iHeartMedia Decides Not To Repay Its 5.50% Senior Notes Due December 15th, 2016
December 13, 2016 at 10:05 AM (PT)
iHEARTMEDIA, INC. has decided to not repay the $57.1 million of the 5.50% Senior Notes due THURSDAY, DECEMBER 15th, 2016 (“2016 Legacy Notes”) held by affiliate CLEAR CHANNEL HOLDINGS, INC. ("CCH") when the notes mature on that day.
The decision, made by a Special Committee of independent directors, is part of the Company’s ongoing efforts to proactively address its capital structure, while maximizing the value of its assets.
While the $192.9 million of 2016 Legacy Notes held by other holders will be paid in full at maturity, the $57.1 million balance held by affiliate CCH will remain outstanding. Because the 2016 Legacy Notes owned by CCH will continue to remain outstanding, the Company will continue to have at least $500 million of legacy notes outstanding on December 15th, 2016 and will therefore not be obligated to grant certain additional security interests in favor of certain of its debtholders under a so-called “springing lien” set forth in relevant debt agreements.
In addition, the Company and certain affiliates yesterday filed lawsuits in the State District Court in BEXAR COUNTY, TEXAS, seeking a declaration that the $57.1 million of 2016 Legacy Notes remains outstanding and that the Company is not currently obligated to grant any of its debtholders the “springing lien” on any of its assets.
As the Company continues to work towards a comprehensive plan to achieve an optimal capital structure, it intends to take any other actions necessary to protect iHEARTMEDIA and position the Company for long-term growth and success.
iHEARTMEDIA has released an official statement: "Over the past five years, we have transformed iHEARTMEDIA into a leading 21st century media and entertainment company – one that includes some of the industry’s most successful platforms across broadcast radio, digital, outdoor, mobile, social and live events. The strength in our operating business gives us the ability to deal with our capital structure, and we are focused on taking additional steps in order to support the long-term growth of this unique multi-platform company."
Bob Pittman, Rich Bressler Address The Team
In an internal communique to the iHEARTMEDIA team, Chairman/CEO BOB PITTMAN and Pres./COO/CFO RICH BRESSLER said:
As you know, our company was a leveraged buyout, or LBO, back in 2008 -- and, as many LBOs do, has a high debt to equity ratio. We started taking steps this year to address our company’s capital structure – which is where the debt sits, and is distinct from our operating business, i.e., the day-to-day operations of our company -- and bring our debt to equity ratio to a more optimal level ...
This process is very complex, and there are many players -- and no matter what we do at each step, there will be some debtholders who think we’re making good moves and others who think we are not. We believe we are taking the right actions to strengthen our company for the future and protect what we have built, even though some of those who disagree with our strategy will certainly create noise or confusion in the press. We greatly appreciate your patience as we work through this important process, and we apologize in advance for any noise you may hear as the process unfolds. We think we’ll all be happy with the eventual outcome.
The steps we announced today should not disrupt our company’s day-to-day operations at all. Transparency is one of our core company values, and as always we are committed to updating you on developments during the process and ask that you not lose focus on the most important task at hand -- continuing to advance our business goals and building iHEARTMEDIA, INC. We should all continue to focus on our operating business, where we’ve had many great successes, and on delivering for our listeners, our consumers, our advertisers and our partners.