iHeartCommunications again extends exchange related to restructuring

By Susanna Moon

Chicago, Sept. 28 – iHeartCommunications, Inc. yet again extended the private exchange for five series of priority guarantee notes and senior notes due 2021 and its term loan D and term loan E facilities in connection with a proposed debt restructuring.

The exchange will now continue until 5 p.m. ET on Oct. 20, extended from 5 p.m. ET on Sept. 29.

As of 5 p.m. ET on Sept. 27, investors had tendered about $31.4 million, or 0.4%, of the outstanding notes, according to a company update on Thursday. As of 5 p.m. ET on Sept. 6, investors had tendered about $45.5 million, or 0.6%, of the outstanding notes.

The offer was originally set to end on April 14 and has been extended numerous times with expirations previously set for Sept. 8, Aug. 18, Aug. 4, July 21, July 7, June 23, June 9, May 26, May 12, April 28 and April 21.

The company has said it is continuing the offers so that it could continue discussions with holders of its notes and loans.

Holders had tendered $45.5 million, or 0.6%, of the outstanding notes as of Aug. 16; $45.4 million, or 0.6%, of the outstanding notes as of Aug. 2; $45.5 million, or 0.6%, of the outstanding notes as of July 19; $45.4 million on June 21; $46.4 million, or 0.6%, of the outstanding notes as of June 8; $47.1 million, or 0.6%, of the outstanding notes as of May 24; $86.7 million, or 1.1%, of the amount outstanding as of May 11; $30.9 million, or 0.4%, as of April 26, $3.1 million on April 12 and none on April 4.

The response rate for the loans has not been disclosed.

The company disclosed the company’s most recent proposals on July 17 and the lenders’ counterproposal to restructure its debt and said that negotiations are continuing.

The company announced exchange offers for its notes and loans on March 15, 2017 and has since extended the offers multiple times.

During that period, iHeartCommunications has been negotiating with a group of holders of its term loan D and term loan E facilities. These holders include Eaton Vance, OppenheimerFunds and Symphony Asset Management, which hold more than $1 billion of the term loans.

The most recent state of the restructuring talks was as follows, based on the company’s proposal of June 26 and the lender group’s counter proposal of July 13:

• The holding company structure is agreed. iHeartMedia will issue new debt and will hold an equity interest in CC Outdoor Holdings with a minimum of 51% of the economic value and 81% of the votes and a minimum 51% economic interest in iHeartCommunications. Creditors will receive equity for 49% of the economic interest in iHeartCommunications and 49% of the economic and 19% of the voting interest in CC Outdoor;

• Holders of term loans and priority guarantee notes will receive new HoldCo debt issued by iHeartMedia and secured by the equity interests in iHeartCommunications and CC Outdoor that will pay 8% interest in kind and have a five-year maturity with an excess cash flow sweep. Under the company proposal, $375 million of debt will be issued. Under the lender proposal $500 million of debt will be issued and it will be non-callable except for a make-whole call;

• iHeartCommunications debt will be restructured as follows: the term loan D due 2019 will be exchanged for a term loan F due 2021 at Libor plus 675 basis points of which 250 bps will be PIK with a 1% floor, the 9% priority guarantee notes due 2019 will be exchanged for 9% senior secured notes due 2021 with 250 bps of the coupon payable in kind, the 9% priority guarantee notes due 2021 will be exchanged for 7½% senior secured notes due 2023 with 100 bps of the coupon payable in kind, the 11¼% priority guarantee notes due 2021 will be exchanged for 9¾% senior secured notes due 2023 with 100 bps of the coupon payable in kind, the 9% priority guarantee notes due 2022 will be exchanged for 7½% senior secured notes due 2024 with 100 bps of the coupon payable in kind, the 10 5/8% priority guarantee notes due 2023 will be exchanged for 9 1/8% senior secured notes due 2025 with 100 bps of the coupon payable in kind, and the 14% senior notes due 2021 will be exchanged for 7½% senior secured notes due 2023 with 100 bps of the coupon payable in kind;

• Under the company proposal the debt exchange ratio for the term loans and priority guarantee notes will be 80% if participation is below 95% and 83% above that level, and 35% for the 14% senior notes. Under the lender proposal the ratio for the term loans and priority guarantee notes will be 80% if participation is below 90%, 82% for 90% to under 95% participation and 83% for 95% and above, and 35% for the 14% senior notes;

• The lender group is also proposing to eliminate the sponsor management fee to preserve liquidity for the estate.

Both proposals are different than the terms currently on offer in the public exchange offer.

At its previous announcement on July 6, iHeartCommunications again extended the private exchange for five series of priority guarantee notes and senior notes due 2021 and its term loan D and term loan E facilities.

The company said on April 13 that it had extended the offers and amended the exchange to raise the amount being offered for some series of notes.

As announced March 15, the company is offering to swap out its $1,999,815,000 of 9% priority guarantee notes due 2019, $1.75 billion of 9% priority guarantee notes due 2021, $809,946,000 of 11¼% priority guarantee notes due 2021, $1 billion of 9% priority guarantee notes due 2022, $950 million of 10 5/8% priority guarantee notes due 2023 and its $1,746,460,109 of senior notes due 2021.

The type and amount of securities issued in the exchange will be based on the participation level in the offers, with the amount for the low turnout revised to be the same as that of the medium showing. The exchange value for the high involvement remains unchanged.

The new securities consist of new debt of iHeartCommunications and, in the high participation scenario, class B common stock of Clear Channel Outdoor Holdings and warrants to purchase class D common stock of iHeartMedia, the release noted.

The class B common stock will represent an economic interest of up to 49% of the total economic interest in Clear Channel Outdoor Holdings and up to a 19% voting interest in Clear Channel Outdoor Holdings. The warrants will have no voting interests but represent economic interests of up to 49% of the total economic interest in iHeartMedia. No class B common stock or warrants will be issued in the mid participation scenario or the low participation scenario.

Exchange participation

If there is a high level of participation in the offers, there will be a separation of the media and outdoor businesses, the company previously noted. Otherwise, the media and outdoor businesses will remain consolidated subsidiaries of iHeartCommunications.

In exchange for the priority guarantee notes, the company is now offering $900 principal amount of new notes for each $1,000 principal amount of notes if there is either low or medium turnout. Before the change, the company was offering $830 principal amount of new notes for medium participation and $880 principal amount of new notes for low.

If there is a high turnout, the company will continue to issue $750 principal amount of new notes plus shares and warrants, unchanged since the beginning of the offer.

For the senior notes due 2021, iHeartCommunications is offering per $1,000 of notes: For high participation, $350 principal amount of new notes plus shares and warrants; for mid participation, $350 principal amount of new notes; and, for low, $350 principal amount of new notes.

The amounts being offered remain unchanged for the notes due 2021.

The exchange value for each $1,000 principal amount will be as follows:

• For the 9% priority guarantee notes due 2019, high participation scenario: $750 principal amount of new iHeartCommunications 8½% senior secured notes due 2021, 2.7 shares of Clear Channel Outdoor Holdings class B common stock and warrants to purchase 6.4 shares of class D common stock of iHeartMedia; mid participation: $900 principal amount, up from $830, of new 9% senior secured notes due 2021; and low participation: $900 principal amount, up from $880, of new 9% senior secured notes due 2021;

• For the 9% priority guarantee notes due 2021, high scenario: $750 principal amount of new 6½% senior secured notes due 2023, 2.7 Clear Channel Outdoor shares and warrants for 6.4 shares; mid participation: $900 principal amount, up from $830, new 7% senior secured notes due 2023; and low participation: $900 principal amount, up from $880, of new 7% senior secured notes due 2023;

• For the 11¼% priority guarantee notes due 2021, high: $750 principal amount of new 8¾% senior secured notes due 2023, 2.7 Clear Channel Outdoor shares and warrants for 6.4 shares; mid participation: $900 principal amount, up from $830, of 9¼% senior secured notes due 2023; and low: $900 principal amount, up from $880, of 9¼% senior secured notes due 2023;

• For the 9% priority guarantee notes due 2022, high: $750 principal amount of new 6½% senior secured notes due 2024, 2.7 Clear Channel Outdoor shares and warrants for 6.4 shares; mid participation: $900 principal amount, up from $830, of 7% senior secured notes due 2024; and low: $900 principal amount, up from $880, of 7% senior secured notes due 2024;

• For the 10 5/8% priority guarantee notes due 2023, high: $750 principal amount of new 8 1/8% senior secured notes due 2025, 2.7 Clear Channel Outdoor shares and warrants for 6.4 shares; mid participation: $900 principal amount, up from $830, of 8 5/8% senior secured notes due 2025; and low: $900 principal amount, up from $880, of 8 5/8% senior secured notes due 2025; and

• For the senior notes due 2021, high: $350 principal amount of new 6½% senior secured notes due 2023, 1.26 Clear Channel Outdoor shares and warrants for 3 shares; mid participation: $350 principal amount of new 7% senior secured notes due 2023; and low: $350 principal amount of 7% senior secured notes due 2023.

As previously described, the high participation scenario is defined by a level of involvement by holders and lenders that would “generate sufficient reductions” in the company’s debt and in cash interest payment obligations under that debt, as well as extensions to the debt maturities to prevent legal restrictions on the company’s board of directors ability to declare a dividend of all of the outstanding shares of Clear Channel Outdoor Holdings that it owns, which will represent at least 51% of the total economic interest in Clear Channel Outdoor Holdings after the closing of the exchange, to effect the separation of Clear Channel Outdoor from iHeartMedia through a pro rata distribution of all of iHeartMedia’s interest in Clear Channel Outdoor Holdings to the holders of iHeartMedia’s class A, class B and class C common stock.

In the mid participation scenario, the high participation threshold is not reached but exceeds 50% of the aggregate amount of outstanding debt under the term loans and each note series excluding those owned by iHeartCommunications’ subsidiaries or any of iHeartCommunications’ affiliates and that exceeds 65% of the aggregate amount of outstanding debt across the term loans and notes including those owned by affiliates of iHeartCommunications but not by its subsidiaries.

The low participation scenario will result if neither the high participation nor mid participation threshold is met but the level exceeds 50% of the aggregate amount of outstanding debt excluding those owned by iHeartCommunications’ subsidiaries or any of iHeartCommunications’ affiliates.

Private term loan offers

The payout in the term loan exchange offers will consist of new term loans and contingent value rights (CVRs) of Broader Media and, if there is a high level of participation, class B common stock of Clear Channel Outdoor Holdings and warrants to purchase class D common stock of iHeartMedia.

As with the notes, the amount and type of the payout is based on the level of participation.

Those offers also have been extended until 5 p.m. ET on Oct. 20 from 5 p.m. ET on Sept. 29, according to a separate notice.

As a result of changes to the term loan offers, the exchange amount being offered in the mid participation scenario is the same as that being offered for a low showing. The high turnout scenario remains unchanged.

The exchange value was revised as follows for each $1,000 principal amount:

• For the term loan D facility due 2019, for high participation, $750 principal amount of new term loan F due 2021 of iHeartCommunications, 2.7 shares of Clear Channel Outdoor Holdings class B common stock and warrants to purchase 6.4 shares of class D common stock of iHeartMedia; for mid, $900 principal amount, up from $830, of new term loan F loans due 2021 and CVRs of Broader Media; for low, $900 principal amount, up from $880, of new term loan F loans due 2021 and CVRs of Broader Media; and, for term loan only, amended term loans with a six-month maturity extension and the benefit of a prepayment premium and a premium payable upon acceleration as well as CVRs of Broader Media; and

• For the term loan E facility due 2019, for high participation, $750 principal amount of new term loan G due 2021 of iHeartCommunications, 2.7 Clear Channel Outdoor shares and warrants for 6.4 shares; for mid, $900 principal amount, up from $830, of new term loan G loans due 2021 and CVRs of Broader Media; for low, $900 principal amount, up from $880, of new term loan G loans due 2021 and CVRs of Broader Media; and, for term loan only, amended term loans with a six-month maturity extension and the benefit of a prepayment premium and a premium payable upon acceleration as well as CVRs of Broader Media.

Interest on the term loans will be based on Libor and interest payable in kind at a rate equal to 2%, beginning with July 30.

If the level of participation is either low or medium, the spread over Libor would be 475 bps for the tranche F term loans and 550 bps for tranche G term loans.

If the high threshold is met, the margin would be 425 bps for tranche F term loans and 500 bps for tranche G term loans.

The class B common stock will represent an economic interest of up to 49% of the total economic interest in Clear Channel Outdoor Holdings and up to a 19% voting interest in Clear Channel Outdoor Holdings. The warrants will have no voting interests but will represent economic interests of up to 49% of the total economic interest in iHeartMedia.

The participation scenarios for the loans match those for the notes. The company previously said that for the loans, though, if the participation level falls short of the low threshold, lenders will receive amended term loans and CVRs upon closing of the offers. If the lenders take up offers for more than half of the aggregate amount of outstanding debt, “all of the existing term loans will be amended to no longer require the absence of a going concern qualification or the like in the delivery of any audited financials,” the release previously noted.

Global Bondholder Services Corp. (866 470-3700, 212 430-3774 or gbsc-usa.com/eligibility/ihc-termloanoffers) is the tabulation agent and information agent.

iHeartMedia, Inc. and Clear Channel Outdoor Holdings, Inc. are also making the private offers. Clear Channel Outdoor Holdings is a newly formed entity that will hold an 89.9% equity interest in Clear Channel Outdoor Holdings, Inc. upon closing of the offers if the high participation threshold is achieved.

The company said on Feb. 23 that it was considering a “global restructuring” of all of its outstanding debt, which would be needed in order to avert bankruptcy.

iHeartCommunications is a subsidiary of iHeartMedia, Inc., a media and entertainment company based in San Antonio.

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