S&P lowers iHeartCommunications

S&P said it lowered the corporate credit rating on iHeartMedia Inc. and its subsidiary iHeartCommunications Inc. to CC from CCC.

The outlook is negative.

S&P also said it lowered the ratings on iHeartCommunications' priority guarantee notes and term loans to CC from CCC and on its senior notes due 2021 to C from CC.

All of its other debt ratings, including the recovery ratings, are unchanged.

The downgrades follow news that the company has offered to exchange five series of priority-guarantee notes, senior notes due 2021 and term loans D and E for longer-dated debt, S&P explained.

The debt also may be exchanged for stock and warrants, the agency said, or contingent value rights.

Under all but one scenario, there would be a reduction in the principal amount of debt outstanding and an extension of the debt maturity by two years for exchanged debt, S&P said.

The company's debt is trading at significant discounts to par of 20% to 60%, the agency said, and its capital structure is unsustainable."

iHeartMedia faces significant debt maturities over the next few years.

Those maturities include an asset-based revolver due December 2017; $287 million debt due 2018; and $8.3 billion debt due 2019.

The company's total debt load is more than $20 billion, S&P said, and its leverage is extremely high at 9x.

S&P said it intends to lower the corporate credit rating to SD (selective default) and the affected issue-level ratings to D once the debt exchange is completed.

New ratings then will be assigned that reflect the company’s new capital structure, the agency said.

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