Since March, iHeartCommunications has been trying to convince lenders and bondholders to restructure about $15 billion of the company’s debt. What iHeart was offering the lenders has not convinced them to buy into the plan and iHeart has continued to extend the deadline of their offer. Now, there’s been a counteroffer made by one of the lenders which that lender believes may lure other lenders in.
The counteroffer was made by Arnold & Porter Kaye Scholer, an advisor to Symphony Asset Management, which holds about $280 million in iHeart term loans. The counterproposal made to iHeartMedia is for $500 million in newly issued debt secured directly by equity in the company and 49 percent equity stakes in both iHeartMedia’s radio stations and iHeart’s billboard company if the two divisions are spun out into separate companies. MySA.com reports that the creditors want to eliminate the holding company altogether.
In a letter filed with an iHeart 8K Monday, Symphony said it believes that the proposed alternative transaction could obtain significant support from the company’s debt investors and finally bridge the chasm between the company and certain of its stakeholders. Symphony and APKS have been in regular contact with several of the iHeart’s largest lenders, including OppenheimerFunds and Eaton Vance, regarding the alternative proposal. Symphony says those lenders have indicated they would consider the new proposal and would like to see a formal term sheet.
In that same 8K filing iHeart says: “No agreement has been reached with respect to the above discussions and discussions remain ongoing. There can be no assurance that any agreement will be reached. Any such agreement will require the consent of additional debt holders who are not party to the negotiations, and who hold substantial percentages of our debt.”
Debtwire’s Seth Crystall tells MySA.com that the lenders are trying to find a way to protect their interests. “It’s one way to seek more equity in the company. I’m not sure that $500 million in new secured debt will move the needle, but it might.”
iHeart is still about $20 billion in debt. The company has $316.5 million in debt maturing this year, $324.2 million in 2018, and $8.4 billion in 2019.
Read the entire debt presentation HERE
What about the banks who originally financed the buyout of the Mays family? Some entities have a secured interest in these same assets the bondholders are after. Something missing to this story…