iHM Senior Lenders Want To Unite All Creditors

Senior lenders to iHeartMedia Inc. are preparing to pitch a new term sheet to junior bondholders in an attempt to unite all the creditor groups behind a common proposal as time runs out for the radio giant’s debt restructuring, according to Bloomberg citing people with knowledge of the conversations.

The senior group, led by Franklin Resources and advised by PJT Partners and Jones Day, held a call Tuesday to finalize terms of the proposal, according to one of the people. The group plans to pitch it this week to holders of iHeart’s 14 percent notes due 2021 and legacy notes, said the people, who asked not to be identified because the talks are private. The proposal is the latest step in a series of recent conversations between the different groups.

iHM spokeswoman Wendy Goldberg declined to comment. A spokeswoman for PJT declined to comment, while representatives for Franklin Resources and Jones Day didn’t immediately provide comment.

iHM is teetering ever closer to a default on its $20 billion debt load. The company skipped a $106 million interest payment due Feb. 1 on its 14 percent notes, kicking off a 30-day countdown to an official default. Creditors expect the company to file for bankruptcy by the end of the grace period, and are negotiating with each other and the San Antonio, Texas-based company to reach a pre-arranged plan before time runs out, according to the people.

The senior group is betting that a shared desire to deny current equity owners any stake in a restructured company will get junior creditors on board with their latest proposal, the people said. Cleansing documents filed by the company on Feb. 9 showed that iHM’s insistence on retaining equity stakes for its current owners remains the main obstacle to a consensual deal.

The latest term sheets proposed by both the company and the senior lender group involved a pre-packaged or pre-arranged bankruptcy and offered lenders full ownership of iHM’s healthy billboard subsidiary Clear Channel Outdoor Holdings. The proposals offered $200 million of new debt and 5.25 percent of new equity in the recapitalized iHM, as well as warrants, for existing holders of the more-junior 2021 and legacy notes.