Chatter across the media finance landscape indicated a move was imminent.
On Wednesday morning, those rumors became reality: The entirety of Oaktree Capital Management L.P.‘s stake in Townsquare Media has been repurchased by the local media company headed by CEO Bill Wilson.
To do so, $80,640,000 will be paid by Townsquare, publicly traded on the NYSE.
The transaction effectively concluded Tuesday (3/9), with Townsquare snapping up the 12.6 million shares and warrants in the company held by Oaktree at a price of $6.40 per security.
Townsquare subsequently retired those securities.
It’s a great value for Townsquare, as its common stock closed at $10.51 on Tuesday, its best finish since July 2017.
With programmatic and local digital key revenue drivers for a company steeped in mid-size and smaller markets across the U.S., Townsquare has enjoyed strong growth on Wall Street since the 2020 U.S. presidential election. On October 26, 2020, TSQ was valued at just $4.52.
That amounts to 132.5% growth in less than five months.
The $80.64 million share buyout follows the January 25 Townsquare Media announcement that it was repurchasing at least 10 million of the 12.5 million shares of Class A and Class B common stock — and warrants — held by funds managed by Oaktree Capital Management L.P. for $64 million.
The $64 million question, if you will, for shareholders then is whether or not Townsquare would execute an option at a later day to acquire the remaining 2.5 million shares.
That’s now transpired.
As such, Townsquare’s total payout is the $80.64 million amount.
And, the company’s reacquisition is comprised of 100% of Oaktree’s 1.6 million shares of Class A common stock, 2.2 million shares of Class B common stock, and 8.8 million warrants.
“Based on current share counts, the transaction is expected to be immediately accretive on a free cash flow per share and adjusted earnings per share basis in excess of 70%,” Townsquare said in a release distributed at 7am Eastern and immediately Tweeted by RBR+TVBR. “At 10 million securities, the repurchase would have been accretive by
approximately 50%.”
How did Townsquare make the transaction happen? Cash on hand was used to pay $80.4 million aggregate purchase price.
Townsquare will also pay Oaktree a $4.5 million consent fee related to the transaction in four installments, the first of which is due on April 1.
With the repurchase’s completion, Townsquare will have approximately 16 million securities outstanding, inclusive of common stock and warrants.
“We could not be more pleased to share that given our strong cash position, we were able to repurchase 100% of Oaktree’s ownership interests in Townsquare, capturing a strong return for our shareholders,” Wilson said in prepared remarks. “This is a beneficial transaction for our investors and the company. The Oaktree share repurchase is significantly accretive on an earnings per share and free cash flow per share basis in 2021, and entirely eliminates Oaktree’s ownership overhang for current and potential shareholders.”
Wilson also thanked Oaktree for their long-term support of the company.
Houlihan Lokey Capital Inc., which acquired MVP Capital, home of Elliot Evers, served as financial advisor to the Special Committee in connection with the repurchase.
Oaktree’s investment in Townsquare Media dates to August 2010, when the company was created from the post-Chapter 11 ashes of the former Regent Communications. With Oaktree’s dollar infusion, Regent was merged into Gap Broadcasting; the resulting entity was renamed Townsquare.
Townsquare Media CEO Bill Wilson tells RBR+TVBR that Tuesday (3/16) will see the unveiling of the company’s Q4 and full-year 2020 results. They’ll be distributed prior to the day’s NYSE Opening Bell. And, as has been a tradition for Townsquare, a big pot of coffee will be brewing as C-Suite members will host a earnings call for investors and analysts starting at 8am Eastern/5am Pacific on March 16.
