(Adds Cumulus statement, paragraph 3)
By Nate Raymond
NEW YORK, Feb 24 (Reuters) - A judge on Friday rejected Cumulus Media Inc’s bid to proceed with a refinancing plan that the second-largest U.S. radio network hoped would help reduce its $2.4 billion debt load, but was opposed by some lenders.
The decision by U.S. District Judge Katherine Polk Failla in Manhattan came in a lawsuit the Atlanta-based company filed in December, accusing JPMorgan Chase & Co of withholding consent to parts of its refinancing plan.
Cumulus said in an emailed statement that it was disappointed with the decision, and that it remained “focused on exploring strategies that would give us the runway needed to fully execute our plan.”
In its lawsuit, Cumulus said that JPMorgan’s actions in its role as administrative agent under a 2013 credit agreement had threatened a deal it reached with bondholders that would deleverage the company by up to $305 million.
But JPMorgan and a group creditors who objected to the deal disagreed and argued the transaction was not permitted under the credit agreement, a position Failla adopted.
“I do not believe it permits the proposed refinancing,” she said.
Cumulus Media shares fell sharply in Friday trading on the Nasdaq stock exchange following the ruling. Its shares last traded at 75 cents, down 25 percent.
The lawsuit by Cumulus, which owns 447 radio stations, stemmed from its efforts to reduce its debt load, which includes $1.8 billion in secured loans and $610 million of unsecured senior notes due in 2019.
Cumulus on Dec. 6 announced a plan to exchange the senior notes for a combination of stock and up to $305 million in secured debt borrowed through a $200 million revolving credit line.
Cumulus said the deal would allow the company to retire the notes at a discount and avoid a “springing maturity” on the $1.8 billion in loans that occurs if more than $200 million of the notes are outstanding in January 2019.
The deal was reached with a majority of Cumulus’ senior noteholders. Cumulus said the refinancing must be completed by March 13, when the exchange offer is scheduled to expire.
The Cumulus lawsuit sought an order declaring that its credit agreement permitted it to use the revolving credit line as part of its refinancing plan and may amend a restriction that would enable it to access the credit line.
It also sought an order requiring JPMorgan to undertake other actions necessary to effectuate the refinancing.
The case is Cumulus Media Holdings Inc. et al v. JPMorgan Chase Bank, N.A., U.S. District Court, Southern District of New York, No. 16-09591. (Reporting by Nate Raymond in New York; editing by G Crosse and Grant McCool)