v3.23.3

LONG-TERM DEBT | 9 Months Ended
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Sep. 30, 2023
Debt Disclosure [Abstract] |
LONG-TERM DEBT | LONG-TERM DEBT Long-term debt was comprised of the following as of the periods indicated:
Long-Term Debt |  | September 30, 2023 |  | December 31, 2022
|  | (amounts in thousands)
Credit Facility |  |  |  |
Revolver, matures August 19, 2024 |  | $ | 219,000 |  |  | $ | 180,000 |
Term B-2 Loan, due November 17, 2024 |  | 632,415 |  |  | 632,415 |
Plus unamortized premium |  | 905 |  |  | 1,116 |
|  | 852,320 |  |  | 813,531 |
2027 Notes |  |  |  |
6.500% notes due May 1, 2027 |  | 460,000 |  |  | 460,000 |
Plus unamortized premium |  | 2,663 |  |  | 3,220 |
|  | 462,663 |  |  | 463,220 |
2029 Notes |  |  |  |
6.750% notes due March 31, 2029 |  | 540,000 |  |  | 540,000 |
|  | 540,000 |  |  | 540,000 |
Accounts receivable facility, matures July 15, 2024 |  | 75,000 |  |  | 75,000 |
Other debt |  | 23 |  |  | 23 |
Total debt before deferred financing costs |  | 1,930,006 |  |  | 1,891,774 |
Deferred financing costs (excludes costs related to the revolving credit) |  | (7,895) |  |  | (11,412) |
Total long-term debt, net |  | 1,922,111 |  |  | $ | 1,880,362 |
Current portion of long-term debt |  | (1,922,111) |  |  | — |
Total long-term debt, net of current portion |  | $ | — |  |  | $ | 1,880,362 |
Outstanding standby letters of credit |  | $ | 8,128 |  |  | $ | 5,909 |
As discussed in Note 1, there is substantial doubt about our ability to continue as a going concern within one year after these condensed consolidated financial statements are issued. On November 3, 2023 we executed amendments to the Credit Facility (as defined below) and Accounts Receivable Facility (as defined below) that, among other things, waived the requirement for the Company to comply with the Consolidated Net First Lien Leverage Ratio financial covenant for the quarterly test period ended September 30, 2023. While we received this waiver for the September 30, 2023 quarterly testing period, we have concluded that it is unlikely we will be able to maintain compliance with this financial covenant at the testing periods over the next 12 months. As a result, all debt has been reclassified to current on the condensed consolidated balance sheet as of September 30, 2023. There can be no assurance that any such additional waivers or amendments would be available on acceptable terms or at all. If the Company is unable to obtain additional necessary waivers or amendments and its debt is accelerated, there can be no assurance that the Company would be able to obtain replacement financing or to satisfy its obligations, in which case the Company may pursue a process to restructure its indebtedness under the protection of a bankruptcy court. Refer to Note 1, Basis of Presentation And Significant Policies—Going Concern, Note 17, Subsequent Events, “Management’s Discussion And Analysis Of Financial Condition And Results Of Operations” in Part I, Item 2, and “Risk Factors” in Part II, Item 1A, for additional information. (A) Senior Debt The Credit Facility The Company's credit agreement (the "Credit Facility"), as amended, is currently comprised of the $227.3 million Revolver maturing August 19, 2024 and a term B-2 loan (the "Term B-2 Loan") maturing November 17, 2024. The Credit Facility has usual and customary covenants including, but not limited to, a net first lien leverage ratio, restricted payments and the incurrence of additional debt. Specifically, the Credit Facility requires the Company to comply with a certain financial covenant which is a defined term within the agreement, including a maximum Consolidated Net First-Lien Leverage Ratio that cannot exceed 4.0 times. On October 31, 2023, the Company’s finance subsidiary, Audacy Capital Corp., elected to utilize a 3-business day grace period for interest payments in the aggregate amount of approximately $17.0 million originally due on October 31, 2023 pursuant to the terms of the Credit Facility. On November 3, 2023, Audacy Capital Corp. entered into an amendment to the Credit Facility to extend the grace periods before which a default in the payment of such interest in the amount of approximately $17.0 million due on October 31, 2023, and approximately $0.8 million due on November 8, 2023, matures into an Event of Default, from 3 business days 11 business days. The amendment also waived the requirement for the Company to comply with the maximum Consolidated Net First-Lien Leverage Ratio financial covenant referenced above, for the quarterly test period ended September 30, 2023. Failure to comply with the Company’s financial covenants or other terms of its Credit Facility and any subsequent failure to negotiate and obtain any additional required relief from its lenders could result in a default under the Company’s Credit Facility. Any event of default could have a material adverse effect on the Company’s business and financial condition. The acceleration of the Company’s debt repayment could have a material adverse effect on its business. The Company may continue to seek from time to time to amend its Credit Facility or obtain other funding or additional funding, which may not be successful or result in higher interest rates. As of September 30, 2023, the Company was in compliance with the financial covenants and all other terms of the Credit Facility in all material respects due to the amendment and waiver described above. The Company’s ability to maintain compliance with its covenant is highly dependent on its results of operations and its ability to negotiate additional waivers or amendments, as applicable, when needed on acceptable terms or at all. The cash available from the Revolver is dependent on the Company’s Consolidated Net First-Lien Leverage Ratio at the time of such borrowing. The 2027 Notes During 2019, the Company and its finance subsidiary, Audacy Capital Corp. issued $325.0 million in aggregate principal amount of senior secured second-lien notes due May 1, 2027 (the "Initial 2027 Notes"). During the fourth quarter of 2019, the Company and its finance subsidiary, Audacy Capital Corp., issued $100.0 million of additional 6.500% senior secured second-lien notes due 2027 (the "Additional 2027 Notes") at a price of 105.0% of their principal amount, plus accrued interest from November 1, 2019, as additional notes under the original indenture (the “2027 Notes Base Indenture”), as supplemented by a first supplemental indenture, dated December 13, 2019 (the "2027 Notes First Supplemental Indenture" and, together with the 2027 Notes Base Indenture, the "2027 Notes Indenture"). During the fourth quarter of 2021, the Company and its finance subsidiary, Audacy Capital Corp., issued a further $45.0 million of Additional 2027 Notes as additional notes under the 2027 Notes Indenture at a price of 100.750% of their principal amount. All of the Additional 2027 Notes are treated as a single series with the Initial 2027 Notes and have substantially the same terms as the Initial 2027 Notes (collectively, the "2027 Notes"). The premium on the $45.0 million of Additional 2027 Notes will be amortized over the term under the effective interest rate method. Interest on the 2027 Notes accrues at the rate of 6.500% per annum and is payable semi-annually in arrears on May 1 and November 1 of each year. Until May 1, 2022, only a portion of the 2027 Notes could be redeemed at a price of 106.500% of their principal amount plus accrued interest. On or after May 1, 2022, the 2027 Notes may be redeemed, in whole or in part, at a price of 104.875% of their principal amount plus accrued interest. The prepayment premium continues to decrease over time to 100% of their principal amount plus accrued interest. During the nine months ended September 30, 2022, the Company repurchased $10.0 million of the 2027 Notes through open market purchases. This repurchase activity generated a gain on retirement of the 2027 Notes in the amount of $0.6 million. As of any reporting period, the unamortized premium on the 2027 Notes is reflected on the balance sheet as an addition to the 2027 Notes. On November 1, 2023, Audacy Capital Corp. elected to utilize a 30-day grace period for the interest payment in the amount of approximately $15.0 million originally due on November 1, 2023 pursuant to the terms of the 2027 Notes. The 2029 Notes During the first quarter of 2021, the Company and its finance subsidiary, Audacy Capital Corp., issued $540.0 million in aggregate principal amount of senior secured second-lien notes due March 31, 2029 (the "2029 Notes"). Interest on the 2029 Notes accrues at the rate of 6.750% per annum and is payable semi-annually in arrears on March 31 and September 30 of each year. The Company used net proceeds of the offering, along with cash on hand, to: (i) repay $77.0 million of existing indebtedness under the Term B-2 Loan; (ii) repay $40.0 million of drawings under the Revolver; and (iii) fully redeem all of its $400.0 million aggregate principal amount of 7.250% senior notes due 2024 (the "Senior Notes") and to pay fees and expenses in connection with the redemption. In connection with this activity, during the first quarter of 2021, the Company: (i) recorded $6.6 million of new debt issuance costs attributable to the 2029 Notes; and (ii) $0.4 million of debt issuance costs attributable to the Revolver which will be amortized over the remaining term of the Revolver on a straight line basis. The Company also incurred $0.5 million of costs which were classified within refinancing expenses. On October 2, 2023, Audacy Capital Corp, elected to utilize the 30-day grace period for the interest payment in the amount of approximately $18.0 million originally due on September 30, 2023 pursuant to the terms of the 2029 Notes. On October 27, 2023, Audacy Capital Corp. entered into a first supplemental indenture (the “2029 Notes First Supplemental Indenture”) to the original indenture (the “2029 Notes Base Indenture” and, together with the 2029 Notes First Supplemental Indenture, the “2029 Notes Indenture”) governing the 2029 Notes to extend the grace period before which a default in the payment of such interest matures into an Event of Default, from 30 to 60 days. Accordingly, the grace period for the interest payment on the 2029 Notes that was due on September 30, 2023 now ends on November 29, 2023. However, the extension will terminate on the earlier of the date on which: (i) a failure to pay interest under a Credit Facility (as defined in the 2029 Notes Indenture) when due constitutes an event of default permitting all unpaid principal, interest accrued and unpaid thereon and other amounts owed or payable under such Credit Facility to be immediately due and payable; or (ii) Audacy Capital Corp. makes the payment of interest under the Credit Agreement (as defined in the 2029 Notes Indenture) originally due on October 31, 2023 (either on such original due date or during or after any applicable grace period). Accounts Receivable Facility On July 15, 2021, the Company and certain of its subsidiaries entered into a $75.0 million Receivables Facility, maturing on July 15, 2024, to provide additional liquidity, to reduce the Company's cost of funds and to repay outstanding indebtedness under the Credit Facility. The documentation for the Receivables Facility includes (i) a Receivables Purchase Agreement entered into by and among Audacy Operations, Audacy Receivables as seller, the Investors, and DZ BANK, as agent; (ii) a Sale and Contribution Agreement, by and among Audacy Operations, Audacy NY, and Audacy Receivables; and (iii) a Purchase and Sale Agreement and together with the Receivables Purchase Agreement and the Sale and Contribution Agreement, the “Agreements”) by and among certain wholly-owned subsidiaries of the Company (together with Audacy NY, the “Originators”), Audacy Operations and Audacy NY. Pursuant to the Purchase and Sale Agreement, the Originators (other than Audacy NY) have sold, and will continue to sell on an ongoing basis, their accounts receivable, together with customary related security and interests in the proceeds thereof, to Audacy NY. Pursuant to the Sale and Contribution Agreement, Audacy NY has sold and contributed, and will continue to sell and contribute on an ongoing basis, its accounts receivable, together with customary related security and interests in the proceeds thereof, to Audacy Receivables. Pursuant to the Receivables Purchase Agreement, Audacy Receivables has sold and will continue to sell on an ongoing basis such accounts receivable, together with customary related security and interests in the proceeds thereof, to the Investors in exchange for cash investments. Yield is payable to Investors under the Receivables Purchase Agreement at a variable rate based on either the Secured Overnight Financing Rate ("SOFR") or commercial paper rates plus a margin. Collections on the accounts receivable: (x) will be used to either: (i) satisfy the obligations of Audacy Receivables under the Receivables Facility; or (ii) purchase additional accounts receivable from the Originators; or (y) may be distributed to Audacy NY, the sole member of Audacy Receivables. Audacy Operations acts as the servicer under the Agreements and may be used to (i) fund capital expenditures, (ii) repay borrowings on the Credit Facility, (iii) satisfy maturing debt obligations, as well as (iv) fund working capital needs and other approved uses. The Agreements contain representations, warranties and covenants that are customary for bankruptcy-remote securitization transactions, including covenants requiring Audacy Receivables to be treated at all times as an entity separate from the Originators, Audacy Operations, the Company or any of its other affiliates and that transactions entered into between Audacy Receivables and any of its affiliates shall be on arm’s-length terms. The Receivables Purchase Agreement also contains customary default and termination provisions which provide for acceleration of amounts owed under the Receivables Purchase Agreement upon the occurrence of certain specified events with respect to Audacy Receivables, Audacy Operations, the Originators, or the Company, including, but not limited to: (i) Audacy Receivables’ failure to pay yield and other amounts due; (ii) certain insolvency events; (iii) certain judgments entered against the parties; (iv) certain liens filed with respect to assets; and (v) breach of certain financial covenants and ratios. The Company has agreed to guarantee the performance obligations of Audacy Operations and the Originators under the Receivables Facility documents. The Company has not agreed to guarantee any obligations of Audacy Receivables or the collection of any of the receivables and will not be responsible for any obligations to the extent the failure to perform such obligations by Audacy Operations or any Originator results from receivables being uncollectible on account of the insolvency, bankruptcy or lack of creditworthiness or other financial inability to pay of the related obligor. Although the SPV is a wholly owned consolidated subsidiary of Audacy NY, the SPV is legally separate from Audacy NY. The assets of the SPV (including the accounts receivable) are not available to creditors of Audacy NY, Audacy Operations or the Company, and the accounts receivable are not legally assets of Audacy NY, Audacy Operations or the Company. The Receivables Facility is accounted for as a secured financing. The Receivables Facility has usual and customary covenants including, but not limited to, a net first lien leverage ratio, a required minimum tangible net worth, and a minimum liquidity requirement (the "financial covenants"). Specifically, the Receivables Facility requires the Company to comply with a certain financial covenant which is a defined term within the agreement, including a maximum Consolidated Net First-Lien Leverage Ratio that cannot exceed 4.0 times. The Receivables Facility also requires the Company to maintain a minimum tangible net worth, as defined within the agreement, of at least $300.0 million. Additionally, the Receivables Facility requires the Company to maintain liquidity of $25 million. As of September 30, 2023, the Company was compliant with the Receivables Facility and related financial covenants, in some cases were due to the amendment and waiver described below. The Receivables Facility will mature on July 15, 2024, unless earlier terminated or subsequently extended pursuant to the terms of the Receivables Purchase Agreement. The pledged receivables and the corresponding debt are included in Accounts receivable, net and Long-term debt, net of current portion, respectively, on the Condensed Consolidated Balance Sheet. As of September 30, 2023, the SPV has $215.9 million of net accounts receivable and has outstanding borrowings of $75.0 million under the Receivables Facility, which matures in July 2024. On November 3, 2023, Audacy Receivables and the other parties to the Receivables Purchase Agreement amended the Receivables Purchase Agreement to waive the cross-default that would otherwise occur under the Receivables Facility in respect of certain defaults in the payment of interest under the Credit Facility, with the effect that such interest payment defaults will not result in an event of default under the Receivables Facility until the expiration of the 11 business day grace periods provided for under the Credit Facility, as amended. In addition, the amendment waives the requirement for the Company to comply with the same maximum Consolidated Net First-Lien Leverage Ratio, as provided for in the Credit Facility, for the quarterly test period ended September 30, 2023. (B) Net Interest Expense The components of net interest expense are as follows:
|  | Three Months Ended September 30,
Net Interest Expense |  | 2023 |  | 2022
|  | (amounts in thousands)
Interest expense |  | $ | 34,870 |  |  | $ | 27,076 |
Amortization of deferred financing costs |  | 1,397 |  |  | 1,293 |
Amortization of original issue premium of Senior Notes |  | (256) |  |  | (256) |
Interest income and other investment income |  | — |  |  | — |
Total net interest expense |  | $ | 36,011 |  |  | $ | 28,113 |
|  | Nine Months Ended September 30,
Net Interest Expense |  | 2023 |  | 2022
|  | (amounts in thousands)
Interest expense |  | $ | 98,868 |  |  | $ | 73,119 |
Amortization of deferred financing costs |  | 4,838 |  |  | 3,832 |
Amortization of original issue premium of Senior Notes |  | (766) |  |  | (768) |
Interest income and other investment income |  | — |  |  | (70) |
Total net interest expense |  | $ | 102,940 |  |  | $ | 76,113 |

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