Long-Term Debt

The Company’s long-term debt consisted of the following as of March 31, 2018 and December 31, 2017 (dollars in thousands):



	March 31, 2018			December 31, 2017
Term loan	$	1,700,078		$	1,722,209
7.75% senior notes:	610,000			610,000
Long-term debt, net subject to compromise	$	2,310,078		$	2,332,209
Less: Amounts reclassified to liabilities subject to compromise	(2,310,078		)	(2,332,209		)
Long-term debt, net	$	—		$	—

In connection with the filing of the Bankruptcy Petitions, all amounts outstanding under the Term Loan (as defined below) and the Notes have been reclassified to Liabilities Subject to Compromise in the Company's Condensed Consolidated Balance Sheets as of March 31, 2018 and December 31, 2017. As a result of the filing of the Bankruptcy Petitions, the Company expensed the entire balance of $25.9 million of deferred financing costs and debt discount during the fourth quarter of 2017.

Credit Agreement

The Company's Credit Agreement consists of a Term Loan (the “Term Loan”) with a stated maturity date in December 2020. Notwithstanding the stated maturity date of the Term Loan, if on January 30, 2019, the aggregate principal amount outstanding exceeds $200.0 million, the Term Loan maturity date will be accelerated to January 30, 2019. While the Company's Plan has been approved, the Company has not yet emerged from bankruptcy and if the Company is unable to take steps to create additional liquidity or otherwise avoid the occurrence of the springing maturity, forecasted cash flows would not be sufficient for the Company to meet its obligations as of January 30, 2019.

At March 31, 2018 and December 31, 2017, the Company had $1.7 billion and $1.72 billion, respectively, outstanding under the Term Loan.

The Credit agreement previously provided for a $200.0 million revolving credit facility, which facility was terminated upon the filing of the Bankruptcy Petitions.

Amounts outstanding under the Term Loan amortize at a rate of 1.0% per annum of the original principal amount of the Term Loan, payable quarterly, with the balance payable on the maturity date. Borrowings under the Term Loan bear interest, at the option of Cumulus Holdings, based on the Base Rate (as defined below) or LIBOR, plus 3.25% on LIBOR-based borrowings and 2.25% on Base Rate-based borrowings. LIBOR-based borrowings are subject to a LIBOR floor of 1.0%. Base Rate-based borrowings are subject to a Base Rate floor of 2.0%. Base Rate is defined, for any day, as the rate per annum equal to the highest of (i) the Federal Funds Rate, as published by the Federal Reserve Bank of New York, plus 0.5%, (ii) the prime commercial lending rate of JPMorgan Chase Bank, N.A., as established from time to time, and (iii) 30 day LIBOR plus 1.0%. At March 31, 2018, the Term Loan bore interest at 4.90% per annum.

As a result of the filing of the Bankruptcy Petitions, the Company is required to make adequate protection payments on the Term Loan. The amounts of these payments are calculated under the same terms as the interest and at the rates described above. During the pendency of Bankruptcy Petitions, ASC 852 requires the Company to recognize the adequate protection payments as a reduction to the principal balance of the Term Loan. As a result, the Company applied adequate protection payments of approximately $22.1 million to the principal balance of the Term Loan for the three months ended March 31, 2018, which in turn, caused interest expense to be lower by approximately $22.1 million than it would have been absent the filing of the Bankruptcy Petitions.

The representations, covenants and events of default in the Credit Agreement are customary for financing transactions of this nature. Any efforts to enforce such obligations upon the occurrence of an event of default have been automatically stayed as a result of the Company's Bankruptcy Petition and the Term Loan holders' rights of enforcement in respect of these obligations are subject to the applicable provisions of the Bankruptcy Code.

Certain mandatory prepayments on the Term Loan are required upon the occurrence of specified events, including upon the incurrence of certain additional indebtedness, upon the sale of certain assets and upon the occurrence of certain condemnation or casualty events, and from excess cash flow.

The Company’s, Cumulus Holdings’ and their respective restricted subsidiaries’ obligations under the Credit Agreement are collateralized by a first priority lien on substantially all of the Company’s, Cumulus Holdings’ and their respective restricted subsidiaries’ assets in which a security interest may lawfully be granted, including, without limitation, intellectual property and substantially all of the capital stock of the Company’s direct and indirect domestic wholly-owned subsidiaries and 66% of the capital stock of any future first-tier foreign subsidiaries. In addition, Cumulus Holdings’ obligations under the Credit Agreement are guaranteed by the Company and substantially all of its restricted subsidiaries, other than Cumulus Holdings.

7.75% Senior Notes

On May 13, 2011, the Company issued $610.0 million aggregate principal amount of 7.75% Senior Notes due 2019 (the "7.75% Senior Notes").

On September 16, 2011, the Company and Cumulus Holdings entered into a supplemental indenture with the trustee under the indenture governing the 7.75% Senior Notes which provided for, among other things, the (i) assumption by Cumulus Holdings of all obligations of the Company related to the 7.75% Senior Notes; (ii) substitution of Cumulus Holdings for the Company as issuer; (iii) release of the Company from all obligations as original issuer; and (iv) Company’s guarantee of all of Cumulus Holdings’ obligations, in each case under the indenture and the 7.75% Senior Notes.

Interest on the 7.75% Senior Notes is payable on each May 1 and November 1 of each year. The 7.75% Senior Notes mature on May 1, 2019.

Cumulus Holdings, as issuer of the 7.75% Senior Notes, may redeem all or part of the 7.75% Senior Notes at any time at a price equal to 100% of the principal amount, plus a “make-whole” premium. If Cumulus Holdings sells certain assets or experiences specific kinds of changes in control, it will be required to make an offer to purchase the 7.75% Senior Notes.

In connection with the substitution of Cumulus Holdings as the issuer of the 7.75% Senior Notes, the Company also guaranteed the 7.75% Senior Notes. In addition, each existing and future domestic restricted subsidiary that guarantees the Company’s indebtedness, Cumulus Holdings’ indebtedness or indebtedness of the Company’s subsidiary guarantors (other than the Company’s subsidiaries that hold the FCC licenses for the Company’s radio stations) guarantees, and will guarantee, the 7.75% Senior Notes. The 7.75% Senior Notes are senior unsecured obligations of Cumulus Holdings and rank equally in right of payment to all existing and future senior unsecured debt of Cumulus Holdings and senior in right of payment to all future subordinated debt of Cumulus Holdings. The 7.75% Senior Notes guarantees are the Company’s and the other guarantors’ senior unsecured obligations and rank equally in right of payment to all of the Company’s and the other guarantors’ existing and future senior debt and senior in right of payment to all of the Company’s and the other guarantors’ future subordinated debt. The 7.75% Senior Notes and the guarantees are effectively subordinated to any of Cumulus Holdings’, the Company’s or the guarantors’ existing and future secured debt to the extent of the value of the assets securing such debt. In addition, the 7.75% Senior Notes and the guarantees are structurally subordinated to all of the liabilities of the Company and its subsidiaries.

The Indenture governing the 7.75% Senior Notes contains representations, covenants and events of default customary for financing transactions of this nature. Any efforts to enforce obligations upon the occurrence of an event of default have been automatically stayed as a result of the filing of the Bankruptcy Petitions and the holders of the 7.75% Senior Notes rights of enforcement in respect to any obligations are subject to the applicable provisions of the Bankruptcy Code.

As described in more detail in Note 1, "Description of Business, Interim Financial Data and Basis of Presentation", on October 30, 2017, the Restructuring Committee of the Board of Directors authorized the Company to forgo the November 1, 2017 scheduled interest payment of $23.6 million on the 7.75% Senior Notes. The Company will continue to forgo interest payments on the 7.75% Senior Notes while under bankruptcy protection. As a result, the Company's interest expense attributable to the 7.75% Senior Notes for the three months ended March 31, 2018 was approximately $11.8 million lower than it would have been absent the filing of the Bankruptcy Petitions.

Amortization of Debt Discount and Debt Issuance Costs

For the three months ended March 31, 2017, the Company amortized $2.5 million of debt discount and debt issuance costs related to its Term Loan and 7.75% Senior Notes. As a result of the Company’s chapter 11 cases, the Company expensed the entire remaining balance of deferred financing costs and debt discount during the fourth quarter of 2017. Thus, no amortization was recorded for the quarter ended March 31, 2018.