News

By Dietrich Knauth

Jan 8 (Reuters) - Lawyers for Audacy AUDA.PK said on Monday the radio broadcaster is seeking to complete its bankruptcy court case in under two months and that it had already lined up lender support for a $1.6 billion debt reduction deal when it filed for Chapter 11 protection a day earlier.

Audacy, one of the largest radio and podcast companies in the U.S., filed for bankruptcy in Houston, Texas, with a pre-negotiated debt deal that would wipe out its existing equity shares and turn over control of the company to a lender group that includes hedge funds HG Vora Capital Management, PGIM and Lakestar Finance.

Audacy's attorney, Caroline Reckler, told U.S. Bankruptcy Judge Christopher Lopez that she expects "a smooth, prepackaged case," with final court approval of the restructuring by February 21. If the deal is approved, Audacy would emerge from bankruptcy once it receives U.S. Federal Communications Commission approval for its change in ownership, a process that may take "a few months," Reckler said.

Audacy should be able to move quickly through bankruptcy, because it obtained support for its restructuring plan from more than three-quarters of its lenders during six months of negotiations in the second half of 2023, Reckler said.

Lopez granted the company's request for a Feb. 20 court hearing to approve the restructuring, and allowed the company to fund its bankruptcy with a new $32 million loan provided by its existing lender group.

Audacy intends to pay junior creditors in full, and it said that its bankruptcy would not impact operations at its radio stations or podcasts.

Audacy, formerly known as Entercom, said it was forced to seek bankruptcy protection to address the high costs of its $1.9 billion debt, which largely stemmed from its 2017 acquisition of CBS radio stations, according to court documents.

While that acquisition built Audacy into the second-largest radio company in the U.S., the COVID-19 pandemic caused a sharp decline in radio advertising revenue as many workers in the U.S. stayed home and stopped listening to the radio during their daily commutes.

Audacy has invested in podcasts and digital distributions to match listeners' changing habits, but has been squeezed by rising debt costs as revenues declined. Audacy accrued $120 million in interest costs on its debt in 2023, and may have had to file for bankruptcy sooner if its lenders had not granted it forbearance on scheduled debt payments, according to court documents.

Audacy's revenues have begun to recover, but they remain well below pre-pandemic levels, according to court documents. Audacy's adjusted earnings for 2022 were $137.9 million, down nearly 60% from the company's $341.2 million adjusted earnings in 2019, according to court documents.

Audacy is a dominant player in local news, sports radio and music broadcast, operating 225 stations in 45 U.S. markets, and its podcasts have more than 150 million monthly downloads, according to court documents.

The largest radio company in the U.S., iHeartMedia, previously filed for bankruptcy in 2018.

The case is In re Audacy Inc, U.S. Bankruptcy Court for the Southern District of Texas, No. 24-90004.

For the debtor: Caroline Reckler of Latham & Watkins

For first-lien lender ad hoc group: Matthew Williams of Gibson Dunn & Crutcher

For second-lien lender ad hoc group: Michael Stamer of Akin Gump Strauss Hauer & Feld

Read more:

Spotify launches podcast ad marketplace in 5 countries

CBS to merge its radio business with Entercom

Largest U.S. radio company iHeartMedia files for bankruptcy

(Reporting by Dietrich Knauth in New York)

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