Moody's may lower Cumulus Media

Moody's Investors Service said it placed Cumulus Media Inc.'s ratings on review for possible downgrade following the company's announcement that it has entered into a merger agreement, under which it will be acquired by an investor group consisting of Lewis W. Dickey, Jr., Chairman, President and CEO of the company and an affiliate of Merrill Lynch Global Private Equity.

The transaction is valued at $1.3 billion, the agency said, noting that the review will focus on the company's pro forma capital structure and credit metrics as well as its future business strategy in the context of the secular pressures on and modest growth prospects for the mature radio broadcasting industry.

In addition, Moody's said it notes that the company's debt to EBITDA leverage of 7.2x incorporates Moody's standard adjustments and excludes non-cash stock compensation for the trailing twelve months ended March 31 remains high relative to its current Ba3 rating category, the agency noted.

The following ratings are under review for possible downgrade: corporate family rating at Ba3, probability of default rating at B1, secured revolver at Ba3 (LGD 3, 34%) and secured term loan at Ba3 (LGD 3, 34%).

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