• Liberty Media in the iHeart Mix?

    Liberty Media,  who has a broad range of media and entertainment interests that include SiriusXM and the Atlanta Braves, have entered the iHeart Media sweepstakes as a potential investor.  Liberty has offered a term sheet to certain key lenders and note holders of iHeart to buy a 40 percent stake in a restructured iHeart for $1.16 billion. The equity position would be split evenly between Liberty Media and Liberty SiriusXM.

    The offer includes Liberty indicating their willingness to finance working capital conditional on iHeart filing Chapter 11 and Liberty being provided Debtor in Possession, or DIP, status by the bankruptcy court.  For those of you not familiar with the bankruptcy process, DIP status allows the lender to move in front of all existing claims into a priority secured status.

    With iHeart choosing to skip an interest payment deadline at the beginning of February, it started a 30 day grace period for payment before iHeart enters into default.  Assuming iHeart does not reach a deal with creditors, the general consensus is that iHeart is headed for Chapter 11.  More news this month indicates that the lender group would prefer that iHeart go through a pre-packaged bankruptcy to clear the assets, which would end up almost entirely with the lenders. In any event whether it be with Liberty Media or the Creditor group, Clear Channel Outdoor is headed to new ownership.

    Insiders Take – So why has Liberty Media offered to make an investment virtually days before iHeart enters into default?  They most likely see it as an opportunity to grab some assets at a significantly reduced value.  And strategically it makes sense as iHeart and SiriusXM could be great partners.

    The general consensus is that the offer will fall on deaf ears as iHeart and their creditors seem to be closing in on a structure both can agree to.  But you never know as the reality of bankruptcy, which can potentially include a significant amount of time and legal fees, quickly approaches.

    If you would like to read more on iHeart, the San Antonio Express-News has a good article from the 27th.



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