UPDATE 3 - The court gave iHeartMedia, its 855 radio stations and creditors until 11:59 PM Central time, Wed. March 7th to agree to a reorganization that would reduce its debt by $15 billion, according to papers filed with the SEC. The deadline has now been extended through Monday, March 12th. Details here.
A proposal filed with the Securities and Exchange Commission on Monday would reduce iHeartMedia's debt from $20.6 billion to under $5.8 billion, as part of a Chapter 11 bankruptcy reorganization plan. Clear Channel Outdoor Holdings, iHeart's billboard division, would be spun off, and debt holders will receive both stock in Clear Channel and equity in a newly recapitalized iHeart.
iHeart. which owns 855 radio stations in the US and dozens of popular streaming channels, has until l 11:59 PM tonight, Wednesday, March 7th to accept the plan.
The fall of iHeartMedia began in 2008 when private equity firms Bain Capital and Thomas H. Lee Partners bought what was then Clear Channel and financed the $20 billion deal with loans equal to 9 times the company’s pre-tax cash flow. That's 50% higher than the 6X leverage limit set by the federal government in 2013. The Trump administration has said that they will remove all such limits soon.
Since then, iHeart has struggled. In 2016, the company's net loss was about $300 million including $1.8 billion in debt payments. So a managed bankruptcy with lower debt payments could make the media giant a viable company again. That appears to be the goal as major creditors and iHeart execs huddle to prepare to file court papers, likely early this week, according to multiple reports.