A new forbearance filed with the SEC on Wednesday morning gives iHeartMedia yet another day to come to terms with its $20 billion in creditors. Today marks the sixth extinction in talks in the last two weeks.
iHeartMedia’s latest bankruptcy deadline is 11:59PM CST on Wednesday March 14, 2018. The company owns 855 U.S. radio stations, a popular streaming service and other assets. It has operated under similar forbearance agreements with creditors off and on since 2011.
Without an agreement , bankruptcy experts say that iHeartMedia will be forced into bankruptcy today or tomorrow. And while a deal between the radio broadcast giant and creditors or another extension are still possible, a once high-flying iHeartMedia appears closer than ever to a messy demise.
A proposed reorganization plan filed with recent forbearance documents reduces iHeartMedia’s debt from $20.6 billion to $5.8 billion. Clear Channel Outdoor Holdings, iHeart’s billboard and outdoor advertising division, would be spun off. Bondholders would receive both stock in Clear Channel and equity in a newly recapitalized iHeart.
How IHeartMedia Got Here
The fall of iHeartMedia began more than a decade ago when private equity firms Bain Capital and Thomas H. Lee Partners bought what was then called Clear Channel and financed the $20 billion deal with loans equal to nine times the company’s pre-tax cash flow. That is 50% higher than the 6X leverage limit set by the federal government in 2013. The Trump administration has said they will remove all such limits soon.
Since then, iHeart has struggled. In 2016, the company’s net loss was about $300 million including $1.8 billion in debt payments. So a managed bankruptcy with lower debt payments could make the media giant a viable company again.
Check back for updates.