{"id":15211,"date":"2016-05-19T05:45:06","date_gmt":"2016-05-19T09:45:06","guid":{"rendered":"http:\/\/streamingradioguide.com\/startingover\/?p=15211"},"modified":"2016-05-19T05:45:06","modified_gmt":"2016-05-19T09:45:06","slug":"ihearts-final-days","status":"publish","type":"post","link":"https:\/\/streamingradioguide.com\/startingover\/?p=15211","title":{"rendered":"Iheart’s final days"},"content":{"rendered":"

Tom Taylor led his newsletter with this SEC filing<\/a><\/p>\n

Coinciding with their court date and attempt to convince the judge in Texas that they are negotiating in good faith, the board of Directors added two new members, both with recent experience in companies with financial problems.<\/p>\n

Iheart has been complaining to the judge that the lenders circulating rumors of bankruptcy is hurting its ability to hire DJs, imperiling the viability of the company. For now, free pizza on Fridays is still working, but that might not last forever. The $150 million a month in interest on the debt pile might mean no more breakfast bagels for the troops.<\/p>\n

In the midst of the existential threat, you don’t change the board of directors without a reason. The two Private Equity firms Thomas H Lee and Bain (“Mitt Romney”) Capital “own” the company, but only in the sense that they represent interests of the $20B in debt, the real “owners”.<\/p>\n

There is one group of debt holders who directly moved to put IHeart in default, and the secondary group that would be crushed indirectly in the event the company is declared in default and entire chunks of debt become immediately due on demand.<\/p>\n

The way involuntary bankruptcy works today, having negative owner equity of $6 billion and little other that intangible assets isn’t enough to force bankruptcy – as long as you are paying your bills and meeting your current interest obligations. A company can initiate voluntary bankruptcy, usually in the form of a “prepackaged” bankruptcy where enough creditors sign off on the plan. That avoids a more arbitrary resolution imposed by the bankruptcy judge who perhaps doesn’t understand the business.<\/p>\n

Adding two new board members suggests the PE firms were given an “or else”. It is in everyone’s best interest to avoid a chaotic bloodbath. After 7 years, the company has as much debt and a lot fewer assets. Everyone realizes haircuts are coming. Two outsiders can perhaps satisfy creditors that deals being proposed are not just defending prior bad deals.<\/p>\n

Worry within the industry is some drastic restructuring of Iheart will spread to other radio companies like Cumulus and derail CBS’s plan to spin off its radio business. Any lender who doesn’t know the radio business is in trouble isn’t paying attention.<\/p>\n","protected":false},"excerpt":{"rendered":"

Tom Taylor led his newsletter with this SEC filing Coinciding with their court date and attempt to convince the judge in Texas that they are negotiating in good faith, the board of Directors added two new members, both with recent … Continue reading →<\/span><\/a><\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[1],"tags":[],"class_list":["post-15211","post","type-post","status-publish","format-standard","hentry","category-uncategorized"],"_links":{"self":[{"href":"https:\/\/streamingradioguide.com\/startingover\/index.php?rest_route=\/wp\/v2\/posts\/15211","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/streamingradioguide.com\/startingover\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/streamingradioguide.com\/startingover\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/streamingradioguide.com\/startingover\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/streamingradioguide.com\/startingover\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=15211"}],"version-history":[{"count":3,"href":"https:\/\/streamingradioguide.com\/startingover\/index.php?rest_route=\/wp\/v2\/posts\/15211\/revisions"}],"predecessor-version":[{"id":15214,"href":"https:\/\/streamingradioguide.com\/startingover\/index.php?rest_route=\/wp\/v2\/posts\/15211\/revisions\/15214"}],"wp:attachment":[{"href":"https:\/\/streamingradioguide.com\/startingover\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=15211"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/streamingradioguide.com\/startingover\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=15211"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/streamingradioguide.com\/startingover\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=15211"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}