iHeartMedia, Inc. yesterday created some industry chatter when it announced its decision to not repay the $57.1 million of the 5.50% Senior Notes due tomorrow, December 15, (“2016 Legacy Notes”) held by affiliate Clear Channel Holdings, Inc. when the notes mature on December 15, 2016. In a release posted on Business Wire, iHeartMedia stated that the decision, “made by a Special Committee of independent directors, is part of the Company’s ongoing efforts to proactively address its capital structure, while maximizing the value of its assets.”
While the $192.9 million of 2016 Legacy Notes held by other holders will be paid in full at maturity, the $57.1 million balance held by affiliate CCH will remain outstanding. Because the 2016 Legacy Notes owned by CCH will continue to remain outstanding, the Company will continue to have at least $500 million of legacy notes outstanding on December 15, 2016 and will therefore not be obligated to grant certain additional security interests in favor of certain of its debt-holders under a so-called “springing lien” (whatever the hell that is) set forth in relevant debt agreements. And there’s more — the release also states that iHeartMedia “and certain affiliates” filed lawsuits in the State District Court in Bexar County, TX (the location of the company’s San Antonio headquarters), seeking a declaration that the $57.1 million of 2016 Legacy Notes remains outstanding and that the Company is not currently obligated to grant any of its debt-holders that aforementioned “springing lien” on any of its assets.
In a statement, iHeartMedia EVP of Communications Wendy Goldberg told RAMP, “Over the past five years, we have transformed iHeartMedia into a leading 21st century media and entertainment company — one that includes some of the industry’s most successful platforms across broadcast radio, digital, outdoor, mobile, social and live events. The strength in our operating business gives us the ability to deal with our capital structure, and we are focused on taking additional steps in order to support the long-term growth of this unique multi-platform company.”