Audacy to go private after emerging from bankruptcy and completing financial restructuring
Audacy announced the completion of its restructuring Monday, hours after the FCC said it had approved the proposed plan.
Philadelphia-based radio broadcaster Audacy has emerged from bankruptcy shedding about $1.6 billion worth of debt, and now plans to go private, following an FCC approval for its restructuring.
“We are pleased to have successfully achieved all of our restructuring goals, emerging with an outstanding balance sheet, delivering industry-leading growth, serving our listeners and advertisers with excellence and honoring our commitments to employees and partners,” Audacy CEO and president David Field said in a statement. The company filed for Chapter 11 bankruptcy in January.
Field will continue to lead the post-bankruptcy version of Audacy, and its existing management team will stay on board, the company said. As part of the restructuring, Audacy said it expects to move from a public company to a private one — a development that brings to an end a run that began in 1999, when the company first went public as Entercom.
Audacy announced the completion of its restructuring Monday, hours after the FCC said it had approved the proposed plan in a 3-2 vote in a memorandum adopted Sept. 18. That vote allowed Audacy to transfer its broadcast licenses for its 200-plus radio stations to a restructured version of the company, temporarily putting off a review of foreign ownership.
As a result of the restructuring, the company sheds about 80% of its $1.9 billion debt load, bringing that number down to $350 million. It also has new owners, including one with connections to Hungarian-born billionaire philanthropist and major Democratic donor George Soros, which drew ire from conservative pundits throughout the restructuring process. The billionaire’s Soros Fund Management previously acquired about $415 million worth of Audacy’s debt.
As part of the reorganization, a financial firm known as Laurel Tree Opportunities Corp. became a major shareholder in Audacy, holding at least 57% of Class A stock in the company, the FCC explained in its memorandum. According to the commission, Laurel Tree is controlled by FPR Capital Holdings LCC, which is run by the Fund for Policy Reform, a nonprofit charitable trust based in Delaware.
The fund was launched in 2009 with a $100 million donation from Soros as part of the Open Society Foundations funding network. Soros’ son, Alexander Soros, serves on the group’s four-person board, the FCC’s memorandum said.
A number of other investors will also hold shares in Audacy, including MBX Commercial Finance, Bank of America, and Goldman Sachs.
Soros’ connection to Audacy’s bankruptcy proceedings has caused controversy among conservative groups and politicians throughout the FCC’s approval process, which began in March. Critics said the company’s proposal, which involved delaying a foreign-ownership review in order to move forward with the company’s bankruptcy proceedings, amounted to seeking “specialized treatment,” according to the FCC memorandum.
Under FCC rules, further review is required if broadcasters have foreign ownership above 25%. Foreign entities can own a broadcaster entirely if the commission determines that ownership isn’t harmful to the public. In its March filing, Audacy estimated its total foreign ownership to be about 22.5%, but asked for a temporarily delayed review as an extra precaution, CNN reports.
In a statement, FCC chair Jessica Rosenworcel wrote that suggesting Audacy received special treatment during the commission’s approval process is “cynical and wrong.” Instead, she said, the process was “identical” to other reorganizations in recent years, including those of Cumulus Media, iHeart Media, and Alpha Media.
“Our practice here and in these prior cases is designed to facilitate the prompt and orderly emergence from bankruptcy,” Rosenworcel wrote.
However, the U.S. House Oversight Committee announced last week that it was investigating what it called the FCC’s “expediting” of the process. And in a dissenting opinion, FCC commissioner Brendan Carr wrote that the approval was a “special shortcut.”
But with its emergence from bankruptcy, Audacy says it is focused on the future.
“Today, Audacy embarks on our next chapter,” CEO and president Field said. “We are maximizing a broad set of opportunities to further accelerate our growth for the benefit of Audacy and all of its stakeholders.”