iHeartMedia Reveals Debt Settlement Proposals As Trial Begins, Hires Advisor To Explore Debt Options
May 16, 2016 at 3:54 AM (PT)
In advance of MONDAY's trial in its suit against bondholders seeking to declare it in default and accelerate bond payments, iHEARTMEDIA filed a disclosure statement with the SEC detailing proposals on the table at mediation that have been submitted by the bondholders and iHEART.
In the Form 8-K's exhibits, a term sheet for the bondholders' proposal shows that the creditors are suggesting a 50 bps interest rate reduction and one year maturity extension on each tranche that also provides for a junior debt buyback cash allowance of $1.2 billion (more if total consolidated net leverage is below 9x).
Assets of iHEART's BROADER MEDIA and CC FINCO subsidiaries would be used for security for up to $250 million of new borrowing, and the company would sell off $325 million in assets to fund a "disposition basket" that would help retire some of the debt; more asset sales up to a cap of $550 million would go to repay the term loan. iHEART would be barred from creating any more subsidiaries like BROADER MEDIA and CC FINCO to shield assets, and creditors would agree to an "early spring" of the Principal Properties lien and would create a lien on BROADER MEDIA and CC FINCO assets to support the term loans, subordinate only to the $250 million lien on the subsidiaries.
iHEART"s proposal is to get a 75 bps interest rate reduction with one year maturity extension on each tranche, with a junior debt buyback cash allowance of $1.2 billion for the 2018 and 2021 notes, plus more if total consolidated net leverage is below 9x. iHEART would retain the ability to use unsecured debt to refinance its debt at maturity. The iHEART proposal would use BROADER MEDIA and CC FINCO assets as security for up to $275 million of new borrowing, but has the same $325 million "disposition basket" asset sale amount and $550 million cap; the proposal does not limit CLEAR CHANNEL OUTDOOR from creating new subsidiaries to shield assets, but does agree that iHEART will not designate any additional subsidiaries as unrestricted (although BROADER MEDIA and CC FINCO would continue as unrestricted) and will not put any future investments into the unrestricted subsidiaries. iHEART's proposal also agrees to the "early spring" of the Principal Properties lien and a lien on BROADER MEDIA and CC FINCO.
iHEARTMEDIA released this statement this morning:
"As we have stated, we believe our contribution of CLEAR CHANNEL OUTDOOR HOLDINGS, INC. stock to our subsidiary BROADER MEDIA, LLC fully complied with our financing agreements. We look forward to the expedited trial on the merits of our case -- which began today -- and a ruling by the TEXAS court that affirms our position.
"As previously announced, we entered into mediation with some of our lenders to pursue potential resolution of the litigation currently underway in Texas and to explore amendments to our existing financing agreements. The mediation, which is continuing, yielded proposals from both sides which address a broader solution than what is at issue in the trial.
"We have had productive conversations over time with many of our lenders as we continue to focus on executing on our strategic plan and realize the financial benefit for all our stakeholders."
iHEARTMEDIA parent iHEARTCOMMUNICATIONS filed suit in BEXAR COUNTY, TX court in an attempt to stop the bondholders from making their Notice of Default effective to cause the bonds to become due immediately. iHEARTMEDIA has also hired MILLSTEIN AND CO. to advise it on options for restructuring or buying back some of its debt, reports REUTERS. iHEART previously hired MOELIS AND CO. as a financial adviser as well.