iHeartMedia Creditors Reject Another Offer

A key group of creditors rejected iHeartMedia Inc.'s latest debt restructuring proposal, and countered with their own deal that requires the company to file for chapter 11, the company disclosed on Thursday.

DowJones report the latest development in long-running restructuring negotiations at iHeart, the largest radio network in the U.S. by number of stations, comes a day after Cumulus Media Inc., the second-largest, filed for bankruptcy, succumbing to billions of dollars of debt and competitive pressures from digital platforms.

"The industry's best days are behind it, even though it's going to be around for years," said Lance Vitanza, managing director and analyst at Cowen Inc.

A large group of bond and loan holders led by Franklin Resources rejected iHeart's latest proposal even after the company increased the cut of equity offered the group to more than 87% in both the iHeart radio business and the company's controlling stake in its Clear Channel Outdoor Holdings Inc. billboard unit, the company said.

Under the company's latest proposal, iHeart's private-equity owners Bain Capital and Thomas H. Lee Partners, would retain 12.5% of the shares in both.

Discussions between iHeart and the Franklin-led group will continue, however, according to the filing on Thursday.

The Franklin-led group, advised by PJT Partners Inc., has tweaked its initial offer, but largely stuck to its guns, demanding the company hand over 95% of the equity in its radio network, and all of iHeart's equity in Clear Channel, and offering the private-equity owners and junior bondholders 5% of the equity in the radio business and warrants in Clear Channel, according to several bondholders.

The company's plan would cut $7.7 billion of iHeart's $15.5 billion in debt, and the proposal by the Franklin-led group would reduce even more debt.

The company has given ground since late October when it disclosed a term sheet offering the creditor group over 49% in the radio business and 70% of the shares iHeartMedia owns in publicly traded Clear Channel Outdoor. IHeartMedia owns 89.5% of Clear Channel, long considered the company's crown jewel.

IHeartMedia has been trying to restructure $15.5 billion in debt since March, when it launched a public tender for a debt swap. The debt swap garnered little interest, and the company started engaging various creditor groups. It sweetened its offer in July in a bid to avoid bankruptcy.