This extension means that the company and its creditors will continue to work out a restructuring plan that will either end in a pre-packaged Chapter 11 agreement with the terms of the company re-organization already decided -- as was roughly laid out in a restructuring term sheet filed with the earlier forbearance agreement on March 4 -- that would result in iHeart's debtors becoming the majority owners of the company.
But if the terms of agreement are not hammered out, the Chapter 11 filing could turn into a full-blown war between various classes of creditors.
As it stands now, the pre-packaged agreement on file with the SEC calls for Clear Channel Outdoor Holdings, iHeart's billboard advertising operation, to be spun off from the company, with the holders of the term loan credit facility claims and the priority guaranteed notes maturing in 2023 to become the holders of the economic interest in the Outdoor operation. It also calls for other debtors to receive new iHeart stock, or a combination of new stock and special warrants, with the amounts for each creditor weighed against the amount of debt they hold from the company. Press reports suggest that the creditors in line for the new stock will receive as much as 93 percent of the equity in the re-organized company.
Further, iHeart will have a new senior secured asset revolving credit facility, and a new secured $5.75 million in debt.
As part of the plan, Liberty Media has offered to give the company $1.16 billion for its financing needs in exchange for a 40 percent equity stake in the restructured iHeart. Liberty already owns a controlling interest in SiriusXM, which views terrestrial radio as its biggest rival in the car.