IHeart Media Is $20 Million In Debt; Files For Bankruptcy

Radio conglomerate iHeartMedia has filed for Chapter 11 bankruptcy protection after reaching an agreement in principle with investors regarding a balance sheet restructuring of more than $10 billion in outstanding debt, around half of the more than $20 billion in debt that has burdened the company's capital structure. Reuters reports the company has struggled with $20 billion in debt and falling revenue recently.

On Monday it disclosed that it continued exchanging proposals with creditors, but no agreement had been reached.

The San Antonia based iHeartMedia bills themselves as a multi-platform media company, and are best known for operation over 850 radio stations.

It's unclear if a DIP loan is needed because the Chapter 11 announcement didn't provide any details mentioning one, but did say that the company believes that its cash on hand and cash generated from operations to sufficiently fund iHeart during the Chapter 11 proceedings.

The bankruptcy caps a yearlong standoff with lenders and bondholders on its latest debt-cutting plan.

Bain Capital and Thomas H. Partners own 68 percent of iHeartMedia's stock.

IHeartMedia, previously known as Clear Channel Communications, has always been expected to file for bankruptcy as its $20 billion debt, mostly from a leveraged buyout in 2008, lingered. The equity holders would keep 5.25% of the company.

IHeartMedia has drawn interest from John Malone's Liberty Media Corp, which proposed on February 26 a deal to buy a 40 percent stake in a restructured iHeartMedia for $1.16 billion. IHeart, led by Chief Executive Officer Robert Pittman, countered with its own streaming services and a live-events business offering concerts and awards shows. It's $20 billion in debt makes it the largest bankruptcy in the previous year, and around the 30th largest ever.

The decision of chapter 11 bankruptcy comes off the heels of multiple extensions since March 1st, their deadline was 11:59 PM, March 14. The deal would unite iHeartMedia with Liberty's Sirius XM Holdings Inc satellite radio service.

  • David Armstrong