iHeart bankruptcy proposal would erase $14.8 billion of debt as lenders extend deadline
Investors in San Antonio-based iHeartMedia Inc. have agreed to give the troubled radio station giant some more time to work out the final details of an agreement that will allow it to wipe out most of its debt in bankruptcy.
The new proposal filed with the Securities and Exchange Commission this morning would reduce the company’s debt from $20.6 billion as of Sept. 30 to just under $5.8 billion under a Chapter 11 bankruptcy reorganization plan. Clear Channel Outdoor Holdings, the company’s billboard subsidiary, would be spun off on its own as part of the deal. Bondholders would receive stock in Clear Channel as well as a mix of equity in the newly recapitalized iHeart.
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The company, which owns 850 radio stations, had until this past weekend to make good on a $106 million bond payment or trigger accelerated repayment on bonds issued in 2008.
iHeart now has until 11:59 p.m. Wednesday to reach agreement under a forbearance plan announced this morning. The agreement will also become null and void if the company defaults for other reasons.
iHeart’s been teetering on the edge of insolvency for a while. It launched an offer almost a year ago — on March 15 — to try to renegotiate $14.6 billion of its more than $20 billion in debt by exchanging it for bonds with longer maturities and higher yields.
Much of iHeart’s debt stems from its 2008 leveraged buyout by Boston private equity firms Bain Capital Partners and Thomas H. Lee Partners. The $24 billion LBO gave them 70 percent of the company, which was called Clear Channel Communications at the time. Prior to the acquisition, the company had $18.8 billion in assets and $5.2 billion in long-term debt.
iHeart has seven stations locally, including WOAI-AM and FM stations 96.1 KXXM top 40 and 101.9 KQXT soft rock. The company also syndicates Rush Limbaugh, Ryan Seacrest and Steve Harvey’s radio shows across the U.S.