The deed is done. Facing default on Friday, Cumulus has filed a prepackaged Chapter 11 bankruptcy. If I followed the details, the existing CMLS stock is cancelled with no residual value – that wipes out the Dickey Brothers and the guy who bought out Citadel on the cheap.
About $1 billion of the existing debt will be converted to a new Cumulus Stock which will meet the requirements for re-listing on NASDAQ. By shedding $1 billion in debt, they aren’t so trapped into diverting all the cash flow into paying interest. It also gives options to cancel contracts and retiree promises.
At the time Mary Berner was brought in as the CEO of Cumulus, there was speculation she was brought in to handle the bankruptcy, having done the same thing for Reader’s Digest.
Of course, don’t forget lenders have given Mr Dickey a blank check for acquisitions, so it is not impossible he might try to take control back.