A court hearing on Thursday will consider a request from Audacy to postpone an important deadline in its Chapter 11 bankruptcy proceeding because its reorganization hasn’t been approved yet by the FCC.
Audacy filed an emergency motion this week to move a key date to the end of September. The hearing will be held in the U.S. Bankruptcy Court for the Southern District of Texas in Houston.
“The debtors are prepared to emerge from the Chapter 11 cases and implement the plan confirmed by the court in February 2024,” the company’s attorneys told the court in their motion.
“While the debtors are optimistic that they will receive FCC approval in the near term, they face upcoming maturities and milestone covenants” that are due or will terminate on Aug. 19, unless the court acts.
Audacy said that given the possibility that the FCC would not act by that date, the company has “worked constructively” with its lenders and other stakeholders to extend its emergence timeline.
The attorneys noted that failure to obtain timely FCC approval could result in defaults that would be “catastrophic” to the restructuring efforts and Audacy’s ability to implement the plan. “Entry into the financing agreements will afford the debtors additional time through September 30, 2024 to obtain approval of their FCC application and emerge from the Chapter 11 cases without unnecessary risk and distraction.”
The company hopes to shed 80% of its debt by exchanging it for equity. According to the filing, Audacy’s voluntary reorganization will “leave the debtors’ business intact and substantially de-levered by permanently reducing approximately $1.6 billion of their prepetition funded debt obligations, provide the debtors with access to new post-emergence exit term loan and receivables financing facilities, and leave general unsecured creditors unimpaired.”
Audacy expects FCC approval by the end of September. But the company would exceed the limit under which no station license can be held by a corporation that exceeds 25% foreign ownership. Audacy has asked the commission to waive that restriction. The FCC’s expected approval has been subject to political criticism from conservatives suspicious of the role that investor George Soros would play in the reorganized company.
