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US radio and podcast giant Audacy has filed for Chapter 11 bankruptcy protection to reduce the company's debt.

Audacy Targets to Decrease its Total Debt Load

According to CNBC, through the restructuring agreement, the company can decrease its total debt load by 80%, or from approximately $1.9 billion to about $350 million.

Audacy CEO David Field noted that the company's debt was due to the ad sales fallout.

"While our transformation has enhanced our competitive position, the perfect storm of sustained macroeconomic challenges over the past four years facing the traditional advertising market has led to a sharp reduction of several billion dollars in cumulative radio ad spending," Field said in a press statement on Sunday.

"These market factors have severely impacted our financial condition and necessitated our balance sheet restructuring," he added.

Audacy, which owns hundreds of radio stations like WFAN Sports Radio, 1010 WINS, KROQ, and KCBS, is one of the top radio broadcasters in the US.

The Philadelphia-based company, which also produced podcasts from the likes of Stephen A. Smith, David Spade, and Dana Carvey, was reportedly delisted from the New York Stock Exchange last November.

Restructuring Agreement of Audacy

Audacy said the restructuring support agreement (RSA) will significantly deleverage its balance sheet and further position the company for long-term growth.

However, the company does not expect the restructuring to impact advertisers, employees, and partners. Audacy will also operate normally under its current leadership team during this restructuring process.

To implement the deleveraging transaction in the RSA, Audacy and certain of its subsidiaries commenced prepackaged Chapter 11 proceedings in the US Bankruptcy Court for the Southern District of Texas on Sunday.

In conjunction with the Chapter 11 petitions, the company has filed a proposed Plan of Reorganization that incorporates the terms of the RSA.

The proposed Plan, which is subject to approval by the court, aims to reduce that debt load by around $1.6 billion, with its debtholders receiving equity. A group of lenders is also expected to provide about $57 million in further financing during the Chapter 11 process.

Audacy expects a court hearing in February. The company also expects to emerge from bankruptcy once regulatory approval is obtained from the Federal Communications Commission.