iHeartMedia Cites 'Significant Gap' In Talks With Creditors, Report Says Talks May End
June 28, 2016 at 8:32 PM (PT)
BLOOMBERG is reporting that iHEARTMEDIA, INC. may end talks with its creditors on restructuring its debt, with the company citing a "significant gap between the proposals” from itself and the investors in a filing with the SEC.
In the filing, iHEARTMEDIA said that it had made a proposal for an amendment to the company's credit agreement and, through a series of exchange offers, priority guarantee note indentures on JUNE 15th, with a counterproposal issued by the creditors on JUNE 22nd. iHEART came back with an amended proposal on MONDAY, but concluded that "(g)iven the significant gap between the proposals, the Company is assessing whether it will continue discussions." BLOOMBERG reports that FRANKLIN ADVISERS INC., the largest holder of the $6.3 billion in term loans given to iHEART, is leading the talks; FRANKLIN RESOURCES' STACEY COLEMAN declined comment to the paper.
The JUNE 22nd iHEART proposal would have given a lien on the company's principal properties to all Senior Debt , and Participating Senior Debt would have received a guarantee from the subsidiaries iHEART set up to hold assets, BROADER MEDIA and CC FINCO, secured by those subsidiaries' assets, subject to a carve-out for securities offered in certain limited payments on junior debt (paid when Total Consolidated Net Leverage is less than or equal to 9x, or from the assets of the subsidiaries). The proposal agreed not to create any more unrestricted subsidiaries (but BROADER MEDIA and CC FINCO would continue to be unrestricted) and no more investments would be placed in BROADER or FINCO. The creditors countered that they would extend the maturity date by a year and cut the interest rate in exchange for amendments that would guarantee repayment in full if iHEART defaulted on some of its unsecured bonds, including $850 million due in JANUARY 2018. MONDAY's iHEART revision asked for a cut of 75 basis points before it would agree to the counteroffer.
“We continue to evaluate various opportunities to strengthen our capital structure for the benefit of our stakeholders, and we remain focused on positioning iHEARTMEDIA for long-term growth,” a statement attributed to iHEARTMEDIA spokesperson WENDY GOLDBERG read.
iHEART won its case in BEXAR COUNTY court in TEXAS against the creditors, BENEFIT STREET PARTNERS LLC, et al., to declare that the move to put assets in new unrestricted subsidiaries did not trigger a default and thus an acceleration of payments due; on MAY 24th, iHEART won a declaration to that effect and a permanent injunction to block a default claim. No appeal has yet been filed.