Where have radio values increased in the last 17 years?
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Audacy granted a 30 day extension to make its missed bond payment
- Thread starter MarkW
- Start date
Where have radio values increased in the last 17 years?
That's why someone in the food chain, whether its the lenders or their appointed operators, has to come up with ways to create new value from these declining properties. In the real estate business, that might mean putting a fresh coat of paint or new hardwood floors on the properties. They NEED to get started on building new revenue and new value.
Nowhere in the U.S.
How about outside of the U.S.?
In many nations in Latin America stations are worth more than ever. Same with the national stations in much of Europe and a few places in Asia.
Interesting. Why the disparity? I was in Italy over the summer, and everyone was glued to their i phones just like in the US. I haven't been in South America in 20 years, so I really can't talk about those countries.
And that equity today is worth, maybe, 15% of the original loan values of the multiple involved lenders.
Essentially, it is like valuing a mortgaged house after an earthquake, fire and flood from a broken dam.
But the "BCF" or broadcast cash flow is not being distributed to them as it all goes to debt service. They own non-performing assets. Sort of like a vacant storefront in downtown San Francisco.
But it is very unlikely they will get much / most of that back. However, instead of a huge one-time write-off, they can write down some of the declining value each year and that looks better to the rest of the world.
But how much will be paid at all?
Radio is easier to buy in many of those countries. For example, in Peru you can buy several formats from each of several groups and cover the whole country with two or three buys. So radio is used vastly more for campaigns.
And, on the negative side socially, many countries have vastly lower functional literacy than the US and that makes the use of "reading required" internet options less attractive.
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The late Teddy Forstmann looked at his investment in Citadel as the company was heading towards bankruptcy. He had the ability to save the company with more money. He felt he had already been paid back enough by that time, and was willing to walk away. Why did it work for Teddy?
But how long ago was that? The financial environment for traditional media was just starting to get bad. It's even worse now.
Based on MarkW comments on enterprise value and 1st lien vs 2nd lien debt, I am betting the extensions are to facilitate negotations between those two classes on a prepack Chapt 11, with 2nd lien debt ending up with most of the equity but still only 15-25% recovery. Also wondering which PE firm could be stepping into a controlling position through buying the distressed credits, I am guessing Silver Lake could be involved, given some synergies with their Diamond Baseball and Endeavor portfolio businesses. Also guessing JPM resigned as they may have conflicts with some of the PE investors and transactions being negotiated.
I agree such negotiations are likely ongoing. I suspect the sides are too far apart on terms and that a true prepack won't be possible.
I would be very surprised to see the 2L lenders awarded more of the equity than the 1L lenders. This company's cash flow maybe can support $300 million to $400 million in debt, and some of that will likely need to be unused revolver availability on day #1 post-reorg. The outstanding prepetition 1L debt (RCF + Term B2) is collectively more than double that range.
The 2L lenders, in my opinion, should be entitled to receive very little economic consideration (from a valuation standpoint) in a reorganization. Their *entire* position is "out of the money." The only reason they'd be tossed a bone is the nuisance value concept on which I pontificated a number of weeks back.
Indeed, I would love to know the valuations versus par of any recent 1st lien debt trades (I.e. did JPM actually unload its 1st lien paper?). Unfortunately, I believe that debt was a privately placed issuance, so I do not believe trade price info is publicly available.
I would be very surprised to see the 2L lenders awarded more of the equity than the 1L lenders. This company's cash flow maybe can support $300 million to $400 million in debt, and some of that will likely need to be unused revolver availability on day #1 post-reorg. The outstanding prepetition 1L debt (RCF + Term B2) is collectively more than double that range.
The 2L lenders, in my opinion, should be entitled to receive very little economic consideration (from a valuation standpoint) in a reorganization. Their *entire* position is "out of the money." The only reason they'd be tossed a bone is the nuisance value concept on which I pontificated a number of weeks back.
Indeed, I would love to know the valuations versus par of any recent 1st lien debt trades (I.e. did JPM actually unload its 1st lien paper?). Unfortunately, I believe that debt was a privately placed issuance, so I do not believe trade price info is publicly available.
Mark, do the Fields take a haircut too in a pre-pak, or do they come out smelling like a rose and only the creditors get slammed?
My take is that's what's holding this deal up. The Fields want a piece of their company. It may cost them some money.
Creditors want one thing: Money. The Fields can help them out there. They are not the Dickeys.
Also probably being held up by the number of 1L creditors involved, Amendment #6 of the RCA in March 2021 listed the following nine Revolving Credit Lenders:
JP Morgan Chase Bank, Bank of America, Citibank, Credit Suisse, Deutsche Bank, Goldman Sachs Bank, Morgan Stanley Senior Funding, Toronto Dominion Bank, and Wells Fargo Bank,
If there are still 9 1L lenders, that will certainly complicate negotiations. Most recent Amendment filings no longer include signatories, maybe to protect new names on the list?
JP Morgan Chase Bank, Bank of America, Citibank, Credit Suisse, Deutsche Bank, Goldman Sachs Bank, Morgan Stanley Senior Funding, Toronto Dominion Bank, and Wells Fargo Bank,
If there are still 9 1L lenders, that will certainly complicate negotiations. Most recent Amendment filings no longer include signatories, maybe to protect new names on the list?
Most likely the Fields will receive little to no equity in a newco out of the gate. If creditors wish to retain executive management, the managers will probably be able to earn stock or stock options over time as part of a management incentive plan.
If the Fields were to infuse a very significant portion of their personal wealth into the company as part of a reorganization, only then would they receive some appreciable amount of either debt or equity in the newco.
My guess is they'll choose to hang onto their personal liquidity and be content with continued roles in the company (assuming the creditors are willing to allow them to keep their board seats, and in the case of David, his CEO role as well).
It's got to be tough to go from being the Boss to answering to the Banks, especially for David, who grew up in the business. On the other hand, no one forced them to do the CBS deal.
I'd bet that the new board would want new corporate leadership. Existing might be able to keep a certain equity stake, but non-controlling.
Here is what one institution thought of the value of notes as of 3/31 - only 7% of principal. Given the 2029 notes were only issued 2 years earlier, speaks to both lack of due diligence on the credit, and some coming legal action targetting accountants and Inv Bank who ran the deal. Finding an out of court reorg solution very unlikely.
