Cumulus CEO Mary Berner said Thursday on its Q3 earnings call that the broadcaster continues to explore a range of alternatives to restructure its balance sheet; she described as “productive” current discussions with its creditors. The company missed a scheduled interest payment on its bonds on Nov. 1. Cumulus has a 30-day grace period to make up the $23.6 million interest payment.
“Our heavy debt load restrains our ability to do business in the short term and achieve full potential in the long term. We are using this time to continue to develop and we hope to commence the implementation of a restructuring with one or both of our creditor groups that will allow us to continue the momentum of our turnaround efforts,” Berner said.
John Abbot, executive VP, treasurer and CFO of Cumulus, was more direct in his comments about Cumulus moving forward with or without a Chapter 11 filing.
“We have been using this period (since November 1) to continue our discussions and we hope to develop and begin implementation of a restructuring process that could be effectuated either out of court or through a court-supervised Chapter 11 process.”
He continued, “It’s our intention to restructure our debt in a way that balances our goal of minimizing disruption to our business while maintaining the momentum of our turnaround effort while maximizing the benefit of a significantly deleveraged capital structure.”
Abbot says Cumulus still runs the risk of being delisted from the New York Stock Exchange because of its sub-$1 stock price. NASDAQ rules require a minimum $1 share price for common stock to maintain compliance. It’s also out of compliance due to the amount of stock holder equity on the balance sheet. He said Cumulus executives met with NASDAQ officials on Oct. 26, 2017, to appeal the delisting notices it has received.
As for the quarter ending Sept. 30, 2017, Cumulus posted net revenue of $287.2 million, which is up 0.4% from one year ago. The income column’s bottom line was on the positive side but barely with a $1.3 million profit in the quarter.
The broadcaster’s radio station group saw revenue dip in Q3 by 1.6% to $202.8 million, but the wholly-owned Westwood One network did better and was up 5.5% year-over-year with revenue of $83.8 million, according to today’s financial filing.
Capital expenditures at Cumulus were up substantially in Q3 compared to a year ago. It spent $7.4 million on buildings and equipment compared to $5.2 million in 2016. Berner said today the company is migrating in the “next 18 to 24 months to the industry-standard WideOrbit” for its traffic and billing systems.
Cumulus has 446 owned-and-operated stations broadcasting in 90 U.S. markets and approximately 8,000 broadcast radio stations affiliated with its Westwood One network.