Item 1.01 – Entry into a Material Definitive Agreement.
Restructuring Support Agreement
In
connection with the Chapter 11 Cases described below in Item 1.03, on November 29, 2017, Cumulus Media Inc. (the “Company”) and certain of its direct and indirect subsidiaries entered into a Restructuring Support Agreement (the
“Restructuring Support Agreement”) with certain creditors (the “Consenting Creditors”) holding more than
two-thirds
of the outstanding principal amount of term loans (the “Term
Loans”) under that certain Amended and Restated Credit Agreement, dated as of December 23, 2013 (the “Credit Agreement”), by and among the Company, Cumulus Media Holdings Inc., as borrower, JPMorgan Chase Bank, N.A., as
administrative agent, and the lenders party thereto from time to time, and Crestview Radio Investors, LLC and certain of its affiliates (the “Consenting Equityholders”). The Restructuring Support Agreement contemplates the implementation
of a financial restructuring of the Debtors (as defined below) through a conversion of more than $1.0 billion of the Company’s funded debt into equity (collectively, the “Restructuring”). The Restructuring will be effectuated
through a joint plan of reorganization (the “Plan”) under chapter 11 of title 11 of the United States Code (the “Bankruptcy Code”).
Pursuant to the Restructuring Support Agreement, each of the Company, the Consenting Creditors and the Consenting Equityholders have made
certain customary commitments and representations. The Company has agreed to, among other things, use its commercially reasonable efforts to consummate and complete the Restructuring, meet milestones set forth in the Restructuring Support Agreement
and obtain required regulatory approvals for the Restructuring. The Consenting Creditors have committed to the Company to, among other things, support and vote for the Plan and use their commercially reasonable efforts to consummate and complete the
Restructuring. The Consenting Equityholders have committed to the Company to, among other things, use reasonable best efforts to support the Plan and not sell, assign or transfer certain equity interests in the Company or take a worthless stock
deduction with such equity interests, subject to certain exceptions.
The Restructuring Support Agreement contains milestones relating to
the Chapter 11 Cases (the “Milestones”), which include the dates by which the Company is required to, among other things, file certain motions and documents (including the Plan and disclosure statement) with the Bankruptcy Court, obtain
certain orders of the Bankruptcy Court and consummate the Company’s emergence from chapter 11 protection. Among other dates set forth in the Restructuring Support Agreement, the Restructuring Support Agreement contemplates that the Company will
file the Plan and disclosure statement within ten days after the date that the Company commences the Chapter 11 Cases (the “Petition Date”) and emerge from chapter 11 protection no later than 180 days after the Petition Date.
Each of the parties to the Restructuring Support Agreement may terminate the agreement (and thereby their support for the Plan) under certain
limited circumstances, subject, in certain cases, to cure rights. The Company may terminate the Restructuring Support Agreement upon, among other circumstances, certain material breaches of the Restructuring Support Agreement by a Consenting
Creditor or the Company’s board of directors reasonably determining, after consultation with counsel, that taking certain actions, or refraining to take certain actions, under the Restructuring Support Agreement would be inconsistent with its
fiduciary obligations.
The Consenting Creditors have termination rights that may, as a general matter, be exercised by Consenting
Creditors holding a majority of the outstanding Term Loans held by the Consenting Creditors upon, among other circumstances, material breaches of the Restructuring Support Agreement by the Company; the failure of the Company to meet any Milestone;
the occurrence of the date that is 270 days after the Petition Date (the “Outside Date”); and certain actions by the Bankruptcy Court, including preventing the consummation of the Plan, dismissing the Chapter 11 Cases and converting the
Chapter 11 Cases into a case under chapter 7 of the Bankruptcy Code. The Consenting Equityholders have similar termination rights as the Consenting Creditors (other than with respect to the Outside Date, for which the Consenting Equityholders have
no termination right). If a Consenting Equityholder exercises such a termination right, it would only terminate the Restructuring Support Agreement as to such Consenting Equityholder.
Consummation of the Restructuring contemplated by the Restructuring Support Agreement is subject to approval by the Bankruptcy Court, among
other conditions. Accordingly, no assurance can be given that the transactions described therein will be consummated.
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The following is a summary of the material terms of the Restructuring that are set forth in the
term sheet attached as Exhibit A to the Restructuring Support Agreement (the “Term Sheet”):
Recoveries
. Holders of
claims with respect to the Term Loans (“Term Loan Claims”) would receive their pro rata portion of $1,300 million in principal amount of new first lien term loans maturing in 2022 (the “New First Lien Debt”) and 83.5% of the
issued and outstanding amount of common stock (the “Reorganized Common Equity”) to be issued by the reorganized Company (“Reorganized Cumulus”), subject to dilution on account of any Reorganized Common Equity issued pursuant to a
post-emergence equity incentive compensation plan (the “MIP”). Holders of unsecured claims against the Company, including claims arising from the Company’s 7.75% Senior Notes due 2019 (the “Notes”), would receive, in the
aggregate, 16.5% of the Reorganized Common Equity, subject to dilution on account of the MIP.
New First Lien Debt
. Reorganized
Cumulus would issue $1,300 million in principal amount of first lien term loans that would mature on May 15, 2022 with interest at LIBOR plus 4.50% per annum, subject to a LIBOR floor of 1.00% or, at Reorganized Cumulus’s option, an
alternate base rate plus 3.50% per annum, subject to an alternate base rate floor of 2.00%. Reorganized Cumulus would be permitted to enter into a revolving credit facility providing commitments of up to $50 million. The New First Lien Debt
would amortize in equal quarterly installments in an aggregate annual amount equal to 1% of the original principal amount of the New First Lien Debt with the balance payable on the maturity date.
Reorganized Cumulus would be able to voluntarily prepay the New First Lien Debt in whole or in part without premium or penalty, except that
any prepayment during the period of six months following the issuance of the New First Lien Debt would require a premium equal to 1% of the principal amount so prepaid. Certain mandatory prepayments on the New First Lien Debt would be required upon
the occurrence of specified events on similar terms as are set forth in the Credit Agreement, including upon the sale of certain assets and from excess cash flow. The New First Lien Debt would not have any financial maintenance covenants. The other
terms and conditions of the New First Lien Debt would generally be substantially similar to those set forth in the Credit Agreement, except as set forth in the Term Sheet.
The New First Lien Debt would be secured by first priority security interests in all the assets of Reorganized Cumulus and the guarantors in a
manner substantially consistent with the Credit Agreement, subject to the terms of the Term Sheet. In addition, the direct parent of Reorganized Cumulus (the “Parent”) and all present and future wholly-owned subsidiaries of the Parent,
subject to exceptions that are substantially consistent with those set forth in the Credit Agreement, would guarantee the New First Lien Debt.
Corporate Governance
.
The Board of Directors of Reorganized Cumulus would consist of the President and Chief Executive Officer
of the Company and six directors chosen by the Consenting Creditors.
The foregoing summary of the Restructuring Support Agreement,
including the Term Sheet, does not purport to be complete and is subject to, and qualified in its entirety by, the full text of the Restructuring Support Agreement, a copy of which is filed as Exhibit 10.1 to this report.
Item 1.02 – Termination of a Material Definitive Agreement.
On November 28, 2017, CMI Receivables Funding LLC (the “Borrower”), a wholly-owned subsidiary of the Company, provided notice to
Wells Fargo Bank, National Association, as administrative agent under the Company’s receivables funding facility, of its optional election to terminate on November 28, 2017 all of the lenders’ commitments under the Amended and
Restated Receivables Funding and Administration Agreement, dated as of March 15, 2017 (the “Securitization Facility”), among the Borrower, as borrower, the lenders party thereto from time to time (the “Lenders”) and Wells
Fargo Bank, as a Lender, as swing line lender and as administrative agent. The Securitization Facility was scheduled to terminate on December 6, 2018 and provided for $50 million in financing for the Borrower. No borrowings were
outstanding under the Securitization Facility as of the termination date.
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Effective November 28, 2017, the Borrower repaid in full all of its remaining obligations
under the Securitization Facility, including accrued fees and other amounts owing to the Lenders. There were no material prepayment penalties or breakage costs or fees. Upon making these payments, the Borrower’s obligations under the
Securitization Facility were satisfied in full and the Securitization facility was immediately terminated other than customary provisions expressly specified to survive termination.