iHeartMedia exits Chapter 11 bankruptcy, cuts debt to $5.75 billion

By Caroline Salls

Pittsburgh, May 1 – iHeartMedia, Inc. completed its restructuring process and emerged from Chapter 11 bankruptcy on Wednesday, according to a news release.

As a result of the comprehensive balance sheet restructuring, iHeartMedia said its debt has been reduced to $5.75 billion from $16.1 billion.

In addition, in conjunction with completion of the restructuring, and in accordance with its plan of reorganization, iHeartMedia and Clear Channel Outdoor Holdings, Inc. (CCOH) have fully separated, creating two independent publicly traded companies. Clear Channel Outdoor Holdings shares will continue to be traded on the New York Stock Exchange under the ticker symbol “CCO.”

iHeartMedia’s plan of reorganization was confirmed on Jan. 22 by the U.S. Bankruptcy Court for the Southern District of Texas and took effect on Wednesday.

Plan terms

iHeartMedia announced in January that it had reached an agreement with legacy notes trustee Wilmington Savings Fund Society, FSB regarding a settlement and related changes to the plan.

Under the settlement term sheet, in addition to the recovery already provided for holders of legacy notes claims, these creditors will receive their share of an additional 0.2% of special warrants, new iHeart common stock or a combination of warrants and stock.

The reorganized equity portion of the additional legacy notes’ recovery will come from a 0.1% reduction in 2021 notes claimants’ recovery and an 0.1% reduction of the total recovery earmarked for consenting sponsors.

The company said claims for 5½% senior notes due 2016 will be allowed in an amount of $57.89 million; claims for 6 7/8% senior notes due 2018 will be allowed in an amount of $178.01 million, and claims for 7¼% senior notes due 2027 will be allowed in an amount of $309.06 million.

Also, under the amended plan, legacy note claims that qualify as intercompany notes claims will be cancelled without distribution, with the distribution scheduled to be allocated to those creditors to go instead to holders of non-intercompany legacy notes claims.

Under another settlement reached in October 2018 with the official committee of unsecured creditors appointed in the Chapter 11 cases, the plan provides holders of guarantor general unsecured claims with a cash recovery between 45% and 55% of their claims.

In addition, holders of general unsecured claims against the iHeartCommunications debtor will receive a recovery of 14.44%, provided that if the treatment to be provided on account of any other unsecured claims against that debtor, including any 2021 notes claims and/or legacy notes claims would provide the holder with a greater percentage recovery than the general unsecured creditors, the general unsecured creditors will receive an additional cash distribution so that the recoveries will be equal.

Holders of iHeart interests will receive their share of equity in reorganized iHeart.

“We are pleased that iHeartMedia now has a capital structure that matches our exciting operating business,” iHeartMedia chairman and chief executive officer Bob Pittman said in the release.

“iHeartMedia enters this next phase of growth as a multi-platform audio company with a vastly improved financial profile. We are well-positioned to continue to innovate and offer cutting-edge technologies, products and services to our audiences and advertisers.”

New board

Pittman continues to serve as chairman and CEO of iHeartMedia, and Rich Bressler continues to serve as president, chief operating officer and chief financial officer.

In addition, a new board of directors has been appointed, including Pittman and Bressler, as well as Jay Rasulo, Gary Barber, Brad Gerstner, Sean Mahoney and Kamakshi Sivaramakrishnan.

Kirkland & Ellis LLP served as legal counsel to iHeartMedia, Moelis & Co, served as the company’s investment banker, and Alvarez & Marsal served as financial adviser.

iHeartMedia is a media and entertainment company based in San Antonio. The company filed bankruptcy on March 15, 2018 under Chapter 11 case number 18-31274.

© 2015 Prospect News.
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