iHeartMedia Gets Another 24 Hours for Chapter 11 Talks

Kristoffer Tripplaar/AP
A logo sign outside of the headquarters of iHeartMedia, Inc., in San Antonio, Texas on September 8, 2015.

iHeartMedia's creditors have given the struggling company until 11:59 tonight to negotiate a pre-packaged Chapter 11. The small extension comes after a previous arrangement dated March 5 expired at midnight Tuesday. While that forbearance agreement extension was for a week, the new 24-hour extension could indicate that the two sides are nearing a deal -- or that the creditors have run out of patience.

Without the forbearance agreement, the company’s technical default would turn into outright default at having missed an earlier interest payment, and as such would likely force the company into Chapter 11. But the two sides have been negotiating a pre-packaged Chapter 11, which is usually a neater and less costly process than an outright Chapter 11, where the creditors fight over the assets and the future of the company.

As indicated in the filings, the pre-packaged deal calls for the iHeart equity owners Thomas H. Lee Partners and Bain Capital to give up their equity; and the company would agree to spin off its outdoor billboard advertising unit so that the creditors could divide up a pool of equity and cash.

In the event the two sides can’t come to terms, without another forbearance agreement extension tonight, iHeart would likely have to file for Chapter 11 protection, maybe as soon as tomorrow.

In addition to a debt-for-equity swap, the deal would give iHeart new funding sources in the form of 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.