iHeart Again Extends Forbearance as Bankruptcy Looms

iHeartMedia lenders have again agreed to forbear from calling default on the company’s missed interest payment, as the radio broadcaster continues to work on a consensual pre-arranged bankruptcy filing.

In a Form 8-K filed with the SEC, iHeartMedia said lenders have agreed to forbear on the missed interest payment until 11:59 p.m. Central Time on March 12, from the previously extended deadline of March 7.

As reported, iHeart failed to make a $106 million Feb. 1 interest payment to holders of its 14% senior unsecured notes due 2021 issued via subsidiary iHeartCommunications, entering instead into a customary 30-day grace period with lenders.

The company earlier this week filed a draft restructuring support agreement and term sheet showing senior lenders—including holders of the company’s term loans and priority guarantee notes—stand to receive 93.25% of the recapitalized equity, bridging the gap on a key sticking point of contentious year-long negotiations between the company’s sponsors and its debtholders.

iHeart is also is also operating under a customary 30-day grace period after it missed interest payments due on two series of priority-guarantee notes, ramping up the pressure among its more senior lenders to achieve a comprehensive restructuring of the company’s $20 billion debt load. — Rachelle Kakouris

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1 Comment

  1. iHeart will not go into liquidation. There are two types of bankruptcy proceedings: liquidation and restructuring. iHeart has been shopping around a restructuring bankruptcy plan in an attempt to pre-negotiate how much of a haircut each debt holder will take. They will likely succeed on that because the option for the debtholders is to have the bankruptcy court tell them how much of a haircut they will be taking. The other option, and we are seeing this with Liberty, is the purchase of the debt from the holder and then a negotiation with iHeart for board seats and equity in exchange for a forgiveness of all or a portion of the debt and a rescheduling of payments on the rest. iHeart, no matter what you think of it, is in a good position outside of owing more money that it can pay back. It is in a much better position than Cumulus. professional writing

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