Fitch Says iHeartMedia ‘Burning Cash’

iHeartMedia is “burning cash” as it approaches a wall of repayments over the next two years, according to a Fitch report that reduced the long-term issuer default rating to CC from CCC. While a restructuring “is likely within a year or two,” Fitch said, negotiations with iHeartMedia’s senior lenders have become more difficult this year. That’s the word from The San Antonio Express-News, the hometown paper of San Antonio-based iHeartMedia, which reports the media giant’s credit rating was cut by Fitch Ratings on concern that efforts to tame the struggling company’s debt “could lead to a distressed exchange or bankruptcy.”

“The company has adequate liquidity to get past 2016, but it will likely need to execute on additional liquidity levers to get through 2018,” said Fitch, which added that iHeartMedia should be able to meet debt payments due Thursday. It has about $21 billion of debt outstanding, Fitch said. The company has asked some of its senior bondholders for modified terms that would make it easier to conduct a debt exchange, but some of those investors were told by their lawyer to resist. The deadline for the investors to respond was Friday.

Failing to repay the bonds would throw the company into default, accelerate payback on billions of dollars of other debt and likely drive iHeartMedia into bankruptcy, said Seth Crystall, a senior credit analyst with Debtwire, who did add that the company actually has plenty of cash on hand to repay the debt.

• In a related story, RAMP has learned that iHeartMedia plans to shutter its Revenue Platforms office in Aliso Viejo, CA by the end of 2017. That location is responsible for creation and support for all Sales, Traffic, Ratings and Spot Verification systems for all markets. We understand that approximately 75 people will downsized as the operations will be absorbed internally in Austin and San Antonio.

By way of confirmation, RAMP reached out to iHeartMedia EVP of Marketing & Communications Wendy Goldberg, who told us, “The Aliso Viejo office will close at the end of 2017 when the lease is up. In the process of making these recent changes, unfortunately some employees were affected. We thank them for their service and wish them all the best for the future.”