Is iHeart’s Combatant Creditor Quandary Overblown?

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RBR+TVBR on Friday spoke with a senior legal analyst at financial research firm Debtwire who questioned whether or not iHeartMedia‘s Dec. 11 plan confirmation hearing will go in the company’s favor. The analyst expresses concern that WSFS Bank, the indenture trustee for 6.875% senior notes due 2018 and 7.25% senior notes due 2027, would put up such a fight that Houston-based U.S. Bankruptcy Judge Marvin Isgur would say no to the plan, leaving bickering junior creditors and senior creditors to hammer out a deal iHeart can finalizes.


Could the analyst’s concerns be for naught? Voting results for iHeartMedia’s Fifth Amended Joint Chapter 11 Plan of Reorganization strongly suggest so.

In a communique released following Monday’s Opening Bell on Wall Street, voting results were shared by iHeartMedia, the nation’s top owner of AM and FM radio stations. It announced that the results indicate that every class of creditors “entitled to vote” has voted to approve the Plan.

It did not elaborate on creditors that may not be entitled to vote.

Of each class of creditors given the opportunity to vote, “more than 90% of the votes cast by creditors and shareholders” approved the plan, “demonstrating substantial support for, and far exceeding the votes necessary to confirm,” iHeart’s path to emerging from debtor-in-possession status.

With iHeart stressing that the voting results reflect “strong support” of the iHeart plan, the company, which seeks to reduce its overwhelming debt, “achieves a value-maximizing restructuring that comprehensively addresses the company’s funded debt obligations and positions iHeartMedia for continued growth and long-term success.”

While reports have said iHeart will reduce its debt from $20 billion to $5.5 billion, the plan aims to reduce iHeartMedia’s funded debt by approximately $10.3 billion—to $5.75 billion—and result in the separation of iHeartMedia’s radio and outdoor advertising businesses.

With the support of its creditors and the “expected confirmation” of the plan, iHeartMedia expects to complete its restructuring process and exit from Chapter 11 debtor-in-possession status “in early 2019.”

Final voting results will be filed with the Houston-based bankruptcy court, and with Judge Isgur, prior to the Dec. 11 plan confirmation hearing.

While this will certainly strongly influence how Isgur will rule, it is still not a guarantee that iHeart is obstacle-free on its desired exit from bankruptcy.


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