A Special Committee of independent directors representing iHeartMedia has decided it is in the company’s best interests to not repay the $57.1 million it owes on the 5.5% Senior Notes (commonly known as the “2016 Legacy Notes”) due Thursday (12/15), when the notes mature.
In a press release distributed Tuesday morning (12/13), iHeart said the decision is part it its ongoing efforts “to proactively address its capital structure, while maximizing the value of its assets.”
The company was quick to note that the $192.9 million of 2016 Legacy Notes held by other holders will be paid in full at maturity. But, given iHeart’s decision, the company will continue to have at least $500 million of legacy notes outstanding come Thursday. Thus, it is free and clear of a “springing lien” that would have had iHeart grant additional security interests to its debtholders as per the terms of its debt agreements.
To ensure that it need not pay the $57.1 million by Thursday, iHeart filed lawsuits in Texas’ State District Court for Bexar County, where San Antonio is located, seeking a declaration that its debt on the 2016 Legacy Notes remains outstanding. The lawsuit would also enforce iHeart’s claim that it is not currently obligated to grant any of its debtholders the “springing lien” on any of its assets.
Details were made in an 8-K filing on Tuesday (12/13).
RBR + TVBR OBSERVATION (full text below, for subscribers only): If news regarding Cumulus’ debt wasn’t enough for one business day don’t fret, readers! The other member of the Dynamic Debt-Bomb Duo has spoken and a rumble near the Alamo could unfold very soon. What are the implications of this?