iHeartMedia reaches agreement on restructuring, files for Chapter 11

New York, March 15 – iHeartMedia, Inc. said that it reached agreement on a balance sheet restructuring that will reduce its debt by more than $10 billion and that it filed for Chapter 11 along with some of its subsidiaries including iHeartCommunications, Inc.

The company has “widespread support across the capital structure” for the agreement, according to a news release.

“The agreement we announced today is a significant accomplishment, as it allows us to definitively address the more than $20 billion in debt that has burdened our capital structure,” said Bob Pittman, chairman and chief executive officer, in the news release. “Achieving a capital structure that finally matches our impressive operating business will further enhance iHeartMedia’s position as America’s #1 audio company.”

The Chapter 11 filing was made in the U.S. Bankruptcy Court for the Southern District of Texas.

In its filing, iHeartMedia said it had $12.26 billion of assets and $20.33 billion of liabilities as of Nov. 6.

The company expects that cash on hand along with cash generated from operations will be sufficient to fund the business during the bankruptcy proceedings.

Clear Channel Outdoor Holdings, Inc. and its subsidiaries did not file for Chapter 11.

Kirkland & Ellis LLP is legal counsel to iHeartMedia, Moelis & Co. is investment banker and Alvarez & Marsal is financial adviser.

The largest unsecured creditors are Law Debenture Trust Co. with a $1.92 billion claim on behalf of the company’s 14% senior notes due 2021, BNY Mellon with a $309.06 million claim on behalf of the 7¼% senior notes due 2027, BNY Mellon with a $178.01 million claim on behalf of the company’s 6 7/8% senior notes due 2018, Nielsen with a trade claim of $20.87 million, an unnamed creditor with a contract counterparty claim for $19.29 million, Icon International Inc. with a trade claim for $6.88 million, SoundExchange Inc. with a $6.43 million claim for royalty fees, Cumulus Media, Inc. with a trade claim for $5.61 million, Cox Enterprises, Inc. with a contract counterparty claim for $5.08 million and Warner Music Group Services with a royalty fee claim for $3.90 million.

Funds managed by Bain Capital Investors, LLC and Thomas H. Lee Partners, LP jointly own 65.6% of the company’s equity securities. Highfields Capital Management, LP funds own 11.0%.

The Chapter 11 case number is 18-31274.

iHeartCommunications also announced that it terminated its long-running exchange offer for five series of priority guarantee notes and senior notes due 2021 and its term loan D and term loan E facilities along with the related consent solicitation.

The offer had been extended multiple times after being launched on March 15, 2017.

iHeartCommunications was 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 and in a concurrent but separate offer its term loans D and E.

The offers were due to expire at 5 p.m. ET on March 16. As of the most recent announcement, the company had achieved a minimal response from noteholders of less than 1%.

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

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