Report: iHeart Creditors Ask Restructuring Adviser Moelis & Co. Be Replaced

Debt Issues Continue

More debt issues reportedly plague iHEARTMEDIA, as THE NEW YORK POST reports the company, "months into a seemingly stagnating effort to restructure its debt, has been asked by its creditors to replace its restructuring adviser, MOELIS & CO.," adding, "The creditors want an ownership stake in the radio giant in exchange for forgiving some of the $20 billion in debt -- but that equity stake offer has not yet been made, sources said."

iHEART reported financial info earlier this month (NET NEWS 5/4), and ALL ACCESS reported the company addressed debt service payments that "continue to incur net losses."

"For the year ended FRIDAY, DECEMBER 31st, 2016," iHEART explained, "we adopted a new accounting standard that requires us to evaluate on a quarterly basis whether there is substantial doubt about our ability to continue as a going concern for a period of 12 months following the date our financial statements are issued. A substantial amount of our cash requirements are for debt service obligations.  Our current operating plan indicates we will continue to incur net losses and generate negative cash flows from operating activities given iHEARTCOMMUNICATIONS’ indebtedness and related interest expense. Although we have generated operating income, we incurred net losses and had negative cash flows from operations for the years ended DECEMBER 31st, 2016 and 2015, as well as for the quarter ended MARCH 31st, 2017. Our current operating plan indicates we will continue to incur net losses and generate negative cash flows from operating activities given iHEARTCOMMUNICATIONS’ indebtedness and related interest expense."

THE POST notes, "At present, iHEART has only a 50-50 chance of reaching a restructuring deal with creditors and avoiding a bankruptcy by early 2018, according to a lead institutional iHEART lender," adding, "Some iHEART bondholders would prefer bankruptcy, in which, they believe, they would be paid in full. Other creditors are seeking an offer of 90 cents on the dollar, sources said."

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