The SEC filing by iHeart Thursday points out that a substantial amount of the company’s cash goes toward debt service obligations. The company says it will continue to incur net losses and generate negative cash flow from operating activities given its debt and interest expenses. During the quarter ended March 31, 2017, the company spent $570.4 million of cash to pay principal and interest on debt. All of this has lead to “substantial doubt as to our ability to continue as a going concern for a period of 12 months following the date the first quarter 2017 financial statements are issued.”
The company says it will have approximately $1.7 billion of interest payments in 2017. As of March 31, the company had debt maturities totaling $316.5 million, $324.2 and $8.369 Billion in 2017, 2018 and 2019, respectively. Those debt maturities include $305. million outstanding under iHeart’s receivables based credit facility, which matures on December 24, 2017, and $112.1 million of 10% Senior Notes due January 15, 2018.
The company says based on the significance of the forecasted future negative cash flows, including the maturities of the $305.0 million receivables based credit facility and the $112.1 million 10% Senior Notes due January 15, 2018, and the uncertainty of the outcomes of the Exchange Offers and Term Loan Offers, management anticipates that our financial statements to be issued for the three months ended March 31, 2017 will include a disclosure indicating there will be substantial doubt as to our ability to continue as a going concern for a period of 12 months following the date the first quarter 2017 financial statements are issued as a result of uncertainty around our ability to refinance or extend the maturity of our receivables based credit facility, to achieve our forecasted results, and to achieve sufficient cash interest savings from the pending Exchange Offers and Term Loan Offers.