There were several news items at the end of last week indicating that (maybe) there might be some movement on an iHeart Media debt restructure. Total company debt, as of June 30, stood at almost $20.4 billion, mostly from the 2008 leverage-buyout from two Boston-based private-equity firms. Bain Capital and Thomas H. Lee Partners acquiring 70 percent of the company. iHeart had made an earlier proposal to restructure the debt, had seen little interest, but continued to extend the deadline on their tender offer hoping someone would blink.
As most all of us know in the outdoor industry, iHeart Media owns 90% of Clear Channel Outdoor and those assets have been a key part of the negotiations.
If you are interested in the main parties involved, the key players are:
- The Private Equity Partners, Bain Capital and Thomas H. Lee Partners
- Franklin Resources, the single largest creditor
- PJT Partners, the investment banking firm hired by Franklin Ventures
If you are wondering about iHeart Media CEO, Bob Pittman, the New York Post is reporting that Pittman has not been in attendance at recent creditor meetings. Only representatives of the private equity firms have been in the meetings on behalf of iHeart.
So here is what seems to be the positions of iHeart Media and Franklin Resources.
iHeart Media – would give junior bondholders and private-equity owners Bain and Thomas H. Lee more than 50% of iHeartMedia equity and 30% of what it owns of Clear Channel, with the rest going to senior bondholders and term loan lenders. The senior creditors that hold about $12.8B in priority guarantee notes and term loans would get $6B-$7B in new secured notes or loans.
Franklin Resources – is pushing a plan for a prepackaged bankruptcy, where senior bondholders and term loan lenders would get most of the shares in iHeart Media and in Clear Channel Outdoor Holding.
See articles from Seeking Alpha and Radio Ink for more details on the plan.
The New York Post reported that in a bankruptcy, the private equity firms would likely be wiped out.
Insider’s take – If you read anything involving other creditors, it is just noise, as none of the creditors will take action without having Franklin Resources on board. While the market for radio stations is depressed at present, iHeart has significant brand and digital presence as well as very valuable outdoor advertising assets from Clear Channel Outdoor. The Private Equity firms are negotiating for any value they can recover with the threat of a prolonged and expensive bankruptcy as their leverage. Franklin Resources would be pleased with a bankruptcy, but only if it is pre-packaged and will move quickly through the courts. In the meantime, the attorney’s are getting richer.
Stay tuned…..
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