Audacy, the second-largest owner of radio stations in the United States, filed for Chapter 11 bankruptcy protection on Sunday in an attempt to restructure its heavy debt load. The company reached a restructuring support agreement with holders of over two-thirds of its senior secured notes to significantly reduce its debt and recapitalize the business.
Lead Up to Bankruptcy Filing
Audacy has struggled financially for years as advertising revenue has shifted away from traditional radio to digital platforms. The company lost $212 million in the first nine months of 2022. Its woes have only intensified due to economic pressures like high inflation and fears of a looming recession.
Audacy carried nearly $2.5 billion in total debt as of Sept. 30, 2022. The company failed to make a $117 million debt payment in December, setting up a 30-day grace period before a possible default.
Key Financial Figures for Audacy
| 2022 Q3 Revenue | $324 million |
|---|---|
| 2022 Q3 Net Loss | $110 million |
| Total Debt as of Sept. 30, 2022 | $2.5 billion |
Facing a liquidity crisis, Audacy spent weeks negotiating the terms of a prepackaged bankruptcy with its debtholders. The agreement will eliminate approximately $1.8 billion of debt and provide additional liquidity to fund operations.
Bankruptcy Filing and Restructuring Details
Audacy announced that it filed voluntary Chapter 11 petitions in the U.S. Bankruptcy Court for the Southern District of Texas over the weekend. The company plans to operate its business as usual during the bankruptcy process.
The restructuring support agreement backed by holders of 70% of Audacy’s senior secured notes will equitize nearly $1 billion of the company’s secured debt, eliminating cash interest expenses and significantly reducing leverage. Audacy has secured commitments for $100 million in debtor-in-possession financing to support operations during bankruptcy proceedings.
In addition, the agreement will provide Audacy with $200 million of fully committed new capital. The capital infusion and debt elimination will leave Audacy with a stronger balance sheet positioned for long-term success.
“With this financial restructuring now underway, Audacy is positioned to continue investing in the growth of our industry-leading platform and premium content that serves and engages America’s listeners and advertisers,” said David Field, Audacy Chairman, President and CEO.
What Happens Next
Audacy will file a proposed prepackaged Chapter 11 plan of reorganization in the coming weeks outlining the specific terms for recapitalizing the company. Pending court approval, Audacy expects to emerge from Chapter 11 with a significantly improved capital structure by early April 2023.
The company stated that broadcast operations, programming, podcasts, apps, websites and all other services will continue uninterrupted throughout the restructuring process. Audacy has adequate liquidity to meet obligations to vendors, affiliates, and other key partners on schedule during bankruptcy.
With its crushing debt load slashed, Audacy aims to reorient around its core radio business while investing further in digital audio, podcasting and advertiser capabilities. However, the company still faces substantial business challenges, including falling radio listenership and shifting ad dollars. Reestablishing revenue growth as a restructured company will remain an uphill battle.
Table: Audacy’s Largest Radio Station Markets
| Market | Key Stations |
|---|---|
| New York City | WFAN, WCBS-FM, 1010 WINS |
| Los Angeles | KROQ-FM, KRTH-FM |
| Chicago | WBBM-FM, WUSN-FM |
| San Francisco | KITS-FM, KLLC-FM |
| Dallas-Fort Worth | KRLD-FM, KLUV-FM |
This table shows some of Audacy’s most prominent radio stations in major US markets. These stations and on-air talent will continue broadcasting as usual during bankruptcy proceedings. However, the company may evaluate its portfolio and consider divestitures to raise cash post-bankruptcy.
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