Restructuring iHeartMedia’s $21 billion in debt isn’t getting any easier for Chief Executive Bob Pittman. A senior lender to the country’s largest radio station owner told The Post on Wednesday he would prefer the San Antonio company goes bankrupt than take Pittman’s latest restructuring offer. The creditor, who is not typically seen as an activist, said his debt, now trading at 73 cents on the dollar, could fetch 90 cents in a bankruptcy.
“The proposal they are making is a to me,” he said, referring to iHeart’s request that he take a haircut on the interest rate, plus wait an additional year to get paid. The creditor, who spoke on the condition of anonymity, said he would rather have a reasonable offer on the table than see the company collapse into bankruptcy — but he would opt for Chapter 11 over the current offer. Pittman, whose company owns 850 stations, including station WWPR 105.
1 and classic rock Q104. 3 in New York City, has been battling creditors on plenty of fronts. Meanwhile, .
The company said in a regulatory filing on Tuesday that it was weighing breaking off talks with holders of $6. 3 billion in term loans because they were going so poorly. Pittman’s troubles in attempting the Herculean restructuring is a challenge for Bain Capital and THL Partners, the private equity firms that own the radio giant.
“It doesn’t look good,” a second source close to the situation said. “There is a lot of risk. ” iHeart has several hundred million dollars in debt due in December that it can likely meet, while a nearly $1 billion principal payment due in January 2018 is seen as more of a challenge, the creditor said.
iHeart, like Caesars Entertainment, was acquired in a highly leveraged buyout in 2008, and is now struggling to deal with the massive debt. In both cases, the owners are trying to keep some of their equity stakes in a restructuring. What’s more, both companies are facing potentially crippling lawsuits.
Mario Gabelli’s Gamco Asset Management has succeeded in getting a February trial date in its Delaware Chancery Court suit against iHeart. iHeart owns 90 percent of publicly traded Clear Channel Outdoor Holdings, the billboard owner. Gamco owns 10 percent of the publicly traded shares.
Gamco claims iHeart is pressuring Clear Channel to lend it money, which the radio station company doesn’t have the ability to repay. iHeart already owes Clear Channel $640 million, according to the suit. Turning off that spigot from the billboard giant could be dangerous for a parent company that needs the cash.
Clear Channel in a May filing said, “iHeartMedia may cause us to engage in transactions for the purpose of supporting its liquidity needs. ” An iHeart spokeswoman said she was optimistic talks would end on the right note — and not in Chapter 11. “We continue to evaluate various opportunities to strengthen our capital structure for the benefit of our stakeholders, and we remain focused on positioning iHeartMedia for growth.