iHM Struggles With Creditors

iHeartMedia Inc. on Thursday said it has offered lenders and bondholders more control of the almost-bankrupt company.

But an agreement has not been reached, iHeartMedia said in a U.S. Securities and Exchange Commission filing, reports mysantonion.com.

“There can be no assurance that any agreement will be reached. Any such agreement will require the consent of additional debt holders who are not party to the negotiations,” the company said in the filing.

The new offer from iHeartMedia is close to a 50-50 split of control of debt-ridden iHeartMedia and the billboard unit, Clear Channel Outdoor Holdings Inc., which is 90 percent owned by iHeartMedia, said Seth Crystall, Debtwire senior credit analyst.

“Who would be in control? That is not spelled out,” Crystall said. “But iHeartMedia definitely made some concessions and made steps toward resolution. They had to or they weren’t going to get anything resolved,” Crystall said.

iHeartMedia last March launched $14.6 billion debt-restructuring deal to bondholders and lenders that ended up being the starting point for prolonged negotiations between the company and its creditors.

Total company debt, as of June 30, stood at almost $20.4 billion, stemming mainly from 2008 leverage-buyout from two Boston-based private-equity firms. Bain Capital and Thomas H. Lee Partners acquired 70 percent of the company then known as Clear Channel Communications.

In 2018, $324.2 million of debt comes due and $8.4 billion in 2019, but some debt is owned by Bain and Thomas H. Lee. As of June 30, its cash on hand dropped to $260.5 million. The company warned last spring that it might not be able to meet scheduled debt repayments.

“The main problem is a balance sheet that is overleveraged. The bondholders want majority control of the company and has always worked toward that. Management (Bain and Thomas H. Lee) have been willing to concede up to 49 percent,” Crystall said.

Crystall stressed that if an agreement is not reached and a Chapter 11 bankruptcy is filed, operations at iHeartMedia’s 850 radio stations and its billboard units would continue as usual. The main changes would occur at the ownership level and perhaps at a few management positions, he said.