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.”
I love this comment from a company with 21-billion in debt:
“The strong performance of our operating business provides us with the flexibility to manage our capital structure in a prudent manner.”
I sincerely wish you the best, R.T.R., for it’s got to be tiresome pushing heavy chains [copiously coated with Lubriplate 630-AA] uphill … while blindfolded.
Do what I do: Watch “Star Trek Generations” on occasion & dream about someone creating that “temporal nexxus.”
Yes, indeed, Shel. The reality is as you describe it, and as someone who wants to make those “massive improvements”, for me and although not new, it’s a terrifying report.
After hearing Ed Christian’s “The Outlaw”, I got up, walked around a bit and – struck nothing. I thought: “Man, it can’t get any worse than this.” I could be mistaken.
Meanwhile, since this is an iHeart thread… Duh!
The Lucky 7th [comment] is indeed the charm, R.T.R. … and while I do agree with the sincere spirit of your thoughts [i.e., make massive improvements to programming and ad creation] — I have to wonder how much of that could possibly be accomplished when …
1)–There are some programming consultants so young & naive, they think Paul McCartney was the bass player for a husband & wife band called Wings — and …
2)–There aren’t too many ad creation miracles a minimum-wage production slave/troll can do when he is given a whole hour’s warning [by the AE, calling via cell from the golf course] to produce a “national quality” spot for the local Mercedes-Benz dealer … on his trusty, smelly, nicotine-stained RE20 with foam crumbs falling out of the side grilles, augmented with the audio renderings from JAM Productions’ “The Answer For The ’90s” & a badly scratched copy of “The Big Whoosh” SFX CD.
3)–Audiences are getting smarter and more discerning. They now know that Nick St. John isn’t the DJ’s real name, and they’re not falling for the tired, old “Yeah, but when WE play The Eagles, it sounds better!” … balderdash. Yeah, that’s a good word for this — balderdash!
While regular readers, Shel, will find this as no surprise coming from me, the #1 priorities for all these outfits are to make massive improvements to programming and ad-creation.
That they refuse to address these issues is, to me, frighteningly mind boggling.
I can only speculate that a. they figure they can get away with the status quo, b. they believe the results of such efforts would be less than satisfactory, or that c. they simply don’t know how – and are too caught up in their own certainty to ask for assistance.
Another (more cynical) possibility is that they have intentions of riding the gravy train until just before it wrecks – and calling it a day.
Shareholders and stakeholders? Whatever.
The “biggies”, after all, do have packages.
The industry’s biggest [proving that bigger isn’t always better] group/cluster owner is $20 BILLION in debt — and this produces five [5] online comments. You can’t “count” mine because I am commenting about the other five.
This is a pretty big story about a fairly large chunk of change [even in 2016 dollars] — and anyone’s niece’s Girl Scout Cookie Sale video, posted on Facebook, would generate more commentary [and probably more sales, heh-heh].
What does this say about “radio’s impact” in this millennium?
In the meantime, I’ll take two boxes of Thin Mints & a box of Samoas.
This company has lost hundreds of millions of dollars and hasn’t made one dime in profit since Bob Pittman has been the boss the last 5 years. Yet, Pittman was ok spending 2 million dollars on water misters for his office!!!! And Pittman considers himself a “leader” in the radio industry? ?? Really???? He must have pictures of the investors, or they are really REALLY stupid.
they figured the company was worth more dead than alive…….boy were they wrong, radio is local, take that away and what is its really worth?
what an absolute joke. I worked in sales and management for them for 12 years under CC, CCME and iHeart. The company had some really great people prior to Bain Capitol acquiring the company. It’s progressively gotten worse since 2008… And 2009 when they laid off a ton of people on the Presidential Inauguration day. That was an awful day. We had off duty police officers in the lobby for safety reasons. Thankfully part of their FCC restructuring agreement the people that were fired were also taken care of very well.
iHeart sales rep to anyone within earshot: “Wanna buy some spawts? How ’bout a cluster of radio stations?
There’s more where they came from. Rock-bottom prices, too. Okay. So, how much ya got on ya?”
The Fat Lady singer is warming up!!