Dial Global Announces Credit Recapitalization
March 4, 2013

Dial Global announces it has negotiated a recapitalization of its existing credit facilities and other obligations and equity interests with its lenders and certain of its stockholders, slated to become effective on or around of April 16.

Dial Global CEO Spencer Brown stated, "The new agreements with our lenders represent a significant step forward for the Company. Once these transactions close, we will have delevered our balance sheet and decreased cash interest expense. The agreements will provide us with greater flexibility to actively manage and grow our business. We look forward to closing these transactions in April and focusing on serving our clients."

As part of the recapitalization, Dial Global has entered into an Amended and Restated Credit Agreement, by and among the Company, General Electric Capital Corporation, as administrative agent and collateral agent, and the lenders party thereto, which provides for a $15 million paydown of the company's existing term loan and revolving credit commitments. The maturity date under the First Lien Credit Agreement is October 21, 2016. 

Dial Global also entered into a Priority Second Lien Credit Agreement among the Company, the administrative agent, the syndication agent and the lender party thereto, pursuant to which such lender agreed to invest an additional $31.5 million through a term loan facility to the Company, with a maturity date of July 21, 2017. In connection with such lender's agreement to extend credit under the Priority Second Lien Credit Agreement, the company agreed to issue it penny warrants to purchase 7.5 percent of the company's common stock exercisable immediately following the consummation of the recapitalization. The effectiveness of each credit agreement is subject to the satisfaction of certain conditions.

The lenders under the company's existing Second Lien Credit Agreement, dated as of October 21, 2011 agreed, subject to the satisfaction of specified conditions, to restructure their existing approximately $93 million in second lien obligations by amending and restating the Second Lien Credit Agreement to provide for a $30 million term loan that matures five years after the expected closing of the recapitalization and exchanging approximately $63 million in remaining obligations under the existing Second Lien Credit Agreement for a new series of preferred stock of the Company. As part of these agreements, these holders of preferred stock will be granted certain corporate governance rights. The company also agreed to issue the 2L lenders for nominal consideration warrants to purchase 12 percent of the company's common stock in connection with the exchange of a portion of the existing second lien obligations for preferred stock, which warrants will be exercisable at various dates after the recapitalization if the company does not retire the $30 million second lien term loan and the preferred stock held by such 2L lenders prior to the specified dates.

Under various subscription and exchange agreements between the company and the holders of the company's PIK Notes and Series A Preferred Stock, such holders have agreed, subject to the satisfaction of certain specified conditions, to exchange their PIK Notes and Series A Preferred Stock for equity securities of the company and have further agreed to make an additional equity infusion of $16.5 million.

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Manny Simon
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Republic Records

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