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Dial Global Refinances With Lenders

Dial Global began working on its debt agreements last year, when it became clear there would be trouble with its debt leverage covenants. This morning, the company announced it has addressed the situation, giving up equity in the company in return for help slashing debt and receiving much-needed cash to help run the company. GE Capital agrees to cut DG's debt by $15 million for a loan that was due in three years, and will also invest $31.5 million into the company by way of a new term loan, due in 2017. In return, GE gets 7.5 percent of the Dial Global network.

As previously reported, Dial Global also recently restructured its top-tier management, making Spencer Brown the CEO and Ken Williams President. David Landau left the company. Prior to the change, all three were acting CEOs. The company has also delisted from NASDAQ. Here are more details on the new arrangement from the full DG release this morning:

The Company also entered into a Priority Second Lien Credit Agreement among the Company, the administrative agent, the syndication agent and the lender party thereto, pursuant to which such lender agreed to invest an additional $31.5 million through a term loan facility to the Company, with a maturity date of July 21, 2017.  In connection with such lender's agreement to extend credit under the Priority Second Lien Credit Agreement, the Company agreed to issue it penny warrants to purchase 7.5 percent of the Company's common stock exercisable immediately following the consummation of the recapitalization.  The effectiveness of each credit agreement is subject to the satisfaction of certain conditions.

The lenders ("2L lenders") under the Company's existing Second Lien Credit Agreement, dated as of October 21, 2011 (the "Second Lien Credit Agreement") agreed, subject to the satisfaction of specified conditions, to restructure their existing approximately $93 million in second lien obligations by amending and restating the Second Lien Credit Agreement to provide for a $30 million term loan that matures five years after the expected closing of the recapitalization and exchanging approximately $63 million in remaining obligations under the existing Second Lien Credit Agreement for a new series of preferred stock of the Company.  As part of these agreements, these holders of preferred stock will be granted certain corporate governance rights.  The Company also agreed to issue the 2L lenders for nominal consideration warrants to purchase 12.0 percent of the Company's common stock in connection with the exchange of a portion of the existing second lien obligations for preferred stock, which warrants will be exercisable at various dates after the recapitalization if the Company does not retire the $30 million second lien term loan and the preferred stock held by such 2L lenders prior to the specified dates.

Under various subscription and exchange agreements between the Company and the holders of the Company's PIK Notes and Series A Preferred Stock, such holders have agreed, subject to the satisfaction of certain specified conditions, to exchange their PIK Notes and Series A Preferred Stock for equity securities of the Company and have further agreed to make an additional equity infusion of $16.5 million. 

The recapitalization is expected to become effective on or around April 16, 2013, subject to the satisfaction or waiver of certain conditions precedent set forth in the First Lien Credit Agreement, the Second Lien Credit Agreement and the other transaction documents. There can be no assurances that the recapitalization will be consummated on the terms described herein, or at all.

(3/6/2013 4:14:17 AM)
Looks like this company is going to need a lot of cash in order to organize a proper and more or less stable working condition. Money is a common problem for so many companies. While we are, average people, are applying for <a href="">payday loans</a>, small and global businesses are turning for help to big banks. Unfortunately there is no guarantee that either of us is going to return a borrowed amount which is sad of course.But as always we have to hope for the best.

- Alicia

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