With the news that iHeartMedia has told the SEC that it may need to break off negotiations with some of its creditors, we asked experts what typically occurs in these kinds of debt talks. Here’s what they told RBR+TVBR.
In a restructuring negotiation, whoever is owed the most usually is leading the lender portion of the committee trying to work it out “and negotiate a deal,” said one broadcast broker who has been involved in such talks.
“The cards are definitely in the senior lenders hands. The subordinated lenders are concerned but the senior lenders have the ability to push hard,” he tells us.
Franklin Resources Inc.’s subsidiary Franklin Advisors Inc. holds the largest amount of iHeart’s $6.3 billion of term loans and has been leading the discussions, reported Bloomberg.
Another broker agrees it appears iHeart is playing “a little bit of hardball” with their lenders.
The some $21 billion the broadcaster owes in debt “is not the number that matters. What matters is how much they can handle in a restructuring,” one expert told RBR+TVBR.
“iHeart did a really good job of not making things not due this minute,” said this expert, referring to the recent court ruling that was in iHeart’s favor over the debt holders. The court ruled iHeart made an allowable $100 million stock transfer between subsidiaries. The debt holders had disagreed and claimed the company was in default.
“But you’re dealing with angry people who have lost money. These things get nasty.”
Still a third expert characterized the talks to us as “Chapter 2 of a long book.”