Regent Communications Inc., the owner of 62 radio stations in 13 markets, filed for Chapter 11 bankruptcy along with 40 of its affiliates. Regents owes creditors more than $211 million; but hopes that Chapter 11 bankruptcy will allow it to cut its debt level by $87 million. Regents and creditors are proposing a debt exchange which will give creditors control of the broadcaster.
Under terms of a reorganization proposal worked out before the broadcaster filed its bankruptcy, affiliates of Oaktree Capital Management L.P. will own a majority of the new stock to be issued once Regent leaves bankruptcy.
Current stockholders will receive about $5.5 million and the company will have a new loan of $95 million, according court records. A judge must first approve the reorganization proposal.
The company said the reorganization should not affect its day-to-day operations because it has $11 million in cash.
Regent Communications’ Chapter 11 bankruptcy prepackaged reorganization plan still needs to be approved by the bankruptcy judge. However, if the company has won the approval of creditors already, it is likely that the bankruptcy plan will be approved and the company could emerge from bankruptcy in less than 90 days. Broadcasters around the country have faced the prospect of bankruptcy due to decreased advertising revenue and a reduced number of people listening. A full post-bankruptcy recovery may require this broadcaster to renegotiate vendor and employee contracts during bankruptcy and maybe even restructure its business model. And while some broadcasters have chosen to forgo filing Chapter 11 bankruptcy, Regents Communications will hold a cash flow advantage over those competitors after reducing its debt obligations significantly in bankruptcy.