iHeartMedia Needs Cash For Interest Payments

iHeartMedia announced Monday it’s exploring a sale of a large part of its stake in its financially healthy billboard subsidiary to raise money and buy more time before a looming bankruptcy.

The San Antonio News-Express reports the surprise announcement of the possible sale came as the company attempts to strike a deal with bondholders and lenders for a pre-bankruptcy debt exchange.

The new capital infusion would come from the sale of more than 110 million shares of billboard subsidiary Clear Channel Outdoor Holdings Inc., the company said in a U.S. Securities and Exchange Commission filing.

iHeartMedia, which holds $20.6 billion in total debt, owns 89.5 percent of Clear Channel Outdoor stock. The rest of Clear Channel Outdoor shares are traded publicly on the New York Stock Exchange.

The possible sale involves 100 million Class B shares of Clear Channel Outdoor now held by an iHeartMedia unit called Broader Media and 10.73 million shares of Clear Channel Outdoor Class A stock held by another unit called Finco. Both units are used by iHeartMedia partly to position equity ownership of Clear Channel Outdoor shares for the purpose of leveraging new debt.

Based on Clear Channel Outdoor share prices Monday, a sale of 110.73 million shares could net the company about $450 million in cash, said Seth Crystall, senior credit analyst for Debtwire, an Acuris company.

iHeartMedia did not identify the possible buyers of Clear Channel Outdoor stock.

“iHeartMedia has announced a possible sale of Clear Channel shares as an alternative way of raising cash and to provide the company with funds to make interest payments for the time being,” Crystall said.

iHeartMedia has said it owes $324.2 million in debt in 2018 and $8.4 billion that comes due in 2019. The company warned last spring that it might not be able to meet debt payments in 2018.