As the company continues to work to trim its $20 billion in debt, a new SEC filing shows that the company is willing to sell a big part of its billboard division. The filing says “iHeartCommunications announced Monday it is exploring a possible private capital-raising transaction supported by the value of some or all of the 100,000,000 shares of Class B common stock of Clear Channel Outdoor.”
The sale would involve 100 million Class B shares of stock owned by iHeart’s company Broader Media and over 10 million shares of Class A stock held by another company called CC Finco. Both units are used by iHeartMedia partly to position equity ownership of Clear Channel Outdoor shares for the purpose of leveraging new debt, according to The SanAntonio Express-News.
iHeart has been negotiating with some of its lenders for quite some time now as dates rapidly approach to make debt payments. iHeart has small amounts of debt due this year and next. In 2019 debt payments jump up to $8.4 billion.
Debtwire Senior Credit Analyst tells the paper that the sale of 110 million shares could net iHeart about $450 million in cash. “iHeartMedia has announced a possible sale of Clear Channel shares as an alternative way of raising cash and to provide the company with funds to make interest payments for the time being. The possible sale could be used as a possible negotiating tool to get the negotiations moving.”
On November 22, iHeart proposed to its Term Loan Holders $7 billion in new debt giving up 87.5% equity in a recapitalized iHeart and 87.5% ownership of iHeart’s ownership in its Outdoor division. Under iHeart’s proposal, private-equity owners Bain Capital and Thomas H. Lee Partners, would retain 12.5% of the shares in both. On November 28, the lenders countered with $5.75 billion in new debt with 95.3% equity in a recapitalized iHeart and 100% ownership in iHeart’s piece of the Outdoor company and an option to do a pre-packaged Chapter 11. Under this counter-proposal, the private-equity owners and junior bondholders get 5% of the equity in the radio business.
You may recall we reported this detail from the Q3 iHeart earnings press release: “Although we have generated operating income in excess of $1.0 billion in each of the years ended December 31, 2016 and 2015, we incurred net losses and had negative cash flows from operations for each of these years as a result of significant cash interest payments arising from our substantial debt balance. For the nine months ended September 30, 2017, we used cash of $558.7 million for operating activities, which included cash paid for interest of $1,426.4 million. Our current forecast indicates we will continue to incur net losses and generate negative cash flows from operating activities as a result of our indebtedness and significant related interest expense.”
