IHeart Said to Discuss Detente With Debt Holders to Forge Deal

  • Broadcaster seeks to ease obligations through at least 2019
  • Creditors said to consider withholding notice of default

IHeartMedia Inc., the radio broadcaster struggling under $20.6 billion of debt, has discussed a standstill agreement with senior lenders, people with knowledge of the matter said, which would give the parties an opportunity for talks on how to deal with debt coming due within at least the next four years.

The company’s advisers and the lenders were negotiating over the last week a pact that would dial back a dispute between the two sides over actions iHeart took in December to shift assets to subsidiary Broader Media LLC, said the people, who asked not to be identified because the talks are private.

Under the accord, creditors would agree not to file a notice of default alleging the moves weren’t allowed, the people said. IHeart would commit to a pause on further asset sales and wouldn’t talk to other creditors about debt deals, they said.

With a standstill agreement, company advisers and creditors could start discussing options for how to clear out some of the company’s nearest-term borrowings, the people said. Those discussions would encompass debt maturing through at least 2019, including top-ranked term loans, they said.

Debt Wall

IHeart, formerly Clear Channel Communications Inc., has been weighing how to address borrowings coming due within the next few years, a person with knowledge of the matter said this month. In 2019, the company runs into a wall of $8.3 billion of senior debt, 40 percent of total obligations. IHeart has been tapping healthier divisions as it seeks to boost cash.

“We firmly believe we are in full compliance with our financing agreements,” iHeart said in a statement. “The strong performance of our operating business provides us with the flexibility to manage our capital structure in a prudent manner. We are always open to constructive dialogue with our lenders as we focus on positioning iHeartMedia for long-term growth.”

The business was bought by Bain and Thomas H. Lee in July 2008 in one of the last mega leveraged buyouts before the credit crisis. The firms paid $24 billion for the radio and billboard company that spawned IHeart, which has been battling ever since under the debt taken on for that deal.

Charlyn Lusk, a spokeswoman for Bain at Stanton Public Relations & Marketing, declined to comment. Matt Benson, a Thomas H. Lee Partners spokesman at Sard Verbinnen & Co., didn’t immediately provide a comment.

The creditors, represented by law firm Jones Day and investment bank PJT Partners Inc., threatened in at least two letters to the company since December to file a default notice, the people said. The group, whose members own some of iHeart’s senior bonds known as priority-guaranteed notes and some of its term loans, alleged in the letters that the company’s debt documents didn’t allow it to shift assets the way it did, the people said.

Julie Oakes, a spokeswoman for PJT at Joele Frank, and Dave Petrou, a spokesman at Jones Day, didn’t immediately provide comment.

Potential Offering

IHeart has also considered a potential bond or equity offering to pay off its most-pressing obligations and buy time to improve earnings, a person with direct knowledge of the matter said earlier this month. The company could sell securities in one of its units to retire $1.4 billion of bonds the parent is responsible for paying, the person said at the time. 

IHeart is also discussing an alternative plan to use proceeds from a Broader Media security sale to purchase the parent company’s bonds in the open market, the person said. The company is looking to take advantage of low market prices for its debt, the person said.

The cheapest of the obligations being targeted for paydown, the $850 million of 10 percent notes due January 2018, traded at about 35 cents on the dollar on Thursday, according to Trace, the bond-price reporting system of the Financial Industry Regulatory Authority.

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