IHeartMedia Inc. and a key group of bondholders and lenders appear to still be far apart over how to restructure $15.5 billion in debt owed by the nation's largest radio station network, according to the company's disclosures on the talks released Thursday.
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A key difference between the company's proposal and one put forward by a group of bondholders, led by Franklin Resources and represented by PJT Partners Inc. and Jones Day, is that the Franklin-led group wants the company to file a so-called prepackaged bankruptcy plan. Under the plan, senior bondholders and term loan lenders would get the lion's share of shares in both the radio business and the company's valuable Clear Channel Outdoor Holding Inc. billboard unit.
IHeart, which is trying to avoid a bankruptcy case, has countered with a proposal to restructure $15.5 billion of debt out of court, with iHeartMedia's junior bondholders and private equity owners Bain Capital and Thomas H. Lee Partners retaining over 50% of equity in iHeartMedia and 30% of the equity iHeartMedia currently owns in Clear Channel. Under the company's proposal, its senior bondholders and term loan lenders, including the Franklin-led group, would get the rest of the equity in iHeartMedia and Clear Channel. iHeartMedia owns 80% of the shares in publicly traded Clear Channel.
The Franklin Resources-led group's proposal offers just share in a small slice, up to $300 million in value, of equity to junior bondholders and the company's private equity owners.
Both plans would also give senior creditors, holders of approximately $12.8 billion in so-called priority guarantee notes and term loans, $6 billion to $7 billion in new secured notes or loans, while ridding the balance sheet of $8.3 billion to $9.2 billion in debt.
Spokeswomen for iHeart and PJT declined to comment. Representatives of Franklin and Bain couldn't be reached for comment. .
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IHeart's bonds came under pressure on Thursday in reaction to the disclosure on the talks via an SEC filing, according to bondholders. The company's 11.25% priority guarantee notes due 2021 are down 0.50 points to 73.75 from 74.25 on Wednesday, according to MarketAxess.
The company is facing a number of deadlines in ongoing talks with creditors. The company may be in default if its auditors declare that it is no longer a going concern when it files its annual report in the second quarter of 2018. More than $640 million in bond debt is set to mature in the next year.
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(END) Dow Jones Newswires
October 26, 2017 17:32 ET (21:32 GMT)