Is Cumulus about to declare bankruptcy?

Jerry Del Colliano’s newsletter today says Cumulus has retained a bankruptcy law firm. That makes a lot of sense. Due to non-proportional voting rights, the Dickeys with only 5% of the stock can outvote the owner who owns 24% of the stock. I think this needs to be changed by Congress.

So the only way past this is to force the Dickeys to give up control. The lenders on the $2.2 billion in debt can cause that to happen. The threat of bankruptcy may be enough to convince the Dickeys to leave – if the company goes through bankruptcy, their 5% likely becomes worth $0.00 – better to own 5% of a company you don’t control than own 0% of a company you don’t control.

In the spirit of full disclosure, I bought 3000 shares of CMLS about two weeks ago. Maybe I can attend the bankruptcy hearings 😉

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7 Responses to Is Cumulus about to declare bankruptcy?

  1. Art Stone says:

    CMLS went up $.02 a share today… ka-ching!

  2. Parrott says:

    Cool. You are part of the 1 % ! I never knew anyone in the on percent : )
    well if you go to the board meeting, tell them ‘Nash country’ sux !


  3. briand75 says:

    Only problem with bankruptcy is: stock value = $0.00

    I remember GM. The shareholders took it in the shorts while the unions made out with ownership. Thank you, Obama.

    • Art Stone says:

      It’s worse than that. At $0.01 there are no buyers. Without selling the stock, you can’t take a tax loss. Back in the good old days, brokers would buy the stock @ $.01 as a courtesy to their good customers so they could exit the stock.

      At some point, if the spiral goes on, low market cap (# shares * price) will get the stock delisted, then it is “game over”. Going below $1 a share is also significant.

      Today’s rumor news is that Cumulus lawyers are aggressively threatening affiliates who want out of their 24/7 music contracts

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