The San Antonio Express-News reports failing to repay the bonds due Dec. 15 would throw the company into default, accelerate payback on billions of dollars of other debt and likely drive iHeartMedia into bankruptcy, said Seth Crystall, a senior credit analyst with Debtwire.
The company actually has plenty of cash on hand to repay the $250 million due Dec. 15, Crystall said, citing two recent asset sales that raised about $800 million. About $57 million of the $250 million is owed to one of iHeartMedia’s subsidiaries, he said.
IHeartMedia is threatening to withhold the payment if bondholders don’t approve an amendment to its credit agreements that gives investors less say over how the company can restructure its debt going forward, Bloomberg News reported, citing “people with knowledge of the matter.”
“The amendment proposed in the consent solicitations would maximize our flexibility as we continue to proactively explore initiatives to strengthen our capital structure and position the company for long-term growth and success,” iHeartMedia spokeswoman Wendy Goldberg said in an email, declining to elaborate.
Investors have until Dec. 7 to decide on the change.
The struggling company has been trying to restructure its $20.5 billion in outstanding debt over the last year, Crystall said. IHeartMedia may be trying to exchange its debt to better position the company so it can meet its debt obligations over the next three years, he said.
Crystall said iHeartMedia could technically avoid default and bankruptcy by repaying a portion of the outstanding principal due, so long as the unpaid balance is less than $100 million.
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