Cumulus launches rights plan

The market capitalization of Cumulus Media (NASDAQ: CMLS) is down to a mere $14 million, carrying debt of around $2.4 billion. The board just executed a preferred rights agreement intended to block a takeover attempt if any owner or group of owners with 5% of the stock tries to oust the current board.

The logical inference (based on no specific evidence) is that Lew Dickey’s $150 million blank check pool of money will be used to take back control of the company. This power struggle looks like a lose-lose deal no matter what.

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6 Responses to Cumulus launches rights plan

  1. TheChairman says:

    A Pennystock for their thoughts.

  2. briand75 says:

    The things they don’t teach you as an undergraduate student. Board maneuvering and shenanigans to avoid large investors from taking over your board and company.

    I think with $14 million market cap they are okay for a time. The TTM revenue is running about $1.2 billion, which is respectable and the Assets run about $2.4 billion. Unfortunately, the book value is -$2.2 billion due to the presence of that large debt and the effect is seen in the earnings at $1.8 million (out of proportion).

    The bottom line – if you are investor, you had best not be too risk averse as you won’t invest a penny in Cumulus. The attraction has to be the market share that they represent.

    • Fred Stiening says:

      CMLS faces NASDAQ delisting both because of the sub $1.00 stock price and minimum capital requirements

      • briand75 says:

        Interesting as I didn’t actually look at the stock price. You are correct as there are some strict rules on share price and capitalization. Maybe that extra “hang time” is simply vapor.

  3. Fred Stiening says:

    The CMLS situation made it into the lay press in New York

  4. briand75 says:

    I ran analytics on Cumulus and the result was a sea of red indicating that the longevity of Cumulus is very much in question.

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