The largest radio broadcaster by total number of AM and FM stations has asked its bondholders to approve its ability to extend its outstanding debt by a half-billion dollars. To accomplish this task, the company – iHeartCommunications – has agreed to pay a $8.6 million consent fee to the boldholders.
In an 8-K filing Sept. 27 with the Securities & Exchange Commission, iHeart confirms that it has commenced a consent solicitation to gain the approval of holders of its outstanding Senior Notes due 2021 to a proposal that would increase the company’s indebtedness by $500 million, to just above $17.27 billion — should iHeart choose to move forward at a later date on tapping into the credit line.
A consent solicitation, by definition, occurs when a security’s issuer proposes changes to the material terms of the security agreement. In this case, iHeart is seeking permission from its investors to draw more funds from its bondholders, extending its lending capacity.
iHeart bondholders have until 5pm Eastern on October 3 to express their vote on the request. Only the holders of notes as of 5pm Eastern on Sept. 26 are eligible to participate.
The company notes that the consent fee will be paid to each consenting holder pro rata.
The Consent Solicitation is contingent on a majority vote of the bondholders.
Moelis & Company LLC is the solicitation agent for iHeart, while Global Bondholder Services Corp. is the tabulation and information agent.
As iHeartMedia, the company trades on the Over-the-Counter (OTC) exchange as “IHRT.” At the market close on Sept. 27, the company’s shares were at $1.47. The company’s market cap presently sits at $46.6 million.
CONTENTIOUS BONDHOLDER BATTLE
The relationship between iHeart and its main bondholders hasn’t been a healthy one.
In late July, the San Antonio-based media giant took its bondholders back to court, assailing them for delaying the company’s debt refinance plans. In May 2016, the company scored a victory over the same group of bondholders, which threatened to put iHeart into a technical default on its crushing debt, valued at the time at $6 billion.
Investors are unhappy about a December 2015 maneuver in which iHeart transferred a portion of ClearChannel Holdings Stock between subsidiaries.
But, as the clock ticks and the calendar gets ever closer to 2019, the senior debtholders will possess the greatest level of power — thus increasing the possibility of bankruptcy protection for iHeart.
RBR + TVBR