Wednesday, February 22, 2017

Report: Credit Analysts Ponder iHM’s Next Move

It certainly would not be a surprise if San Antonio-based radio-and-billboard giant iHeartMedia Inc. reports a fourth-quarter loss Thursday. But, according to an article in the San Antonio Express-News, the question credit analysts have isn’t about the bottom line, but what it’s planning to do about its massive debt obligations.

iHeartMedia reported its 27th consecutive quarterly loss in November with a third-quarter loss of $34.95 million. There’s no reason to think that trend will change when iHeartMedia reports its fourth-quarter results, said Seth Crystall, a senior credit analyst with Debtwire.

“It will be business as usual. It’s hard for the company to make money in radio. That’s the way it goes,” Crystall said Tuesday.

But he said credit analysts should expect to hear some news from iHeartMedia executives Thursday about the next step to push back some of its massive debt obligations.

Much of the company’s 2018 debt maturities has been delayed until 2021. “For the foreseeable future, there’s not a lot to worry about,” Crystall said. But iHeartMedia faces $8.3 billion in maturing debt in 2019. A large move will be necessary eventually, probably in the second half of this year, Crystall said.

“The best hope is that the valuations of Clear Channel Outdoor (Holdings Inc., the company’s billboard subsidiary) improve a lot, and that the company can monetize that and perhaps pay down some debt,” Crystall said.

“This company has way too much debt. At some point, it gets defeating,” Crystall added. “Their goal is to keep this going until they come into an agreement on what to do. I don’t know what it is, but eventually there will have to be a huge restructuring of this company.”

The company’s total debt stands at more than $20 billion, stemming mainly from the 2008 leveraged buyout by two Boston-based private equity firms. The company remains 30 percent publicly traded.

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