iHeartMedia’s Thin Skin on Corporate Finances

A funny thing happened just hours after I posted last week’s update on iHeartMedia’s dance with bankruptcy earlier this year: I got an e-mail from a PR flack contesting my analysis. But it wasn’t just any flack — it was Wendy Goldberg, iHeart’s chief communications officer. She was displeased with several points I made.

To begin, Goldberg asserted that I had misconstrued the timeline of events surrounding the company’s near-default. Instead, iHeart conducted a pre-emptive strike against “a small group of lenders” who planned to call in some $6 billion of the company’s $20+ billion outstanding debt burden within 60 days. (This would indeed have immediately tipped the company into default.) Secondly, my she called my assertion that this close call, in my words, worried “the market that the conglomerate is just steps away from bankruptcy” was seemingly, in her words, “confused at best, and speculation at worst.”

Finally, Goldberg took umbrage with my contention that iHeartMedia remains near the precipice: “I am assuming this is your own opinion or speculation, and if so you should either couch it as such or remove it.” Read More

iHeartMedia Seeks Pounds of Flesh for Bankruptcy Pressure

After fending off one legal challenge that would’ve sent the company into default, the nation’s largest radio conglomerate now seeks a spot of revenge.

iHeartMedia is heading back to a Texas courtroom in hopes of getting mega-damages out of a consortium of investors who went after the company, serving a notice of default for playing fast and loose with its $20+ billion worth of debt — a strategy which involves iHeart setting up shell companies to repurchase some of the debt it already owes at lower interest rates, while also working to shield some assets from potential creditors. The conglomerate filed suit to stop the default process, and the Bexar County judge sided with iHeart in May. Read More

iHeartMedia Dodges Bankruptcy, Option Remains

iHeartMedia’s lawyers are probably very happy to see May in their rearview mirrors, after dodging a bullet in a Texas courtroom last week. A friendly judge barred the company’s creditors from seeking notices of default on some $6 billion of iHeart’s $21 billion in corporate debt, racked up primarily from pillaging the radio industry over the last 20 years.

iHeart’s creditors were attempting to call out the company for constructing a shell game in an attempt to keep its debt from crushing it. They noticed last year that the company had begun transferring hundreds of millions of dollars in assets to two “independent” subsidiaries named Broader Media and CC Finco. In simple terms, having already borrowed tens of billions against hundreds of stations, thousands of billboards, and countless other media ventures, iHeart moved some of those assets to “new” corporate parents, thereby creating “new” value against which to borrow even more money. Even better, this shuffle protected those assets against existing debt claims. Read More