iHeart Finally Files For Chapter 11
• After lengthy negotiations with its creditors and several extensions, iHeartMedia, quoting Variety, “bowed to the inevitable” late Wednesday evening and filed for Chapter 11 bankruptcy protection that will cut its $20 billion in debt in half.
In a statement, Bob Pittman, Chairman and Chief Executive Officer said, in part, “The agreement we announced today is a significant accomplishment, as it allows us to definitively address the more than $20 billion in debt that has burdened our capital structure. Achieving a capital structure that finally matches our impressive operating business will further enhance iHeartMedia’s position as America’s #1 audio company.”
As the official announcement reads, “To implement the balance sheet restructuring contemplated by the agreement in principle, iHeartMedia and certain of its subsidiaries, including iHeartCommunications, Inc., have filed voluntary petitions for relief under Chapter 11 of the U.S. Bankruptcy Code in the United States Bankruptcy Court for the Southern District of Texas, Houston Division. Clear Channel Outdoor Holdings, Inc. and its subsidiaries are not included in the Chapter 11 proceedings.” iHeartMedia believes that its cash on hand, together with cash generated from ongoing operations, will be sufficient to fund and support the business during the Chapter 11 proceedings.
Last night’s filing is the culmination of proceedings that escalated on Feb. 1, when the company announced that it had skipped a $106 million payment on debt that matures in 2021. That set up a 30-day grace period before triggering a default, which forced the company to declare bankruptcy. It was around that time when Liberty Media came into the picture, offering $1.1 billion for a 40% stake in the company.
According to Variety, some of the companies listed as creditors on the iHeartMedia docket are Nielsen (owed $20 million); SoundExchange ($6.4 million); Warner Music Group ($3.9 million); Universal Music Group ($1.3 million); and Spotify ($2.1 million). ASCAP and BMI are each owed slightly over $1.4 million while Global Music Rights is owed $2 million.
