One-hit wonder

4 May 2017 By

The U.S. radio giant has muddled through a 2008 mega-buyout largely because of looser terms on $20 bln of debt. IHeartMedia isn’t sure now if it can survive another year. As Bain and Thomas H. Lee fight to save their investment, creditors keep playing the same covenant-lite song.

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Radio broadcaster iHeartMedia warned on May 4 of "substantial doubt" of the company's ability to continue as a going concern for a year because of its expected negative cash flows and maturing debt. The company, which also owns billboard enterprise Clear Channel Outdoor, reported a decline in first-quarter revenue from a year ago and a wider loss of $388 million.

In March, the iHeartCommunications subsidiary proposed a debt exchange to help reduce its debt load of approximately $15 billion. Under the restructuring, owners of the company’s term loans would receive between $750 and $880 for every $1,000 principal amount of existing loans.

The company also made an offer to exchange some senior notes. Holders would receive between 35 percent and 75 percent of their face value of notes, depending on their rank in the capital structure, as well as some stock and the warrants to purchase iHeartMedia stock. In some scenarios, depending on how many people elect to take the offering, debt holders could own as much as 49 percent of Clear Channel Outdoor stock.

On April 13, the company slightly amended its terms. On April 27, it extended the offer's expiry date to May 12.

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