[TUESDAY 3.13.18 8AM ET] The bankruptcy and reorganization of iHeartMedia has been postponed for another 24 hours, according to an SEC filing overnight. Creditors have agreed to a forbearance agreement granting the nation's largest radio broadcast group until 11:59PM CT today to reach terms for a reorganization.
iHeartMedia owns 855 U.S. radio stations, a popular streaming service and other assets. It has operated under similar forbearance agreements with creditors off and on since 2011.
A proposed reorganization plan filed with the latest forbearance agreement would reduce iHeartMedia's debt from $20.6 billion to $5.8 billion. Clear Channel Outdoor Holdings, iHeart's billboard and outdoor advertising division, would be spun off. Bondholders would receive both stock in Clear Channel and equity in a newly recapitalized iHeart.
iHeart's Path To Bankruptcy
The fall of iHeartMedia began more than a decade ago when private equity firms Bain Capital and Thomas H. Lee Partners bought what was then called Clear Channel and financed the $20 billion deal with loans equal to nine times the company’s pre-tax cash flow. That is 50% higher than the 6X leverage limit set by the federal government in 2013. The Trump administration has said 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.