NEW YORK A U.S. judge on Friday rejected Cumulus
Media Inc’s bid to proceed with a refinancing plan that
the second-largest U.S. radio network hoped would help reduce
its $2.4 billion debt load, but was opposed by some lenders.
The decision by U.S. District Judge Katherine Polk Failla in
Manhattan came in a lawsuit the Atlanta-based company filed in
December, accusing JPMorgan Chase & Co of withholding
consent to parts of its refinancing plan.
In its lawsuit, Cumulus said that JPMorgan’s actions in its
role as administrative agent under a 2013 credit agreement had
threatened a deal it reached with bondholders that would
deleverage the company by up to $305 million.
But JPMorgan and a group creditors who objected to the deal
million of the company’s loans disagreed and argued the
transaction was not permitted under the credit agreement, a
position Failla adopted.
“I do not believe it permits the proposed refinancing,” she
Cumulus Media shares fell sharply in Friday trading on the
Nasdaq stock exchange as the ruling was announced from the
bench. Its shares last traded at 75 cents, down 25 percent.
The lawsuit by Cumulus, which owns 447 radio stations,
stemmed from its efforts to reduce its debt load, which includes
$1.8 billion in secured loans and $610 million of unsecured
senior notes due in 2019.
Cumulus on Dec. 6 announced a plan to exchange the senior
notes for a combination of stock and up to $305 million in
secured debt borrowed through a $200 million revolving credit
Cumulus said the deal would allow the company to retire the
notes at a discount and avoid a “springing maturity” on the $1.8
billion in loans that occurs if more than $200 million of the
notes are outstanding in January 2019.
The deal was reached with a majority of Cumulus’ senior
noteholders. Cumulus said the refinancing must be completed by
March 13, when the exchange offer is scheduled to expire.
The Cumulus lawsuit sought an order declaring that its
credit agreement permitted it to use the revolving credit line
as part of its refinancing plan and may amend a restriction that
would enable it to access the credit line.
It also sought an order requiring JPMorgan to undertake
other actions necessary to effectuate the refinancing.
The case is Cumulus Media Holdings Inc. et al v. JPMorgan
Chase Bank, N.A., U.S. District Court, Southern District of New
York, No. 16-09591.
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