Who Gets What in the iHeartMedia Bankruptcy Reorg?

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When iHeartMedia filed for Chapter 11 bankruptcy protection on March 14 in the face of $20 billion of debt, the company entered into a restructuring agreement with noteholders.

The debt originated from the 2008 leveraged buy out by Bain Capital, LLC and Thomas H. Lee Partners. Faced with stagnant revenue, competition from streaming music services, and huge interest payments, iHeart chose to miss an interest payment and work on a restructuring agreement with noteholders.

Now the question is, who gets what?

A list of iHeartMedia creditors shows trade payables in the tens of millions. One large creditor is Nielsen at $20.8 million—getting Nielsen ratings aren’t cheap—outside of three senior noteholders owed about $2 billion.

The downside for these companies is that trade credits are un-guaranteed and last in line for money recovered in a bankruptcy restructuring. iHeartMedia owes millions for the performance of sound recordings.

SoundExchange, the collection agency for digital performance royalties, is owed $6.4 million; iHeartRadio owes money for its spins on radio simulcasts, Pandora-like Internet radio, and its on-demand streaming service. Two major labels are owed money, Warner Music Group ($3.9 million) and Universal Music Group ($3.9 million).

iHeartMedia has a long list of payables to radio companies: Cumulus Media ($5.6 million), CBS Corp ($3.3 million), Hubbard Broadcasting ($2.4 million), Univision ($1.6 million), Beasley Broadcast Group ($1.5 million), and Urban One ($1.4 million).

Cox Media Group, a contract counterparty, is owed $5 million The most significant losers are the note holders.

The restructuring agreement has reduced about $20 million of debt to roughly $11 million.

But Noteholders will get 99 percent of the equity in iHeartMedia and 100 percent of equity in Clear Channel Outdoor Holdings, the financially stable sister company that sells outdoor advertising. Existing equity owners will get a combined one percent of the equity in CCOH. The information on accounts payable to credits comes from an article at Radio+Television Business Report.