iHeartMedia‘s bankruptcy proceedings continued in Houston on Monday (7/23) with the filing by the company of a proposed order granting the media company’s emergency application to the court that seeks the employment and retention of LionTree Advisors as a special financial advisor.
This latest effort in iHeart’s road to fiscal recovery hit a major pothole on May 16, when a 49-page “omnibus objection” of the official committee of unsecured creditors was submitted for the court’s review.
At the heart of this objection was pending investment banker retention applications for LionTree and Moelis & Co. The creditors argue that there is no need for two financial advisers, as they largely replicate each other’s respective services and their “unprecedented and unreasonably high fees” could collectively approach $90 million.
The LionTree application was “eventually” filed on May 1, some 48 days after iHeart filed its Chapter 11 restructuring petition with the Houston court. It was done on an “emergency” basis, the creditors add.
The LionTree application, the creditors disclose, reveals that LionTree has been working with iHeartMedia since fall 2017 in connection to a proposal presented by Liberty Media that was first disclosed to the public in February 2018.
“LionTree also was working with the Debtors and another “Interested Party” in
connection with a potential Equity Transaction,” the creditors stated in their May 16 opposition statement. Thus, they claim LionTree is being retained for the express purpose of “a potential equity transaction.” All signs pointed to Liberty Media; discussions have formally concluded, with iHeart rejecting a low-ball offer from the entity headed by John Malone.
The 10-page proposed order filed by iHeart on Monday reiterates the need for LionTree “to render professional services solely in the connection with a potential equity investment in the radio business of the Debtors by any third party.”
Regarding payment, iHeart notes, “The total combined fees that may be paid to Moelis and LionTree will not exceed $67.5 million in the aggregate.”
Corporate restructuring partner Patricia Tomasco made the filing with the court on iHeart’s behalf. Tomasco is a Houston-based partner at Jackson Walker LLP.
MAY SHOWERS OF CASH FOR iHEART
Given its debtor-in-possession status, iHeartMedia is sharing with the Federal Bankruptcy Court in Texas considering its restructuring petition a monthly look at its financial performance. Last week iHeart shared its May 2018 operating report.
How did the company do?
Quite well, actually, compared to April 2018.
Operating income was $80.9 million in May, compared to $63.9 million in the previous month.
Most notably, net income was realized, and came in at $57.7 million.
In April, iHeart experienced a net loss of $139.8 million.
This was accomplished on net revenue of $318.7 million — and that’s actually down from $417.9 million in April ’18.