Audacy Preparing for Bankruptcy Filing

Audacy, formerly known as Entercom Communications since its establishment in 1968, underwent a major transformation in 2017 by merging with CBS Radio and rebranded as Audacy in 2021. It operates 235 radio stations across 48 markets and provides streaming services via its mobile app. However, the company has faced significant financial challenges recently.

The Wall Street Journal reports that Audacy is preparing to file for bankruptcy in the coming weeks due to a substantial decline in advertising revenue, which has led to an inability to service its $2 billion debt. This financial struggle is primarily due to a decrease in ad spending, resulting in diminishing revenue and expanding net losses. Audacy had previously expressed doubt about its capacity to continue operations, raising concerns over meeting debt obligations based on its 2024 revenue forecasts.

In October, the situation worsened when Audacy missed interest payments on its senior loans, leading to a negotiated grace period with lenders. This development focused efforts on restructuring negotiations. Consequently, in December, Audacy signed the 12th amendment to its credit agreement, gaining an additional 68 days to avoid technical default on $18.9 million in loans.

The company's third-quarter 2023 results revealed ongoing constructive conversations with lenders as part of efforts to recapitalize. Audacy CEO David Field emphasized the company's commitment to its growth strategy, investment in its people, platform, content, and technology, and the exploration of new partnerships.

With $926.4 million of debt maturing this year, Audacy acknowledged in its quarterly report the possibility of filing for bankruptcy protection if a deal with lenders is not reached. Despite declining to comment on the Wall Street Journal's report, a spokesperson referenced a statement from Field during the grace period extension in October, highlighting ongoing discussions with lenders and progress in key performance metrics.

Audacy has negotiated a prepackaged bankruptcy plan with its senior lenders, who are expected to assume ownership post-restructuring and provide the necessary financing for the upcoming Chapter 11 proceedings.