iHeartCommunications extends exchange offers for notes until July 21

By Susanna Moon

Chicago, July 6 – 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 July 21, extended from 5 p.m. ET on July 7.

As of 5 p.m. ET on July 5, investors had tendered about $45.4 million, or 0.6%, of the outstanding notes, according to a company update on Thursday, up slightly from $45.4 million on June 21.

Previously the offer was extended from June 23, June 9, May 26, May 12, April 28, April 21 and before that April 14.

The company previously said it was extending the offers so that it could continue discussions with holders of its notes and loans.

Holders had tendered $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 5 p.m. ET on May 24; $86.7 million, or 1.1%, of the amount outstanding as of 5 p.m. ET on May 11; $30.9 million, or 0.4%, as of 5 p.m. ET on 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 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 July 7, 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 Term Loan Offers have been extended to 5:00 p.m., New York City time, on July 21, 2017. iHeartCommunications is extending the Term Loan Offers to continue discussions with lenders regarding the terms of the Term Loan Offers.

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 basis points 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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