CUMULUS MEDIA INC. (NASDAQ:CMLS) Files An 8-K Entry into a Material Definitive Agreement
Item 1.01 Entry into a Material Definitive Agreement.
On September 26, 2019, Cumulus Media New Holdings Inc., a Delaware corporation (Holdings) and an indirect wholly-owned subsidiary of Cumulus Media Inc. (the Company), and certain of the Companys other subsidiaries, entered into a Credit Agreement (the Credit Agreement), dated as of September 26, 2019, with certain lenders, Bank of America, N.A (Bank of America) as administrative agent, and Bank of America, Credit Suisse Loan Funding LLC, Deutsche Bank Securities Inc., Morgan Stanley Senior Funding, Inc., JPMorgan Chase Bank, N.A. and Fifth Third Bank as joint lead arrangers and bookrunners.
The Credit Agreement consists of a $525 million senior secured term loan (the Term Loan). Amounts outstanding under the Term Loan amortize in equal quarterly installments of 0.25% of the original principal amount of the Term Loan with the balance payable on the maturity date. The maturity date of the Credit Agreement is March 31, 2026. The Term Loan was issued at 99.5% of par.
Holdings used the borrowings under the Term Loan, along with approximately $34 million of cash on hand, to repay in full all amounts outstanding under the Companys term loan entered into in June 2018, including accrued interest.
Amounts outstanding under the new Credit Agreement bear interest at a per annum rate equal to (i) the Alternative Base Rate (as defined below) plus an applicable margin of 2.75%, subject to an Alternative Base Rate floor of 2.00%, or (ii) the London Inter-bank Offered Rate (LIBOR) plus an applicable margin of 3.75%, subject to a LIBOR floor of 1.00%. The Alternative Base Rate is defined, for any day, as the per annum rate equal to the highest of (i) the Federal Funds Rate, as published by the Federal Reserve Bank of New York, plus 1/2 of 1.0%, (ii) the rate of interest in effect for such day as publicly announced from time to time by Bank of America as its Prime Rate and (iii) LIBOR plus 1.0%. Term Loan borrowings currently bear interest at 5.8% per annum.
The representations, covenants and events of default in the Credit Agreement are customary for financing transactions of this nature. Events of default in the Credit Agreement include, among others: (a) the failure to pay when due the obligations owing thereunder; (b) the failure to perform (and not timely remedy, if applicable) certain covenants; (c) certain defaults and accelerations under other indebtedness; (d) the occurrence of bankruptcy or insolvency events; (e) certain judgments against the Company or any of its restricted subsidiaries; (f) the loss, revocation or suspension of, or any material impairment in the ability to use of or more of, any material Federal Communications Commission licenses; (g) any representation or warranty made, or report, certificate or financial statement delivered, to the lenders subsequently proven to have been incorrect in any material respect; and (h) the occurrence of a Change in Control (as defined in Credit Agreement). Upon the occurrence of an event of default, the lenders may terminate the loan commitments, accelerate all loans and exercise any of their rights under the Credit Agreement and the ancillary loan documents as a secured party.
The Credit Agreement does not contain any financial maintenance covenants. The Credit Agreement provides that Holdings will be permitted to enter into either a revolving credit facility or receivables facility providing commitments of up to $100.0 million, subject to certain conditions.
The borrowers may elect, at their option, to prepay amounts outstanding under the Credit Agreement without premium or penalty (except that any prepayment during the period of six months following the closing of the Credit Agreement would require a premium equal to 1.00% of the prepaid principal amount). The borrowers may be required to make mandatory prepayments of the Term Loan upon the occurrence of specified events as set forth in the Credit Agreement, including upon the sale of certain assets and from Excess Cash Flow (as defined in the Credit Agreement).
Amounts outstanding under the Credit Agreement are guaranteed by Cumulus Media Intermediate Inc. (Intermediate Holdings), which is a subsidiary of the Company and secured by a security interest in substantially all of the assets of Holdings, the subsidiaries of Holdings party to the Credit Agreement as borrowers, and Intermediate Holdings.