This order doesn’t involve a BK drive-thru window for a quick on-the-go breakfast from Burger King.
Rather, by the dawn’s early light on The Ides of March, a day made famous by William Shakespeare in Julius Caesar as one of warning from a soothsayer, iHeartMedia moved forward with its anticipated Chapter 11 restructuring plan by filing voluntary petitions for relief in the Houston-based U.S. Bankruptcy Court for the Southern District of Texas.
It’s not exactly grim news for the nation’s No. 1 radio broadcasting company widely known for its iHeartRadio App, its just-concluded iHeartRadio Music Awards and an array of superstar talent including Ryan Seacrest, Elvis Duran, and Bobby Bones. In fact, iHeart Chairman/CEO Bob Pittman called moves that put the wheels in motion on a Chapter 11 filing “a significant accomplishment” for the company.
Triggering the voluntary petitions for relief under Chapter 11 of the U.S. bankruptcy code is a March 14 agreement in principle with holders of more than $10 billion of its outstanding debt, and iHeart’s financial sponsors.
The agreement, iHeart says, “reflects widespread support across the capital structure for a comprehensive balance sheet restructuring” that will reduce the company’s debt. It also allows for the operation of iHeart as normal — a point stressed by company executives as it it becomes the second major owner of radio stations to elect for bankruptcy protection. Cumulus Media, the No. 2 operator by number of radio stations, is presently working with a New York-based federal bankruptcy court on a restructuring agreement.
Stressing on the positive growth seen by iHeart in recent quarters, Pittman said, “iHeartMedia has created a highly successful operating business, generating year-over-year revenue growth in each of the last 18 consecutive quarters.”
He added that thanks to the popular iHeartRadio app, “We have transformed a traditional broadcast radio company into a true 21st century multi-platform, data-driven, digitally-focused media and entertainment powerhouse with unparalleled reach, products and services now available on more than 200 platforms, and the iHeartRadio master brand that ties together our almost 850 radio stations, our digital platform, our live events, and our 129 million social followers.”
Pittman concluded, “The agreement we announced today is a significant accomplishment, as it allows us to definitively address the more than $20 billion in debt that has
burdened our capital structure. Achieving a capital structure that finally matches our impressive operating business will further enhance iHeartMedia’s position as America’s No. 1 audio company.”
iHeartMedia believes that its cash on hand, together with cash generated from ongoing operations, will be sufficient to fund and support the business during the Chapter 11 proceedings.