iHeartMedia Shares Drop Amid Warning

The shares of iHeartMedia Inc. have tumbled 27.3 percent since the company warned investors last Thursday that it may not survive over the next 10 months.

The shares closed at $2.10 Monday, according to mysanantonio.com.

The San Antonio company’s stock, which reached an all-time high of $18.95 in 2008, has plunged under its crushing debt load — largely stemming from its acquisition that year by two Boston private equity firms.

Although the company said it will probably be able to survive by refinancing or extending the maturity on its more than $20 billion in outstanding bonds, it gave “no assurance” it would be able to do so, according to its proxy statement filed April 20 with the Securities and Exchange Commission.

If iHeart doesn’t generate enough cash, cannot refinance or extend the maturity on its debt or extend the maturity of its credit facility, “we may be forced to reduce or delay our business activities and capital expenditures, sell material assets, seek additional capital or be required to file for bankruptcy court protection,” the company said, adding that it could also default on its debt payments. “We cannot assure you that we would be able to accomplish any of these alternatives on a timely basis or on satisfactory terms, if at all.”

The company has been scrambling to restructure its debt over the last six months. It was able to push out the maturities on roughly $750 million in bonds that were originally due earlier this year. But analysts said its future solvency remains uncertain and largely depends on a pending offer to exchange $14.6 billion of its bonds.

Analysts said they see the debt-exchange offer as an out-of-court bankruptcy settlement negotiation with lenders and bondholders before a possible formal bankruptcy filing.

“The company is just doing its due diligence and laying it out there,” said Seth Crystall, senior credit analyst for Debtwire, a corporate debt research firm based in New York. “But it (bankruptcy) is close to a reality,” Crystall added Monday.

The company will report first-quarter earnings on May 4, but investors and lenders are watching for results of the debt-exchange offer, which may be extended and new terms offered that are more favorable to lenders and bondholders.

The company’s annual shareholder meeting is scheduled May 26 in San Antonio.