Report: Is iHeartMedia Restructuring Being Forced By Creditors?
January 4, 2016 at 3:12 AM (PT)
In early DECEMBER (NET NEWS 12/11/15) iHEARTMEDIA was reportedly planning to use a "novel plan" to address its debt problem, buying up a "sizable portion" of unsecured debt and converting it to equity to lower interest payments to the break-even point, then restructuring the rest of its debt to push the maturity dates on senior loans further into the future.
The NEW YORK POST wrote that the company, which was projected to lose $50 million in 2015, $80 million in 2016 and $120 million in 2017, can go cash flow positive if it converts $2.4 billion of unsecured debt into equity, saving over $100 million in interest annually. The paper added that iHEART has so far purchased $500 million of the debt, but the POST's source warns that while most iHEARTMEDIA debt holders will go along with the plan, "there may be holdouts."
Now THE POST expands on that report, noting that, "Two creditors of iHEARTMEDIA, including LLOYD BLANKFEIN’s GOLDMAN SACHS, are expected to put the squeeze on the debt-laden radio giant -- a move that could make it a lot harder for its private-equity owners to keep the music playing. GOLDMAN and hedge fund CANYON CAPITAL ADVISORS are putting together a group of senior lenders to pressure the company to use a $196 million dividend it will receive JAN. 4th to pay down their debt -- and not that of junior bondholders."
The $196 million dividend in question is coming from CLEAR CHANNEL OUTDOOR, the billboard company that is 90% owned by iHEARTMEDIA. THE POST reports, "The lenders, in their gutsy move, are claiming the dividend," adding, "the power play could lead to a sooner-than-expected financial restructuring of the entire money-losing radio colossus, said the source, who also noted the possibility it could lead to a court battle over the payment."
iHEARTMEDIA had no comment on the report.