iHeartMedia Jet Flying Into Turbulence?

MarketWatch created some serious viral buzz on Saturday when it posted a story provocatively titled, “iHeartRadio Parent Warns It May Not Survive Another Year.” Whether the piece contains any serious basis in truth is still up for discussion, but, needless to say, it was widely shared on social media… and it’s not surprising, given the opening line, which read, “iHeartMedia Inc. plans to include language in its next quarterly report warning investors that it may not survive another year.” The company said it continues to expect cash flow to be negative and is uncertain as to whether it will be able to refinance or extend the maturities of some of its borrowings, according to a regulatory filing.

In an SEC filing, the company stated, “Management anticipates that our financial statements to be issued for the three months ended March 31, 2017, will include disclosure indicating there will be substantial doubt as to our ability to continue as a going concern for a period of 12 months following the date the first quarter 2017 financial statements are issued.”

As has been widely reported, iHeartMedia has almost $350 million of debt coming due this year, part of the massive $20 billion debt load it took on as part of the $24 billion 2008 leveraged buyout of Clear Channel Communications Inc. by private-equity firms Bain Capital and Thomas H. Lee Partners. The company has another $8.3 billion of debt coming due in 2019. That news ties in with an April 21 Reuters story that stated, in part, “A group of iHeartMedia lenders has signed a cooperation agreement to oppose the debt overhaul of the largest owner of U.S. radio stations, presenting a threat to the company’s bid to avoid bankruptcy… The move shows how iHeartMedia… is struggling to find a solution that would significantly slash its $20 billion debt pile outside of bankruptcy court.” iHeart shares closed Friday at $2.75, down 4.84 percent.