iHeartMedia Proposes To Eliminate Voting Rights Of Some Bondholders
Company Says It Just Wants To Be Able To Make Offers Without Registration Cost, Delay
November 29, 2016 at 4:39 PM (PT)
iHEARTMEDIA continues to address its more than $20 billion of debt, and is now asking bondholders of the iHEARTCOMMUNICATIONS division to make it easier for the company to plan a future financial overhaul.
YESTERDAY (NET NEWS 11/28), Investor MARIO GABELLI's suit against iHEARTMEDIA, INC. in DELAWARE Chancery Court alleging that the sale of assets and diversion of funds from CLEAR CHANNEL OUTDOOR to a separate subsidiary violated the company's fiduciary duty to shareholders was dismissed.
Now there's more financial news as iiHEARTCOMMUNICATIONS has issued six separate consent solicitations aiming to obtain consent from shareholders of its five series of priority guarantee notes and senior notes due 2021 to a proposed amendment to the notes' indentures that would allow it to block noteholders who are not institutional “accredited investors” or non-“U.S. persons” from voting on future consent solicitations, waivers, or amendments of the notes' indentures. iHEART is offering up to $8 million for consent, and up to $12 million if a debt swap occurs later. The consent solicitations expire on DECEMBER 7th, but that deadline can be extended.
“The amendment proposed in the consent solicitations would maximize our flexibility as we continue to proactively explore initiatives to strengthen our capital structure and position the company for long-term growth and success,” iHEARTMEDIA EVP/Marketing & Communications WENDY GOLDBERG said in an e-mail.
“One thing that was made pretty clear is that they’re considering doing some sort of exchange offer,” said BLOOMBERG INTELLIGENCE analyst PHILIP BRENDEL. “By excluding certain holders, they may be able to avoid inconveniences and costs tied to registering new securities.”
And the SAN ANTONIO EXPRESS-NEWS, citing BLOOMBERG, reports that sources told the latter that iHEART is threatening that if creditors don't agree to the changes, the company will not pay back $193 million in bonds that mature next month. The company has enough cash on hand to make the payment but the report claims that “people with knowledge of the matter" say the company is threatening to miss the payment if the voting rules are not altered. In the report, DEBTWIRE analyst SETH CRYSTALL says that the company can avoid default by paying part of the outstanding principal, as long as it leaves less than $100 million unpaid; he speculated that the company is looking to exchange $850 million in bonds maturing in JANUARY 2018 and another $175 million maturing in JUNE 2018 and possibly renegotiate debt from a line of credit.
Late TUESDAY, the company issued a release to "clarify" why it issued the six consent solicitations, saying that it would allow the company "to conduct future exchange offers involving a consent or amendment to the relevant Indenture without registering them under the United States Securities Act of 1933... or the registration requirements of any other jurisdiction," allowing it to make exchange offers in offshore transactions without the cost and time involved with registration. "If the Proposed Amendment is adopted," the release said, "the Company would not be able to, nor does the Company seek to, exclude either institutional accredited investors or non-U.S. persons in offshore transactions from such exchange offers, so long as the Company would not need to register the exchange offers if made to such holders."