iHeartMedia, the debt-burdened radio conglomerate, bowed to your inevitable late on Wednesday (March 14) and filed for Chapter 11 bankruptcy protection.
In an argument, the firm said hello had reached a partnership with all the holders of more than $10 billion of the company’s debt.
"The agreement we announced today is usually a significant accomplishment, because it allows us definitively address the harder than $20 billion in the red that’s got burdened our capital structure," CEO Bob Pittman said in a very statement. "Achieving a capital structure that finally matches our impressive operating business will further enhance iHeartMedia's position as America's #1 audio company."
iHeart, formerly named Clear Channel, is a nation's largest radio company, with more than 850 stations. Furthermore, it owns iHeartRadio's music streaming service, a large concert business, in addition to a 90% stake in Clear Channel Outdoor, the billboard company. Clear Channel Outdoor couldn’t declare bankruptcy. For several years, the company continues to be saddled with $20 billion struggling with debt, the legacy on the leveraged buyout in 2008.
"What they've completed to aim to stay afloat is financial engineering," says Seth Crystall, an analyst at Debtwire. "There's daft to submit bankruptcy till you have to… but we're at that time."
Among the tunes companies listed as creditors around the iHeart docket are Nielsen (owed $20 million); SoundExchange ($6.4 million); Warner Music Group ($3.9 million); Universal Music Group ($1.3 million); and Spotify ($2.One million). Performance rights organizations ASCAP and BMI are each owed slightly over $1.4 million while Global Music Rights is looking in a $2 million debt.
While dramatic, the filing isn’t likely to own much noticeable effects on the company's day-to-day. "They're not turning off. They're visiting pay their bills," Crystall says. "If you were enjoying iHeartRadio, or gonna iHeart concerts, you do not be aware that the difference."
The company, properties of Thomas H. Lee Partners and Bain Capital, has been negotiations for up to annually featuring a primary debtholders, led by Franklin Resources Group. In public term sheets, the equity holders offered a pre-packaged bankruptcy to which the creditors would get 89.5% of the equity. The equity holders would keep 5.25% from the company. The creditors' counteroffer sought a higher stake inside company — 94.75% — and provides the equity holders nothing.
On Feb. 1, iHeart announced it had skipped a $106 million coupon payment on debt that matures in 2021. That create a 30-day "grace period" before triggering a default, which forced the business to declare themselves bankrupt.
Late recently, John Malone'sLiberty Media created last-minute offer to take a 40% stake inside the reorganized company for $1.1 billion. Liberty owns a majority stake in Sirius XM, and has a significant stake in Pandora, creating the probability of synergies between the companies. The sale struck observers as a lowball price, and it also came far too late to avert bankruptcy, but Liberty may yet lead to ongoing talks using the creditor group.
The radio business has struggled with flat advertising revenues over the last decade, as ad dollars have migrated to Google and Facebook. iHeart has sought to diversify its business using its digital offerings and concert business. Once it emerges from bankruptcy, analysts say it carries a possible opportunity to use its substantial cashflow to reinvest available, instead of making exorbitant interest rates.
© 2018 Variety Media, LLC, a subsidiary of Penske Business Media; Made available from Tribune Content Agency, LLC