iHeartMedia plan confirmed; emergence expected in first half of 2019

By Caroline Salls

Pittsburgh, Jan. 22 – iHeartMedia, Inc.’s plan of reorganization was confirmed Tuesday by the U.S. Bankruptcy Court for the Southern District of Texas, according to a company news release.

The company said it expects to complete its restructuring process in the first half of 2019, subject to completion of steps related to the separation of Clear Channel Outdoor Holdings, Inc., Federal Communications Commission registration and satisfaction of other customary conditions.

“We are delighted to reach this significant milestone in our restructuring process, which will give us a new capital structure that matches the strong operating performance of our business,” chairman and chief executive officer Bob Pittman said in the release.

“iHeartMedia’s unique place in the advertising world perfectly positions us to take advantage of the renaissance underway in audio.”

Under the terms of the plan, iHeartMedia will complete a comprehensive balance sheet restructuring that will reduce its debt to $5.75 billion from $16.1 billion will separate Clear Channel Outdoor from iHeartMedia, creating two independent public companies.

Last week, iHeartMedia announced that it had reached an agreement with legacy notes trustee Wilmington Savings Fund Society, FSB regarding a settlement and related changes to the plan.

Under the settlement term sheet, in addition to the recovery already provided for holders of legacy notes claims, these creditors will receive their share of an additional 0.2% of special warrants, new iHeart common stock or a combination of warrants and stock.

The reorganized equity portion of the additional legacy notes’ recovery will come from a 0.1% reduction in 2021 notes claimants’ recovery and an 0.1% reduction of the total recovery earmarked for consenting sponsors.

The company said claims for 5½% senior notes due 2016 will be allowed in an amount of $57.89 million; claims for 6 7/8% senior notes due 2018 will be allowed in an amount of $178.01 million, and claims for 7¼% senior notes due 2027 will be allowed in an amount of $309.06 million.

Also, under the amended plan, legacy note claims that qualify as intercompany notes claims will be cancelled without distribution, with the distribution scheduled to be allocated to those creditors to go instead to holders of non-intercompany legacy notes claims.

Under another settlement reached in October with the official committee of unsecured creditors appointed in the Chapter 11 cases, the plan provides holders of guarantor general unsecured claims with a cash recovery between 45% and 55% of their claims.

In addition, holders of general unsecured claims against the iHeartCommunications debtor will receive a recovery of 14.44%, provided that if the treatment to be provided on account of any other unsecured claims against that debtor, including any 2021 notes claims and/or legacy notes claims would provide the holder with a greater percentage recovery than the general unsecured creditors, the general unsecured creditors will receive an additional cash distribution so that the recoveries will be equal.

Holders of iHeart interests will receive their share of equity in reorganized iHeart.

Following iHeartMedia’s completion of the restructuring process, Pittman and president, chief operating officer and chief financial officer Rich Bressler will remain in their respective roles and have extended their contracts by four years.

Kirkland & Ellis LLP is acting as legal counsel to iHeartMedia, Moelis & Co. is acting as the company’s investment banker, and Alvarez & Marsal is acting as financial adviser.

iHeartMedia is a media and entertainment company based in San Antonio. The company filed bankruptcy on March 15, 2018 under Chapter 11 case number 18-31274.

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