SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934
Date of report (Date of earliest event reported):
February 7, 2002 (November 19, 2001)
CUMULUS MEDIA INC.
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(Exact name of registrant as specified in its charter)
Illinois 000-24525 36-4159663
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(State or other jurisdiction (Commission (IRS employer
of incorporation) File Number) Identification No.)
3535 Piedmont Road, Building 14, Fourteenth Floor, Atlanta, Georgia 30305
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (404) 949-0700
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ITEM 5. Other Events.
On November 19, 2001, Cumulus Media Inc. issued a press release
announcing that we had signed a definitive agreement to acquire Aurora
Communications, LLC and that we had signed a letter of intent to acquire the
broadcasting operations of DBBC, L.L.C. On December 17, 2001, we issued a
second press release announcing that we had signed a definitive agreement to
acquire the broadcasting operations of DBBC, on terms and conditions consistent
with those of the previously-announced letter of intent.
The Proposed Aurora Acquisition. The agreement to acquire Aurora
Communications provides for the issuance to the owners of Aurora Communications
of (a) 10,551,182 shares of our common stock, consisting of approximately
1,570,034 shares of our Class A Common Stock, and approximately 8,981,148
shares of our non-voting Class B Common Stock, which may be converted into
shares of Class A Common Stock on a one-for-one basis, and (b) warrants,
exercisable for a period of one year from the date of issuance, to purchase up
to an aggregate of 833,333 shares of our common stock, consisting of warrants
for approximately 124,000 shares of Class A Common Stock and approximately
709,333 shares of Class A Common Stock or Class B Common Stock, at an exercise
price of $12.00 per share, and the payment of $93 million in cash, most of
which will be used to retire existing indebtedness of Aurora Communications and
the balance of which will be paid to the owners of Aurora Communications. This
proposed transaction is referred to as the Aurora acquisition.
One of our directors, Robert H. Sheridan, III, and one of our
principal shareholders, BA Capital Company, L.P., referred to as BA Capital, of
which Mr. Sheridan is a senior vice president and managing director, have
certain interests in the proposed Aurora acquisition that are different from,
and in addition to, those of our other shareholders. Those interests arise
because BancAmerica Capital Investors, SBIC I, L.P., referred to as BACI, of
which Mr. Sheridan is also a senior vice president and managing director and
which is an affiliate of BA Capital, indirectly owns approximately 73% of the
equity interests of Aurora Communications.
If the Aurora acquisition is consummated (but without taking into
account the acquisition of the broadcasting operations of DBBC), BA Capital and
BACI will together own approximately 1.9% of the voting power of our
outstanding common stock, represented by 840,250 shares of Class A Common Stock
and 10,961,144 shares of non-voting Class B Common Stock. In addition, BACI
will hold a warrant to acquire approximately 709,333 shares of our Class A
Common Stock or Class B Common Stock. Assuming this warrant is exercised for
shares of our Class B Common Stock, BA Capital and BACI would together own
approximately 2.9% of our outstanding Class A Common Stock, approximately 74.8%
of our outstanding Class B Common Stock, and none of our outstanding Class C
Common Stock. These shares would represent 1.9% of the outstanding voting power
of our common stock. Assuming conversion of the shares of Class B Common Stock
and the exercise of the warrant (including the conversion into Class A Common
Stock of any shares of Class B Common Stock acquired under the warrant), BA
Capital and BACI would together own approximately 30.5% of our Class A Common
Stock, and none of our Class B Common Stock or Class C Common Stock. These
shares of our Class A Common Stock would represent 22.2% of the outstanding
voting power of our common stock.
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Our Board of Directors was aware of those interests and, without the
participation of Mr. Sheridan, considered those interests, together with other
relevant factors, in approving the proposed Aurora acquisition.
In connection with the Aurora acquisition, we have also entered into a
registration rights agreement with Aurora Communications and its owners,
pursuant to which, among other things, we agreed to prepare and file a
registration statement with the Securities and Exchange Commission, or SEC, in
order to permit the resale of the shares of our Class A Common Stock that we
will issue to the owners of Aurora Communications at the closing of the Aurora
acquisition, including those shares of Class A Common Stock that may be issued
upon conversion of the shares of Class B Common Stock, or upon exercise of the
warrants, that we will issue at closing. It is a condition to closing the
Aurora acquisition that the registration statement be declared effective prior
to the closing, and we are required to maintain the registration statement in
effect until the earlier to occur of:
- the date on which all of the registered shares have been
sold; or
- three years from the date the securities covered by the
registration statement are issued.
The registration rights agreement grants additional rights, called
demand registration rights, to BACI. Starting after 30 months from the date of
the registration rights agreement, BACI can require from time to time, without
limitation as to the number of times, that we register for resale any shares of
our common stock that it received in the Aurora acquisition that it still holds
at that time. The agreement also grants rights, called piggyback registration
rights, to the other owners of Aurora Communications. The piggyback
registration rights allow the owners of Aurora Communications to have the
shares of our common stock that they receive in the Aurora acquisition included
in any future public offering of our common stock. Both the demand registration
rights and the piggyback registration rights expire once the shares of our
common stock issued in the Aurora acquisition have all been sold or otherwise
disposed of.
Also in connection with the Aurora acquisition, BACI has agreed to
enter into a shareholder agreement with us, at the closing of the Aurora
acquisition, that places limits on some of BACI's rights as a holder of our
Class B Common Stock, which rights are otherwise provided under our articles of
incorporation. In addition, the shareholder agreement provides that if BACI, or
any of its affiliates, has converted shares of Class B Common Stock into shares
of Class A Common Stock, in certain circumstances BACI, or its applicable
affiliate, may exchange the shares of Class A Common Stock for an equal number
of shares of Class B Common Stock, all of which would remain subject to the
limitation of certain rights imposed by the shareholder agreement.
The completion of the proposed Aurora acquisition depends upon the
satisfaction of a number of conditions, including, among other things, our
shareholders' approval of the Aurora acquisition, issuance of a final order by
the Federal Communications Commission, or FCC, permitting the transfer of
control of the FCC licenses held by Aurora Communications' subsidiaries to us,
and receipt of the financing required to consummate the Aurora acquisition.
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Assuming that all of the necessary conditions are met or waived, we expect to
complete the Aurora acquisition during the first half of 2002.
The Proposed DBBC Acquisition. The agreement to purchase the
broadcasting operations of DBBC provides for the issuance to DBBC of (a)
5,250,000 shares of our Class A Common Stock and (b) a warrant to purchase up
to 250,000 shares of Class A Common Stock, and the assumption of specified
liabilities of DBBC and the payment of certain expenses, up to an aggregate of
$21 million. This proposed transaction is referred to as the DBBC acquisition.
Simultaneously with the closing of the DBBC acquisition, we will enter
into a registration rights agreement with DBBC, pursuant to which DBBC can
require that we file a registration statement with the SEC in order to permit
the resale of the shares of our Class A Common Stock to be issued to DBBC in
the acquisition, including those shares of Class A Common Stock that may be
issued upon exercise of the warrant.
DBBC is owned by Lewis W. Dickey, Jr., the Chairman, President, Chief
Executive Officer and a director of Cumulus Media, three of his brothers,
including John W. Dickey, the Executive Vice President of Cumulus Media, and
Quaestus & Co. Inc., which is controlled by Richard W. Weening, a director of
Cumulus Media. Collectively, those individuals, and their affiliated entities,
own approximately 1,171,290 shares, or 4.2%, of our outstanding Class A Common
Stock, and 1,529,277 shares, or 100%, of our outstanding Class C Common Stock
(which has ten votes per share), which collectively represent approximately
38.2% of the outstanding voting power of our common stock as of December 31,
2001. In connection with the DBBC acquisition, DBBC will receive 5,250,000
shares of our Class A Common Stock and a warrant, exercisable for a period of
six months from the date of issuance, to purchase up to an additional 250,000
shares of Class A Common Stock at an exercise price of $12.00 per share. As the
majority owners and managers of DBBC, Messrs. L. Dickey and J. Dickey and their
brothers will control the manner in which the shares of Class A Common Stock
that DBBC will acquire in the DBBC acquisition will be voted.
Upon completion of the DBBC acquisition, and without taking into
account the Aurora acquisition, Messrs. L. Dickey, J. Dickey and Weening, and
their affiliates, collectively will own approximately 21.4% of our outstanding
Class A Common Stock and 100% of our outstanding Class C Common Stock, which
collectively will represent approximately 62.7% of the outstanding voting power
of our common stock, assuming exercise of the warrant being issued to DBBC and
of all presently exercisable options held by those persons.
Because of the interests of the Dickeys and Mr. Weening in the
proposed DBBC acquisition, our Board of Directors established a special
committee of independent directors to act on behalf of Cumulus Media in
negotiating the price and other terms and conditions of the DBBC acquisition
and in evaluating the fairness of the transaction. The members of the special
committee were aware of, and considered, those interests, together with other
relevant factors, in approving the proposed DBBC acquisition.
The completion of the proposed DBBC acquisition depends upon the
satisfaction of a number of conditions, including, among other things, our
shareholders' approval of the transaction, an FCC order permitting our
acquisition of DBBC's FCC licenses and receipt of the
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financing required to consummate the DBBC acquisition. Assuming that all of the
necessary conditions are met or waived, we expect to complete the DBBC
acquisition during the first half of 2002.
The Voting Agreements. In connection with both the proposed Aurora
acquisition and the proposed DBBC acquisition, Messrs. L. Dickey, J. Dickey and
Weening, and their affiliates, who together own shares of our common stock
representing approximately 38.2% of the outstanding voting power as of December
31, 2001, have entered into agreements with both Aurora Communications and DBBC
that require the Dickeys, Mr. Weening and their affiliates to vote their shares
of our common stock in favor of any proposals necessary to approve each
acquisition.
The executed agreements, including any amendments, and the press
releases announcing the proposed acquisitions are attached as exhibits to this
report and are incorporated herein by reference. The foregoing descriptions of
the executed agreements are qualified in their entirety by reference to the
attached exhibits.
ITEM 7(c) - Exhibits.
2.1 Acquisition Agreement, dated November 18, 2001, by and among Cumulus Media Inc.,
Aurora Communications, LLC, and the other parties identified therein, as amended
on January 23, 2002.
2.2 Amended and Restated Registration Rights Agreement, dated as of January 23, 2002,
by and among Cumulus Media Inc., Aurora Communications, LLC, and the other parties
identified therein.
2.3 Agreement and Plan of Merger, dated December 14, 2001, by and among Cumulus Media
Inc., DBBC, L.L.C., and the other parties identified therein.
2.4 Voting Agreement, dated November 18, 2001, by Aurora Communications, LLC, Cumulus
Media Inc., Lewis W. Dickey, Jr., John W. Dickey, DBBC of Georgia, L.L.C., CML
Holdings, LLC, Richard W. Weening, Quaestus Management Corporation and Quaestus
Partner Fund.
2.5 Voting Agreement, dated December 14, 2001, by DBBC, L.L.C., Cumulus Media Inc.,
Lewis W. Dickey, Jr., John W. Dickey, DBBC of Georgia, L.L.C., CML Holdings, LLC,
Richard W. Weening, Quaestus Management Corporation and Quaestus Partner Fund.
99.1 Press Release issued by Cumulus Media Inc., dated November 19, 2001.
99.2 Press Release issued by Cumulus Media Inc., dated December 17, 2001.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
CUMULUS MEDIA INC.
By: /s/ Martin R. Gausvik
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Name: Martin R. Gausvik
Title: Executive Vice President,
Treasurer and Chief
Financial Officer
Date: February 7, 2002
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EXHIBIT INDEX
EXHIBIT NUMBER EXHIBIT
2.1 Acquisition Agreement, dated November 18, 2001, by and among Cumulus Media Inc., Aurora Communications, LLC,
and the other parties identified therein, as amended on January 23, 2002.
2.2 Amended and Restated Registration Rights Agreement, dated as of January 23, 2002, by and
among Cumulus Media Inc., Aurora Communications, LLC, and the other parties identified therein.
2.3 Agreement and Plan of Merger, dated December 14, 2001, by and among Cumulus Media Inc., DBBC, L.L.C., and the
other parties identified therein.
2.4 Voting Agreement, dated November 18, 2001, by Aurora Communications, LLC, Cumulus Media Inc.,
Lewis W. Dickey, Jr., John W. Dickey, DBBC of Georgia, L.L.C., CML Holdings, LLC, Richard W. Weening,
Quaestus Management Corporation and Quaestus Partner Fund
2.5 Voting Agreement, dated December 14, 2001, by, DBBC, L.L.C., Cumulus Media Inc., Lewis W. Dickey, Jr.,
John W. Dickey, DBBC of Georgia, L.L.C., CML Holdings, LLC, Richard W. Weening, Quaestus Management
Corporation and Quaestus Partner Fund.
99.1 Press Release issued by Cumulus Media Inc., dated November 19, 2001.
99.2 Press Release issued by Cumulus Media Inc., dated December 17, 2001.
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