The Clear Channel bankruptcy plan

As pointed to be Tom Taylor’s news letter:

SEC Filing

This is proposed pre-packaged bankruptcy. In a Chapter 11 bankruptcy, normally there is an entity called the “Debtor in possession”. The DIP agrees to put up the money to keep the company running while the bankruptcy process is negotiated.

In return for putting up their short term loans and priority debt, for $5.55 billion, that group will get all of Clear Channel’s assets, including the outdoor advertising business and transit advertising in Europe. They will get about 95% of the “New” Clear Channel stock.

The junior debt holders will get $200 million in debt, 5% of the new stock, and warrants that would be valuable if/when the new iHeart stock takes off.

The reality is that iHeart is cash flow positive if the interest on the debt is not paid. The DIP is mainly a formality to manage the process.

I am not a bankruptcy attorney, so do not take any of the above as advice. It is not certain this will be the actual plan until it goes to a judge, but the SEC being informed suggests this will really happen.

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3 Responses to The Clear Channel bankruptcy plan

  1. Fred Stiening says:

    John Malone, the man who swooped in and saved SiriusXM has made an offer to swoop in and take over Clear Channel Radio. He would contribute about $1.1 billion in cash and spin off the Clear Channel Outdoors billboard company. He and SiriusXM would wind up owning 40% of the “new” Clear Channel.

    https://www.wsj.com/articles/liberty-media-makes-a-play-for-radio-giant-iheart-1519686930

    Combining Clear Channel, SiriusXM and Pandora would be a huge deal. If I was a lender being squeezed in bankruptcy, taking equity in a new Clear Channel would make me much more comfortable than continuing to hold ownership in the same company run by the same people. I’m on board.

    • CC1s121LrBGT says:

      It makes a lot of sense. iHeart has a number of non-commercial HD2 streams such as their 80s channel that are broadcast in multiple cities and streamed via their app – very similar to Sirius XM’s music programming except that that that have no DJs and Sirius XM does. As a stream, they are more like Pandora except that they are not able to be customized. Sirius XM also has something in-between, many of their music channels allow you to customize them to alter the mix of music to make it more to your liking.

      I could see the programming costs clapsing by the takeover. How? Similar to what I heard just last week on a talk radio stream. The station had not sold any advertising for a national commercial break and played an old Rolling Stones song. I was shocked but love that practice!

      The new entity could do what the WSJ does with its Marketwatch subsidiary – offer some content both places, the Marketplace site has ads and the WSJ site does not. Some content is on Marketwatch, but some is only “premium” and available behind the paywall.

      BTW- I am not a WSJ subscriber so I could only read the first two paragraphs. I wonder if it was a “free” article when you posted it. I have shared free articles with friends via email, gotten a reply and clicked on the same link to reread something only to find that that they had moved the article to behind the paywall. The expiration of “free”. 😉

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