Lenders, iHeart Edge Closer To A Debt-For-Equity Deal


With talk of a Chapter 11 restructuring coming within weeks, it appears that iHeartMedia may be closer to a deal with its lenders to resolve its Term Loan D and Term Loan E debt.

According to a SEC filing made late Friday (2/9) by the nation’s top owner of radio stations, the lone remaining bargaining point appears to be the percentage of equity in iHeart that the company is willing to cede.

As first reported by Streamline Publishing’s co-owned Radio INK, iHeart’s lenders are very close to reaching a debt-for-equity arrangement that could greatly assist the company, which is suffering with some $20 billion in debt.

The lenders on Feb. 8 presented a new proposal that calls for the following:

  • A pre-packaged and pre-arranged bankruptcy
  • $5.55 billion in new debt at a recapitalized iHeartMedia, with a 5-7 year maturity
  • Equity consideration of 94.75% equity in a recapitalized iHeart
  • Equity consideration of 100% of iHeart’s ownership stake in Clear Channel Outdoor

Regarding the 2021 Notes and Legacy Notes, the lenders seek $200 million in new debt for the recapitalized iHeart, pari passu with new debt issued to the term loan and PGN lenders; 5.25% equity in a recapitalized iHeart, and 3.3% warrants struck at $6.5 billion equity value.

How did iHeart respond?

First, it has no objection to a pre-packaged or pre-arranged bankruptcy.

Second, it’s fine with the debt consideration.

Third, there’s no problem with giving up iHeart’s 100% ownership in Clear Channel.

The snag is over the percentage of equity in a recapitalized iHeart it is willing to give up.

For iHeart, the percentage offered to its lenders is 89.5%.

Given how close the lenders and iHeart are, a final resolution could be just days away.

On January 10, iHeart offered 88.3% equity in a recapitalized iHeart, and debt consideration of $5.5 billion.

At the same time, the lenders have largely held firm on their equity demands. In November 2017, the first proposal shared sought 95.3% equity in a recapitalized iHeart.