Shares of iHeartMedia slid by 8.6%, to $1.60, on Wall Street Tuesday as investors reacted negatively to news that it is considering a counteroffer to its ongoing attempt to complete a debt swap that has thus far seen scant interest from note holders.
As RBR+TVBR has reported, iHeart has extended its deadline for holders of five sets of notes due in 2021 a total of eight times, so they may consider the company’s offer to exchange the existing notes for new securities of iHeartMedia, CC Outdoor Holdings, and iHeartCommunications.
The current deadline is Friday (7/21), and it’s a safe bet that a ninth deadline extension will be seen — unless iHeart seriously considers a proposal made by Arnold & Porter Kaye Scholer, an advisor to Symphony Asset Management, which holds about $280 million in iHeart term loans.
The nation’s No. 1 owner of radio stations, iHeart Media is endeavoring to undertake a major reworking of the company’s capital structure to reduce debt and lower interest payments, but thus far the signs are clearly not good.
As of 5pm Eastern on July 5, just 0.6% (or about $45.5 million of outstanding existing notes) had been tendered. This is approximately the same amount as six weeks earlier.
According to the San Antonio Express-News, the counterproposal made to iHeartMedia calls for $500 million in newly issued debt secured directly by equity in the company — and 49% equity stakes in both iHeartMedia’s radio stations and Clear Channel Outdoor, should the two divisions be spun into separate companies, which iHeart desires.
In an 8-K filing made late Monday (7/17) with the SEC, iHeart acknowledged that it received the counteroffer on Thursday, July 13. The company said, “No agreement has been reached with respect to the above discussions and discussions remain ongoing. There can be no assurance that any agreement will be reached. Any such agreement will require the consent of additional debt holders who are not party to the negotiations, and who hold substantial percentages of our debt.”
Symphony believes that the proposed alternative transaction could obtain significant support from iHeart’s debt investors, and notes that it and Arnold & Porter Kaye Scholer have been in regular contact with several of the iHeart’s largest lenders, including OppenheimerFunds and Eaton Vance, regarding the alternative proposal. Symphony says those lenders have indicated they would consider the new proposal and would like to see a formal term sheet.
With some $20 billion in debt, iHeart has some $316.5 million in debt maturing this year, in addition to $324.2 million in 2018, and a whopping $8.4 billion in 2019 — which many industry observers warn is a “debt bomb” that could have a significant impact on the entire radio industry.
The iHeart exchange and term loan offers commenced March 15.
iHeart shares trade on the OTC Pink Sheet, which represents some of the riskiest investments available on Wall Street.
Meanwhile, iHeart on Tuesday morning released its lineup for its seventh iHeartRadio Music Festival, scheduled for Sept. 22-23 at T-Mobile Arena in Las Vegas. The event will feature performances by Coldplay, The Weeknd, DJ Khaled, Chris Stapleton, Lorde, Kings of Leon, Big Sean, P!NK, Miley Cyrus, Thirty Seconds to Mars, Niall Horan, David Guetta, Thomas Rhett, Harry Styles, and “special guest” Ke$ha.
The Daytime Village Presented by Capital One will also return as a major sponsored element of the iHeartRadio Music Festival, and will be staged at Las Vegas Village (across from the Luxor Hotel and Casino) on Saturday, Sept. 23. This will feature performances by such acts as Halsey, Flume, Little Mix, French Montana, Niall Horan, Bleachers, Kelsea Ballerini, Judah & The Lion, Bebe Rexha, Noah Cyrus, and Julia Michaels.
The CW Network will exclusively livestream both nights of the festival via CWTV.com and The CW App, and then broadcast a two-night television special on Wednesday, Oct. 4 and Thursday, Oct. 5 from 8pm-10pm Eastern/Pacific.
Additional reporting from Adrian Zupp.