'iHeartRadio Parent Warns It May Not Survive Another Year' As Statement Draws Reaction

Financial Woes

Last THURSDAY (NET NEWS 4/20), ALL ACCESS broke the news that as part of an SEC filing of supplements to its debt swap proposals, iHEARTMEDIA released a preliminary first-quarter earnings report that shows consolidated revenue off 2.4% to $1.329 billion and consolidated operating income dropping 72.9% to $114 million, but the numbers were skewed by the previous year's inclusion of $278.3 million from the sale of some outdoor assets and 2017's included a charge of $12.8 million involving foreign exchange rate changes. Without those charges, revenue would have increased 1.6%.

Some experts said bankruptcy is now almost inevitable.

There were several statements from the company that sent shivers across the industry, iHEART wrote, "we will continue to incur net losses and generate negative cash flows from operating activities given iHEARTCOMMUNICATIONS’ indebtedness and related interest expense." The company followed by reporting management anticipates that the final financial statement for first quarter will "include disclosure indicating there will be substantial doubt as to our ability to continue as a going concern for a period of 12 months following the date the first quarter 2017 financial statements are issued as a result of uncertainty around our ability to refinance or extend the maturity of our receivables based credit facility, to achieve our forecasted results, and to achieve sufficient cash interest savings from the pending Exchange Offers and Term Loan Offers."

That SEC filing led to a report over the weekend in MARKETWATCH explaining the, "Station operator is saddled with $20 billion of debt it took on with a $24 billion 2008 leveraged buyout by private-equity firms," noting that, "The company has almost $350 million of debt coming due this year, part of a massive $20 billion debt load it took on as part of a $24 billion leveraged buyout of then Clear Channel Communications Inc. by private-equity firms BAIN CAPITAL and THOMAS H. LEE PARTNERS in 2008. It has another $8.3 billion of debt coming due in 2019."

MARKETWATCH Corporate News Editor CIARA LINNANE concludes, "Some experts said bankruptcy is now almost inevitable."

“I think it will go into Chapter 11 and what will happen is what has happened in most of these LBO cases,” TRIPP SCOTT LAW FIRM International Bankruptcy Expert/Sr. Attorney CHUCK TATELBAUM told MARKETWATCH. “The lender will take back the company as part of a Chapter 11 plan, the other creditors will get nothing and the shareholders will be wiped out.”

On FRIDAY (NET NEWS 4/21) REUTERS reported that a group of iHEARTMEDIA's lenders has agreed to oppose the broadcaster's debt restructuring bid. REUTERS' sources say that the creditors represent over half of the holders of the present term loans and want the company to either improve the debt swap offer on the table now or come up with an entirely new plan. iHEARTMEDIA's present plan is a pair of debt swaps that would extend the maturity of iHEART's $20 billion debt further into the future and cut the overall debt by up to $4.3 billion, but the lenders have thus far mostly declined to agree to the proposals. The deadline for tendering for the swaps is currently the end of business TODAY, the result of two earlier extensions.

More info may become available on THURSDAY, MAY 4th, when iHEARTMEDIA and its publicly traded subsidiary, CLEAR CHANNEL OUTDOOR HOLDINGS, release 2017 first-quarter results before the market opens by 7a (ET). The company will also host a conference call to discuss results the same day at 8:30a (ET).

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