Goldman and hedge fund Canyon Capital Advisors are putting together a group of senior lenders to pressure the company to use a $196 million dividend it will receive Jan. 4 to pay down their debt — and not that of junior bondholders, The NY Post has learned.
The lenders, in their gutsy move, are claiming the dividend — which will come from Clear Channel Outdoor, which is 90 percent owned by the radio giant — is restricted and belongs to them, a source very close to the matter said.
iHeartMedia, which owns 850 stations, has $193 million in bond payments due in 2016. Senior creditors are due to be paid later.
The power play could lead to a sooner-than-expected financial restructuring of the entire money-losing radio colossus, said the source, who also noted the possibility it could lead to a court battle over the payment.
The Bob Pittman-led company is losing money and, with the high-yield market crashing, may find it difficult to simply amend and extend its $20 billion in debt. iHM has succeeded in continually amending the balance sheet to extend the huge pile of debt.
Revenue fell slightly in the nine months ended Sept. 30, to $4.5 billion. The net loss shrank a bit, to $661 million.
Senior lenders, who are likely to get paid in full in any restructuring, do not want to see the company spend more money paying junior lenders or covering the $80 million cash flow shortfall iHeart is projected to lose next year — $120 million in 2017.
If the power play sparks a restructuring, it could succeed in reducing the company’s interest expenses and help it to break even, a source said.
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