The NYPost citing a source close to the situation.
The $1.16 billion offer from Malone’s Liberty Media for a 40 percent stake in a restructured iHeart faces an uphill battle because it undervalues the owner of 850 stations, the source said
If no deal is reached, iHM is likely to file for Chapter 11 reorganization on March 3.
“There is a 98 percent chance there will be a bankruptcy,” said the source, who emphasized that it is not what he is hoping for.
Liberty’s offer values iHeart at $7.5 billion, a source said. Senior creditors of the company, led by Franklin Resources, believe the radio operator, led by Chief Executive Bob Pittman, is worth 12 percent more, or roughly $8.5 billion, the source said.
“I don’t think Liberty has enough time to get the support they need,” the source said.
Liberty has not even started speaking to key creditors yet to gain their support, the source said. “The timing would have been better had this offer come one month ago.”
iHM owes $20 billion in debt and, on Feb. 1, skipped an interest payment.
The San Antonio company will go into default when the grace period for that payment ends Friday.
Meanwhile, it appears Liberty may want to sell its shares in Pandora. A new SEC filing leads to speculation that Liberty is hedging in case the DOJ has a problem with it having stakes in satellite radio, Pandora, Live Nation and – through iHM.