Audacy Starts Debt Restructure Talks With Lenders – Billboard

Radio broadcaster Audacy has begun talks with its lenders to restructure the corporate’s debt as a mushy promoting market clouds its long-term outlook.

The discussions, first reported by the Wall Road Journal, comply with the Could 10 assertion by chairman/president/CEO David Discipline through the firm’s first quarter earnings name that Audacy was “finalizing its preparation to start dialogue with its lenders to discover the financing and methods to handle” its debt load.

“As now we have beforehand said we supposed to do, now we have initiated discussions with our lenders to refinance our debt and optimize our stability sheet to place Audacy for long-term development as we proceed to spend money on our individuals, platform, know-how, content material and development initiatives,” the corporate mentioned in a press release to Billboard.

Audacy warned in a Could 10 10-Q submitting that “difficult macroeconomic situations” equivalent to rates of interest and mushy promoting income had created “important uncertainty in operations.” Discipline mentioned through the earnings name that Audacy’s banks “have traditionally been keen to amend covenants to supply aid throughout recessionary durations” however added “there might be no assurance” the banks would accomplish that in these negotiations.

A weak promoting market has required Audacy and different radio corporations to chop prices, promote non-core belongings and lay off some workers. Audacy’s first quarter web income of $259.6 million was down 5.7% year-over-year and 16% decrease than the identical interval in 2019. The downturn solely amplifies the pressure of Audacy’s debt load. “The primary challenge is an excessive amount of debt in a secular declining trade,” Craig Huber, media analyst at Huber Analysis Companions, instructed Billboard in Could.

Most of Audacy’s $1.88 billion of long-term debt got here from its 2017 merger with CBS Radio. The deal elevated Audacy’s income greater than four-fold but in addition elevated its debt from $468 million on the finish of 2016 to $1.86 billion on the finish of 2017. As of March 31, the corporate was in compliance with its debt covenants, based on its newest 10-Q submitting. However Audacy warned buyers that its forecasted income for the subsequent 12 months “is unlikely to be adequate” to keep up compliance with its covenants. Failing to satisfy these covenants would put the corporate in default and require waivers or amendments from lenders.