On Thursday, iHeartMedia Inc. filed for bankruptcy protection as the largest radio station owner in the U.S. was able to reach an agreement with its creditors for the restructuring of its huge debt load.
The company said that it had reached an agreement with the holders of over $10 billion in outstanding debt for balance sheet restructuring which would lower its overall debt by over $10 billion.
IHeartMedia, which struggled with more than $20 billion in debt and dropping revenue at the more than 858 radio stations it owns, said that cash on hand as well as cash generated from its ongoing operations would be sufficient to fund its business while it was in the bankruptcy process.
The agreement, said CEO Bob Pittman was a big accomplishment, as it allowed the company to address the over $20 billion in debt that it is burdened with.
This filing comes following a proposal February 26 by Liberty Media Corp’s John Malone of buying 40% in the restructured iHeartMedia group at a price of $1.16 billion.
Clear Channel Outdoor Holdings is a subsidiary of iHeartMedia and one of the largest billboard companies in the world, and its units remained outside the Chapter 11 filing.
iHeartMedia skipped an interest payment of $106 million February 1 which triggered a grace period of 30-days during which the business tried to complete a deal with bondholders.
On Monday it disclosed that it continued exchanging proposals with creditors, but no agreement had been reached.
Thomas H. Lee Partners and Bain Capital LLC control 68% of the iHeartMedia voting stock shows a recent annual report.
The two private equity firms were the leads in the leverage buyout of $17.9 billion from what was at the time Clear Channel Communications in 2008, at a time when the buyout boom had started to fade and as signs of the soon to hit financial crisis were beginning to emerge.
Shares of the company lost 75% of their value during the second six months of 2015 and have not recovered since. On Monday, the stock closed at just $0.48.
The roots of iHeartMedia can be traced back to the purchase in 1972 of KEEZ-FM from San Antonio, Texas, where the company currently keeps its headquarters. It also is the producer of syndicated radio shows featuring Ryan Seacrest the host of American Idol and political personalities such as Sean Hannity and Rush Limbaugh.
Over 14,300 people are employed by the company according to its 2016 annual report.