By Adam R Jacobson
RBR + TVBR
Twas the Tuesday before Christmas, when investors were stirring, selling their stocks.
It was a decidedly down day for the radio industry’s biggest player, as iHeartMedia sank 6.5%, to $1.30, as that company experiences the fallout from its decision to forego a $57.5 million debt repayment and sue its bondholders in a Texas court.
However, investor reaction could be positive as the company commenced a new private offer to holders of iHeart’s outstanding 10.0% Senior Notes due 2018.
This offer, announced after market close on Tuesday, would give bondholders the ability to exchange the 10% notes for newly issued 11.25% Priority Guarantee Notes due 2021.
The new notes will be issued as “additional notes” under the indenture governing iHeart’s existing 11.25% Priority Guarantee Notes due 2021 that were issued on Feb. 28, 2013, and will be treated as a single class with the existing notes. However, the new notes will not trade fungibly with the Existing Notes. On Dec. 12 iHeart failed to receive consent solicitations with respect to its proposal that have seen the Aggregate Fixed Consideration Amount for those notes shift to a higher Aggregate Contingent Consideration Amount (from $575,000 to $862,500).
The exchange offer is only available to qualified institutional buyers or institutional accredited investors, and expires at Midnight Eastern on Jan. 19, 2017 unless extended by iHeart.
As a bonus, eligible holders who validly tender and do not validly withdraw the 10% Notes by 5 p.m. Eastern on Jan. 4, 2017, unless extended by iHeart, will get $1,000 in new notes for early tender of each $1,000 principal amount. After that date, $970 in new notes will be exchanged for $1,000 of the old notes, eliminating the like-in-kind swap.
The outstanding aggregate principal amount of the 10% Senior Notes due 2018 is $347.03 million; it does not include $502.97 of notes held by two iHeart subsidiaries, both of which intend to participate in the exchange offer.
Outstanding Notes held by the iHeart subsidiaries may be prorated to the extent that the aggregate principal amount of the new notes would exceed iHeart’s remaining secured debt capacity under the indentures governing its existing indebtedness.
The new notes will mature on March 1, 2021; iHeart will pay interest on the new notes on March 1 and September 1 of each year, starting in 2017.
CUMULUS HITS DANGEROUS DOLLAR MARK
Cumulus Media sank 6.5%, to $1 – a sign that shareholders may not be pleased with the No. 2 radio company’s lawsuit against JP Morgan Chase regarding its debt swap and equity exchange plan designed to significantly trim its leverage. Other radio industry decliners in Tuesday’s trading include Emmis Communications, which was off 1.9%, to $3.19.
Powering the media sector on Wall Street at the moment is Saga Communications. The owner of radio and TV stations saw a .5% gain to continue a great growth streak, as SGA shares now sit at $51.05 a share.
Meanwhile, Salem Media Group shares were up 4%, to $6.45, and Entercom was up 3.3%, to $15.85, in another sign that savvy investors are aware of the radio industry’s overall positives beyond iHeart and Cumulus.
The RBR Radio Index fell 6.294, or 1.02%, to 611.524.
The TVBR Television Index rose 9.445, or 0.97%, to 978.969.
Salem, up 4.0%
Entercom, up 3.3%
Tribune Media, up 2.9%
Cumulus, down 6.5%
iHeart, down 6.5%
SBS, down 5.9%