8-K A Day Keeps Dickey Away?
Is Cumulus circling the wagons to prevent the possibility of a hostile takeover? By, say… oh, I don’t know… Lew Dickey? Or perhaps a mystery player TBA? On paper, the company’s concerns seem well founded — Dickey, who was forced out of Cumulus two years ago, recently raised over $200 million via IPO with the launch of Modern Media Acquisition Corp., which is described as “a blank check company formed for the purpose of effecting a merger, share exchange, asset acquisition, stock purchase, reorganization, recapitalization or other similar business combination with a target company.”
On Monday, in a possible preemptive move to fend off such a takeover, Cumulus issued an 8-K filing with the SEC in what looks like an effort to protect itself from unauthorized parties scaling its walls, so to speak. As the filing reads, in part, “On June 5, 2017, the Board of Directors of Cumulus Media Inc. declared a dividend of one preferred share purchase right, payable on June 15, 2017, for each share of Class A Common Stock, par value $0.01 per share of the Company outstanding on June 15, 2017 to the stockholders of record on that date. Each Right entitles the registered holder to purchase from the Company 1/1000 of a share of Series R Preferred Stock, par value $0.01 per share of the Company at a price of $2.50 per one one-thousandth of a Preferred Share represented by a Right, subject to adjustment. The Rights Agreement is designed to protect the Company’s substantial net operating loss carryforwards in order to preserve the Company’s long-term value and maintain the integrity of the Company’s ongoing restructuring process.”
The filing continues, “The Rights will initially trade with the Company’s Class A common stock and will generally become exercisable only if any person (or any persons acting in concert or as a group) acquires a voting or economic position in 4.99% or more of the Company’s outstanding Class A common stock. Under the Rights Agreement, any person that currently owns more than 4.99% of the Company’s outstanding Class A common stock may continue to own its shares of Class A common stock but may not acquire a voting or economic interest in any additional shares of Class A common stock without triggering the Rights Agreement.”
