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iHeartMedia Creditors Extend Forbearance Agreement

Spencer Osborne profile picture
Spencer Osborne


  • iHeartMedia creditors agree to extend agreement to March 12th.
  • iHeart is struggling with a possible bankruptcy filing.
  • Negotiations have 3 business days to wrap up.

iHeartMedia (NASDAQ:IHRT) investors may find themselves in for a long weekend as the company and its creditors agreed to extend a forbearance agreement until March 12 at 11:59 PM. The original agreement expired on March 7 at 11:59 PM. iHeart made the new agreement public on March 8 via an 8K filing with the SEC.

iHeart is saddled with substantial debt and missed a payment last month, which brought the concept of bankruptcy closer to reality than it has been over the past year. iHeart has had continued pressure mounting because of its debt obligations, and various negotiations over the past year have not resolved the matter.

Active players in the story of late are Liberty Media ([[LSXMA]], [[LSXMK]]) and satellite radio provider SiriusXM (SIRI). Liberty and SiriusXM have teamed up to offer relief in exchange for a 40% stake in iHeart (20% to Liberty and 20% to SiriusXM). In an effort to gain more leverage, Liberty Media has acquired $400 million in iHeartMedia's debt. Currently the Liberty/SiriusXM offer would put $1.16 billion on the table. A term sheet Liberty produced outlines many of the nuts and bolts of the offer. The term sheet holds to many of the parameters iHeart was already working on with creditors, and thus could gain support. This is especially true when Liberty indicated earlier this week it was willing to offer more to get the deal done.

In my opinion, there is likely a path to the finish line that will involve Liberty and SiriusXM. These entities bring a lot to the table in terms of knowing the media space, which is not something some of the banking creditors possess on their own.

I see the initial extension to March 7, and this new extension to March 12, as an indication that negotiations are progressing to

This article was written by

Spencer Osborne profile picture
Spencer Osborne assesses equities in a data supported realistic manner that is often missing in analysis that the average retail investor receives. His analysis is what investors NEED to hear rather than what they WANT to hear. He believes that the foundation of an equity price is based on what is probable rather than what is possible, and the trade focuses on possible near term catalysts and news. Smart investing is understanding how the market works and how that market mentality impacts a given equity. Spencer believes that investors should model their expectations and maintain a critical eye on whether those expectations are being met. If an invesor finds herself making excuses for missing the mark, then they are losing objectivity.

Analyst’s Disclosure: I am/we are long LSXMA, LSXMK, SIRI. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.

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Comments (53)

Mr. Osborne Can you please explain how it's going to be possible that Liberty/Sirius is going to take over Iheart media?....And I think if they do that it would be wonderful for SIRI.....Do you agree with me? If not please tell me why......Thank you Ron
Bloomberg -
iHeart Creditors Are Said to Be Open to Bids Including Liberty's

ThankYou MUSCLE 13 for that article, it was a great help.....Thanks Again Ron......
SeattleGoldMiner profile picture
As A C Vandelay had pointed out earlier in this thread, the term sheet calls for current shareholders of iHeart to get 1% (reduced by dilution of stock given as "incentives" to management) in the "new" iHeart (which will not contain the Clear Channel Outdoor Holdings).

They are merely throwing a "bone" to current equity holders to shut them up, as, they really don't need to give them anything if any of the classes above equity (Debt, loans, claims etc.) are "impaired" (and they most certainly are.)

It is my estimate that this will be worth MUCH less than what the stock is currently trading for and might be worth less than a thin dime.
WSJ - iHeart lawyer Christopher Marcus told Judge Marvin Isgur Thursday the company will weigh “expressions of interest,” including a possible buyout from John Malone’s Liberty Media Corp. Mr. Malone’s Liberty Media, which owns satellite-radio leader Sirius XM Holdings Inc., had been circling iHeartMedia before the bankruptcy filing, offering to pump $1.16 billion into the broadcaster in return for a 40% stake. Liberty has also bought up iHeart debt to have a say in its restructuring.

Bloomberg - Among creditors is Malone’s Liberty Media, which controls satellite radio giant SiriusXM. Liberty Media accumulated a position in iHeart’s debt in recent months with an eye on gaining a stake in the radio business. Liberty sought to break the logjam in negotiations late in February by offering new capital and loans in return for a 40 percent stake, and has said it’s willing to go higher. JCDecaux SA, the world’s biggest outdoor-advertising agency, also has expressed interest in buying some of Clear Channel’s assets.

Liberty Media
While Liberty isn’t mentioned directly in the restructuring documents, the agreement leaves room for potential bids by third parties and analysts have said iHeart holders probably haven’t heard the last of Liberty’s offer.

Speaking on a March 1 earnings call, Liberty Chief Executive Officer Greg Maffei cited “substantial synergies” between the ailing iHeart and two other Malone investments: the majority-owned satellite radio giant SiriusXM Holdings Inc. and Pandora Media Inc., the online music company where Liberty took a minority position last year. IHeart has its own streaming service. IHeart and Pandora, meanwhile, could share advertising technology and sales forces, Maffei said. IHeart’s is larger than those at Pandora and Sirius, he said.

A price of $.59/shr implies a post bankruptcy EV of over $11B.
New debt of $5.75B plus (92M current shares x $.59 x 100)
That is more than 10X EBITDA---which is a big premium to where ETM is trading right now
Whomever is buying is going to loose some dough........
Why would ihrt be up this AM if they are going to declare chap 11???
LOL Amazing! Market knows something nobody else does???
iHeartMedia Files for Bankruptcy http://bit.ly/2FLY2gi
Spotify going after smart speakers too

By the way anybody who is thinking that Spotify will dominate On Demand music should watch out for Apple, which is growing music subs at a faster rate. Spotify doesn't have a lock on that business.
Love the Sirius Pandora iHeart radio strategy in the new age of smart speakers. But this iHeart bankruptcy is taking it's time isn't it....zzzzzzzz
This is getting boring...
Another 24-Hour Extension For IHeart To Finalize Restructuring Deal

When SIRI was within hours of defaulting and bankruptcy, Malone and Liberty worked magic. I don’t think the debt numbers were as dramatic then for SIRI as it is now for IHRT but who knows? Maybe based on decades of performance and acumen, Malone and Liberty can do the same here. If I hear an announcement that a resolution that does not require any bankruptcy of any kind, I may very well bet on Malone again. Maybe lightning does strike more than once in the same spot?!
Spencer Osborne profile picture

Liberty proposal requires bk
13 Mar. 2018
I don't see any benefit to waiting to file bankruptcy if that is what Liberty really wants. if it is true that they are the largest holder of debt, then they are going to be in the driver's seat in bankruptcy. the negotiations could easily continue in bankruptcy without any downside to Liberty.
Bankruptcy is a certainty here----they are just trying to work out the details before filing. I can't see how the current common stock at $.49/shr makes any sense. At 8X EBITDA on a proforma $1.1B---the current common stock is worth about $.33/shr

There is a meaningful possibility that current shareholders get nothing----how do they receive more?
Any insights would be appreciated
The latest term sheet calls for current equity holders to get 1% of the new equity (pre-dilution for mgmt incentive shares).
I bought SIRI shares AFTER Malone and Liberty saved SIRI from bankruptcy. My purchases of the shares happened a day or two after the save back in Feb 09. I might follow same practice here as opposed to buying before this is resolved.
13 Mar. 2018
I am of the opinion that bankruptcy is not going to happen. If it was going to, it already would have. Creditors are likely willing to extend payment schedules, defer payments and perhaps even reduce principal amounts outstanding - it beats getting literally pennies on the dollar. I would rather have $.85 on the dollar versus $.10 on the dollar (not actual numbers, just for illustration purposes). Malone gives the creditors a shot of confidence.

I purchased a small speculative position last week. I was, and am, willing to back up my thesis with my money. If we get through today, I might purchase another small block.

Tinker from Gabelli says LSXMA is worth $69. Crockett from FBR said $62. Here is Gabelli's video http://bit.ly/2Gojxoz
Is there any reason to consider a position in IHRT stock before anything is finalized?
iHeartMedia, Consenting Lenders Agree to 24-Hour Extension to Forbearance Agreement

This link not working Muscle...FYI
Inside Radio - http://bit.ly/2tEH8i0
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