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Cumulus Media Inc. (CMLS) Message Board

  • longtimefollower longtimefollower Nov 2, 2010 2:08 AM Flag

    Solid earnings report. Management confident in cc.

    Let's hope people are paying attention. If so, we could, and should, trade back up to $3.65-3.75 short term.

    1) We have a ROCK BOTTOM cost of capital, and management seems confident covenants will be met, when the relaxed covenants come off early next year. That means we will enjoy this phenomenally low cost of capital, all the way through June 2014. There's a lot of debt that can be paid down between now and then.

    2) We are pressing the market on ad rate increases...and succeeding in getting them. We are turning down business that is not willing to give them.

    3) Cost are remaining FIRMLY under control.

    4) Cap. ex. is staying rock bottom low.

    5) Net levg. should be in high 6x range at end of Oct. Now comfortably in sight of 6.5x hurdle needed at March 31, 2011. Are meeting minimum Ebitda covenant quite comfortably. Term loan is Libor +375 basis points. Half way to our next clawback threshold, should happen after make next payment in early 2011. (Will lover cost of funds by 50 bp.) Remain highly confident that will be meeting terms of leverage agreement, when expire at 3/31/11. And that our financings are behind us until June of 2014.

    6) Generated a couple thousand new accounts from restructured ad sales systems. Rates are going up across all markets, and avg. has seen 6 straight months of consec. growth.

    Disappointment: Only one question in conf. call, and no discussion of what they are doing with the $1B, burning a whole in their pocket.

    I think they should take this thing private at $5.25...but not a penny less.

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    • Just wondering what happens if we can push rates up, say, 3-5% in 2011....and get organic revenue growth of, say, 3-5%. The result could be explosive to bottom line earnings.

      This thing is a CASH MACHINE...and an undervalued cash machine, at that. If the common stays this low, I really don't see why they wouldn't take the $1 B they are sitting on, and simply buy their "own" company.

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