As radio’s largest company deals with over $20 billion in debt, it is now in a battle with some of its lenders. Here’s what we know as of Tuesday. iHeartMedia filed a lawsuit Monday to affirm it has the right to contribute stock to a subsidiary called Broader Media. That lawsuit was then followed by default notices from some of its lenders. iHeart is asking for a temporary restraining order that would prevent the holders from declaring their debt due and payable immediately.
No date has been set for the court to decide the matter. iHeart’s debt rose to $20.87 billion as of Dec. 31, up from $20.33 billion the year before. Much of the debt stems from 2008 when private equity firms, Bain Capital and THL Partners purchased 70 percent of the company. Almost a third of iHeartMedia remains publicly traded.
According to Bloomberg, IHeartMedia has $193 million in bonds that mature in 2016, $230 million under a revolving credit line that’s due in 2017, more than $1 billion in obligations maturing in 2018 and $8.3 billion in bonds and term loans due in 2019. The company has been selling off some assets including billboards in eight markets for $566 million. Reuters is reporting that iHeart has hired Moelis & Co as a financial adviser to help deal with its $21 billion debt.
Back in 2007 when the company was called Clear Channel it reported a net income of $938.5 million. Since the 2008 acquisition, and after the economic meltdown, iHeartMedia has lost between $219.5 million and $4 billion a year.
The New York Post is reporting the creditor group includes Canyon Capital Advisors, D.E. Shaw, Davidson Kempner, and Franklin Advisors. And The Post says the group is giving iHeartmedia 60 days to make things right.
Following the lawsuit filing, iHeart received notices of default from holders of at least 25% of the outstanding principal amount of four of the company’s outstanding series of priority guarantee notes. The allegation is that iHeart violated certain covenants when it contributed 100K shares of class B common stock of Clear Channel Outdoor to Broader Media. In response to the default notice, iHeartMedia says it strongly objects to the allegations and followed the default notice with this statement.
“The strong performance of our operating business provides us with the flexibility to manage our capital structure in a prudent manner. In full compliance with our debt covenants, we continue to evaluate opportunities to strengthen our balance sheet. We believe our recent contribution of Clear Channel Outdoor Holdings, Inc. stock to our subsidiary Broader Media, LLC constituted a permitted investment under, and fully complied with, our financing agreements. We strongly believe the notices of default issued by the lender group based on the contribution are invalid. Prior to receiving the notices, we filed a lawsuit in the State District Court in Bexar County, Texas, to reaffirm our position that the contribution was permitted. We intend to take any other actions necessary to protect iHeartMedia and remain willing to engage in constructive discussions with any of our various groups of lenders to position iHeartMedia for long-term growth.”