term growth. By way of the restructuring, Audacy and its creditors will carry out a deleveraging transaction in order to equitize about $1.6 billion in funded debt, which represents an 80% decrease from about $1.9 billion to about $350 million. The restructure is not anticipated to have any operational effects on the Company, nor will it negatively affect trade or other unsecured creditors.

"With the acquisition of CBS Radio and by establishing leading complementary positions in podcasting, audio networks, live events, digital marketing solutions, and our direct-to-consumer streaming platform, we have strategically transformed Audacy into a leading, scaled multi-platform audio content and entertainment company over the past few years," stated David J. Field, Chairman, President, and CEO of Audacy. "Although our transformation has improved our competitiveness, the traditional advertising market has faced a perfect storm of persistent macroeconomic difficulties over the last four years, which has resulted in a sharp decline in cumulative radio ad spending of several billion dollars." Our financial situation has been significantly impacted by these market factors, which has made our balance sheet restructuring necessary. We think Audacy will be in a strong position to carry on with its innovation and expansion in the rapidly changing audio industry thanks to our scaled leadership position, our distinctively differentiable premium audio content, and our strong capital structure.

On January 7, 2024, Audacy and a few of its subsidiaries filed for prepackaged Chapter 11 bankruptcy in the United States Bankruptcy Court for the Southern District of Texas (the “Court”) in order to carry out the deleveraging transaction outlined in the RSA. Audacy has filed a proposed Plan of Reorganisation (the "Plan") in connection with the Chapter 11 petitions. The Plan incorporates the terms of the RSA and is pending court approval. A supermajority of debtholders agreed under the terms of the RSA to vote in favour of the Plan, which, if approved, will lower Audacy's funded debt from roughly $1.9 billion to roughly $350 million. Debtors of Audacy will own stock in the reorganised company. Audacy anticipates that the Federal Communications Commission will grant regulatory approval for the Plan, and the Court will hold a hearing to consider approval in February. After that, Audacy plans to emerge from bankruptcy.

Through the reorganisation, Audacy will be able to leverage its position as a leading, scaled multi-platform provider of audio content and entertainment, set apart by its unique, premium audio content, and to further advance its digital transformation. In addition to running one of the biggest podcast studios in the nation, Audacy also runs several audio networks, the Audacy direct-to-consumer streaming platform, and one of the two scaled radio broadcasting groups in the nation. In addition to being the industry leader in local news and sports radio, Audacy is a significant event producer and supplier of digital marketing solutions.

Audacy has submitted a number of standard "First Day Motions" to the Court in an effort to get permission to carry on with its regular business operations without interfering with its advertisers, suppliers, partners, or staff. With its current leadership team in place, Audacy anticipates operating as usual during this restructuring process.

Some of Audacy's current lenders have agreed to contribute $57 million in debtor-in-possession ("DIP") financing during the Chapter 11 process. This amount consists of a $32 million new term loan and a $25 million increase in the company's current accounts receivable financing facility from $75 million to $100 million. In the event that the Court grants approval, Audacy should be able to meet its obligations to its partners, employees, advertisers, and vendors thanks to the DIP financing, operating cash flow, and available reserves of the company.

During the duration of the Chapter 11 procedure, Audacy common stock will continue to trade over-the-counter under the symbol "AUDA." As part of Audacy's restructuring, the shares are anticipated to be cancelled and to receive no distribution.

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