iHeartMedia Tries Again For Deal With Creditors, But The Creditors Have A Different Idea

Proposal Swap

While CUMULUS MEDIA was able to reach a deal with a majority of its lenders, iHEARTMEDIA hasn't been able to do so thus far, and the company informed the SEC on THURSDAY (11/30) that a group of its major creditors has rejected the company's latest restructuring proposal and again offered their own plan with terms more favorable to themselves and less going to iHEART's equity partners.

The iHEART proposal, offered on NOVEMBER 22nd, gave BAIN and THL 12.5% of both iHEARTMEDIA and the CCOH interest, 87.5% to the creditor group, and proposed to cut its debt in half, slicing $7.7 billion off the $15.5 billion owed and leaving about $7 billion in new debt with a 5-7 year maturity and $300 million in senior debt for 2018 and 2027 legacy notes.

The creditors, led by mutual fund FRANKLIN RESOURCES, made a counteroffer on TUESDAY (11/28) that asked for 95.3% of iHEARTMEDIA equity and 100% of iHEART's 89.5% interest in CLEAR CHANNEL OUTDOOR HOLDINGS, leaving equity partners BAIN CAPITAL and THOMAS H. LEE PARTNERS and junior bondholders with just 1% equity in the recapitalized iHEART plus 10% warrants at equity value of $8.3 billion and including the option of a Chapter 11 filing.  The recapitalized iHEART would owe $5.75 billion with a 5-7 year maturity, down from the $15.5 billion presently owed, plus $72 million in new debt  for 2018 and 2027 legacy notes (1.2% equity).  Holders of 10% Notes due 2018 would get 0.5% of the iHEART equity, holders of 14% Notes due 2021 would get 2% equity in iHEART and 10% warrants valued at $6.5 billion in equity.

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