iHeartMedia Inc. made analytics company Debtwire’s ominous listing of the top 10 companies most likely to enter a “restructuring” — which could include bankruptcy — in July.
According to The San Antonio News-Express, Debtwire has come up with what it says is the industry’s “first predictive score for leveraged” (meaning having more debt than equity) companies and their likelihood of becoming “stressed, distressed or entering a restructuring.”
Companies that make the list “are experiencing financial or operational trouble that may result in their inability or unwillingness to pay debts, interest payments, or potentially any other liabilities as they become due,” Debtwire says. Companies with stressed debt have serious financial problems. When the debt is considered distressed, the problems have become more severe. At that point, a company may be on the brink of bankruptcy or already mired in it.
iHeartMedia received a “Likely to Distress Score” of 97. Tied atop Debtwire’s latest list with a score of 99 were EchoStar Corp. — the name behind such brands as Boost Mobile and Dish TV, business process automation company Exela Technologies, and Office Properties Income Trust.
iHeart emerged from bankruptcy in 2019, nearly 14 months after seeking refuge.
As part of that restructuring, it was able to shed about $10.4 billion in debt. It also spun off San Antonio billboard advertising company Clear Channel Outdoor Holdings Inc. as an independent publicly traded company.
Debtwire recently reported that iHeartMedia is evaluating its restructuring options again in connection with more than $5.2 billion in long-term debt on its books as of March 31.
iHeart owns and operates more than 860 radio stations in about 160 markets.
Last month, Debtwire — citing two unidentified sources it said were familiar with the matter — reported that iHeart advisers and creditors for weeks have been hashing out “divergent strategies on how best to address the audio company’s over-levered capital structure.”
IHeart’s sizeable debt has been a recurring risk factor in regulatory filings, with it warning that it may “adversely affect our financial health and overall operating flexibility.”
Much of iHeart’s debt doesn’t mature until 2026 and 2027.
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| Richard Bressler |
The company's net debt at the end of the first quarter of about $4.86 billion, which he said was the lowest in the company’s nearly 50-year history. That was about 6.9 times its adjusted earnings before interest, taxes and other items, a figure it’s shooting to reduce this year to 4 times, he said.
As of March 31. iHeart had $361.4 million in cash and the ability to borrow $426.8 million.
Bressler struck a bullish tone about iHeart’s prospects for the second half of 2024. “We continue to see signs of improvement throughout our business and the broader advertising marketplace,” he said. “As we look ahead, we expect to generate significant political revenues as a result of the presidential election cycle.”
Full-year political advertising revenue is pacing 16% higher than the last presidential contest in 2020, when iHeart generated $167 million of political revenue.
In the first quarter, iHeart lost $18.1 million — a vast improvement over the $222.4 million loss it posted in the same period last year. Revenue dipped slightly to $799 million from $811.2 million.
Another oft-repeated warning from the company is that it “may implement further restructurings in the future.”
Bressler said the company expects to incur $60 million in restructuring expenses this year as it continues “to execute on new opportunities to optimize our organization for efficiency and growth.”
It had 10,800 employees at the end of last year, a sharp drop from the nearly 18,000 employees it had before it filed for bankruptcy.
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