Audacy, the struggling radio and audio streaming company, said Sunday it has filed plans for Chapter 11 bankruptcy reorganization to reduce its debt.
Audacy is the second largest radio station in the United States (after iHeartMedia) with 235 owned radio stations in 48 markets. The company’s stations include KROQ, KNX and KRTH in Los Angeles; WFAN Sports Talk Radio in New York and 1010 WINS; Atlanta V-103 (WVEE) and 92.9 The Game (WZGC); Chicago Newsradio 780 WBBM and 670 The Score (WSCR); San Francisco Allies (KLLC) and KCBS; and KISW in Seattle.
Through the restructuring, Audacy expects to eliminate about $1.6 billion in funded debt — an 80% reduction from about $1.9 billion — to $350 million. The Philadelphia-based company said it filed a prearranged Chapter 11 proceeding in the U.S. Bankruptcy Court for the Southern District of Texas on January 7, 2024. Audacy’s debtors will receive shares in the reorganized company. Audacy expects the court will hold a hearing to consider approval of the bankruptcy plan in February and emerge from bankruptcy once it receives regulatory approval from the FCC.
David Field, chairman, president and CEO of Audacy, pointed to the “perfect storm” of macroeconomic challenges that led to the bankruptcy reorganization.
“While our transformation has strengthened our competitive position, the perfect storm of persistent macroeconomic challenges over the past four years facing the traditional advertising market has led to a sharp multi-billion-dollar decline in cumulative radio advertising spending,” Field said in a statement. “These market factors have severely impacted our financial position and necessitated a restructuring of our balance sheet. With our broad leadership position, unique premium audio content, and strong capital structure, we believe Audacy will appear well positioned to continue its innovation and growth in the dynamic audio space.”
Audacy said it expects to “continue operating its business in the normal course without disruption to advertisers, vendors, partners or employees.” Audacy expects to operate normally during this restructuring process under the leadership of its current leadership team.
Founded in 1968 as Entercom Communications, the company changed its name to Audacy in 2021. In 2017, Entercom acquired CBS Radio — which owns 117 stations nationwide — and gave it the digital audio platform Radio.com. In 2019, the company purchased podcast companies Cadence13 and Pineapple Street Studios.
During the Chapter 11 process, certain of Audacy’s existing lenders committed $57 million in debtor-in-possession financing, consisting of $32 million of a new term loan and a $25 million increase of the company’s existing accounts receivable financing facility from $75 million. The company is said to be worth $100 million. Pending bankruptcy court approval of its bankruptcy plan, debtor-in-possession financing and the company’s cash from operations and available reserves, Audacy said it expects to have the capital “to meet obligations to employees, advertisers, partners and vendors.”
Audacy’s stock was delisted from the New York Stock Exchange in November 2023. The company’s shares will continue to trade over-the-counter under the symbol “AUDA” through a Chapter 11 reorganization. The company said the shares are expected to be delisted and not distributed as part of Audacy’s restructuring.
PJT Partners is serving as investment banker, FTI Consulting is serving as financial advisor, and Latham & Watkins is serving as legal advisor to Audacy. Greenhill & Co. As Financial Advisor Gibson, Dunn & Crutcher serves as legal advisor to the debtor-in-possession financing lenders and a designated group of first-lien debt holders. Evercore Group is serving as financial advisor and Akin Gump Strauss Hauer & Feld is serving as legal advisor to the designated group of second lien debt holders.