SMG Sells Seven CCM Stations, Restructures Balance Sheet

RADIO ONLINE | Monday, December 30, 2024

Salem Media Group

In a significant restructuring of its financial landscape, Salem Media Group (SMG) has repurchased all $159.4 million of its outstanding 7.125% Senior Secured Notes due 2028 at a discounted rate, issued $40 million in convertible preferred stock, and reached an agreement to sell seven of its radio stations for $90 million.

Salem CEO David Santrella highlighted the transformative effect of these transactions: "This comprehensive restructuring not only eliminates nearly all of our outstanding debt but also positions us for future growth with a stronger balance sheet and capital structure," he said.

The repurchased 2028 Notes, totaling $159.4 million, were bought back for $104 million in cash and $24 million in subordinated unsecured promissory notes. Following the repurchase, these notes were cancelled, and all obligations under the related indenture were discharged.

In parallel, Salem issued $40 million of Series B Convertible Preferred Stock to The Christian Community Foundation, Inc., known as WaterStone. This injection of funds primarily facilitated the note repurchase. Rick von Gnechten, COO of WaterStone and former CFO of a Fortune 600 company, will oversee this investment.

The restructuring plan also includes the sale of seven Contemporary Christian Music (CCM) stations to Educational Media Foundation (EMF), with broadcasting rights extending across all 50 states through networks like K-LOVE and Air1. The stations involved in the sale are located in key markets including Atlanta, Cleveland, Colorado Springs, Dallas, Los Angeles, Portland and Sacramento, fetching a total sale price of $80 million. An additional $10 million advertising and marketing agreement is also part of the deal.

EMF interim CEO Tom Stultz expressed enthusiasm about the acquisition: "As Salem has leaned into its talk and information programming, we are honored to carry the torch and keep Christian music flowing over these frequencies," he said. "These strong stations expand our coverage area and help us deliver on our mission to reach more people with the Gospel of Jesus Christ. We feel it is an incredible opportunity to continue serving listeners with Christian music in these important markets."

The stations included in the sale are KLTY-FM in Arlington, Texas; WFSH-FM in Athens, Georgia; WFHM-FM in Cleveland, Ohio; KFSH-FM in La Mirada, California; KKFS-FM in Lincoln, California; KBIQ-FM in Manitou Springs, Colorado; and KFIS-FM in Scappoose, Oregon. EMF plans to feature its Contemporary Christian Music network K-LOVE or sister network Air1 Worship Now on these signals, tailored to each market's needs, pending FCC approval of the acquisitions.

Salem Executive Chairman and co-founder Edward G. Atsinger expressed his satisfaction with the deal: "This strategic exit from the Contemporary Christian Music format allows us to clear our long-term debt, and we are thrilled that EMF, a group known for its high-quality content and community impact, will be taking over these stations."

Additionally, the company announced a one-year extension of its Asset Based Loan facility with Siena Lending Group, further stabilizing its financial position.

The transactions, scheduled to close in the first half of 2025, have received financial advisement from Guggenheim Securities, LLC. EMF hopes to begin programming these stations through a local marketing agreement starting February 1, 2025.