PE-backed iHeartMedia extends $20.6B debt deadline
March 6, 2018
US radio broadcaster iHeartMedia (fka Clear Channel Communications) and its lenders have agreed to give the company through Wednesday to ink a deal to restructure its debt load of a reported $20.6 billion. The owner of more than 850 radio stations is working on a proposal that would reduce its debt by nearly $15 billion, per the San Antonio Express-News.
The extension comes after the expiration of a 30-day grace period that began when iHeart missed a $106 million interest payment in early February. Last week, Liberty Media—the owner of satellite radio provider Sirius XM—offered to buy 40% of the company for $1.16 billion.
As with many companies in a shifting industry, iHeart has labored under heavy leverage. Boston-based firms Bain Capital and Thomas H. Lee Partners bought iHeart for $17.9 billion in 2008, a deal reportedly financed at a 9x ratio of debt to pre-tax cash flow; the broadcaster has since struggled to turn a profit, posting losses for 27 quarters in a row until 4Q 2016. The company experienced a 23.7% decline in operating income and a 1.9% drop in revenue during 3Q 2017.
Related read: PE-backed distressed exits in freefall
The extension comes after the expiration of a 30-day grace period that began when iHeart missed a $106 million interest payment in early February. Last week, Liberty Media—the owner of satellite radio provider Sirius XM—offered to buy 40% of the company for $1.16 billion.
As with many companies in a shifting industry, iHeart has labored under heavy leverage. Boston-based firms Bain Capital and Thomas H. Lee Partners bought iHeart for $17.9 billion in 2008, a deal reportedly financed at a 9x ratio of debt to pre-tax cash flow; the broadcaster has since struggled to turn a profit, posting losses for 27 quarters in a row until 4Q 2016. The company experienced a 23.7% decline in operating income and a 1.9% drop in revenue during 3Q 2017.
Related read: PE-backed distressed exits in freefall
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