NEW YORK — The nation’s leading audio content creation and distribution company has completed its previously announced “comprehensive exchange transactions” linked to a series of secured notes — pushing out the company’s loan repayments while reducing its total debt in a notable way.
As previously reported, debtholder approval of the plan was needed and reached successfully. This puts the wheels in motion on a swap of iHeartMedia subsidiary iHeartCommunications, Inc.’s outstanding 6.375% Senior Secured Notes due 2026; 5.25% Senior Secured Notes due 2027; 4.75% Senior Secured Notes due 2028; 8.375% Senior Notes due 2027; and senior secured term loans due 2026 for new 9.125% Senior Secured First Lien Notes due 2029; 7.750% Senior Secured First Lien Notes due 2030; 7.000% Senior Secured First Lien Notes due 2031; 10.875% Senior Secured Second Lien Notes due 2030 and senior secured first lien term loans due 2029, respectively.
RBR+TVBR noted in its prior coverage that the interest rates for the new notes are substantially higher, as iHeartMedia swaps out old debt for new debt. Yet, it reported on Monday that iHeartMedia has reduced its total debt “by over $440 million.”
What iHeartMedia isn’t saying is how the higher interest rates will impact its ability to eventually repay its lender, as approximately $4.8 billion (or 92.2%) of the aggregate principal amount of the Existing Debt participated in the Exchange Offers, which expired at 9am Eastern on December 18.
“As a result of the transactions, iHeartMedia has extended the vast majority of its debt maturities by three years,” the company said, adding that its consolidated annual net cash interest payments “are expected to remain relatively flat.”
Still, iHeartMedia’s considerable debt played a big role in a reduction-in-force initiative that gained considerable attention from local media across the U.S. where air personalities and programming staff were let go.
For iHeartMedia, “he completion of the Exchange Offers results in a strengthened capital structure that provides iHeartMedia with extended maturities which increases its flexibility to execute on its strategy and business initiatives.”
As of December 18 some $755.4 million (or 94.4%) of the aggregate principal amount of the 2026 Secured Notes, approximately $743.0 million (or 99.1%) of the aggregate principal amount of the 2027 Secured Notes, approximately $223.1 million (or 44.6%) of the aggregate principal amount of the 2028 Secured Notes, approximately $844.0 million (or 92.1%) of the aggregate principal amount of the Unsecured Notes, in each case, were tendered in the Exchange Offers and approximately $2,258.7 million (or 99.7%) of the aggregate principal amount of the Existing Term Loans participated in the Exchange Offers.
Simpson Thacher & Bartlett LLP served as counsel and PJT Partners served as financial advisor to the Company. Davis Polk & Wardwell LLP served as counsel and Perella Weinberg Partners served as financial advisor to an ad hoc group of certain of the holders of the Existing Debt.
— With reporting by RBR+TVBR in Dobbs Ferry, N.Y.
