iHEART OF THE MATTER

Malone floats offer

John Malone’s 11th-hour bid for embattled radio giant iHeartMedia is likely to fall on deaf ears, a source close to the situation said.

The $1.16 billion offer from Malone’s Liberty Media for a 40 percent stake in a restructured iHeart faces an uphill battle because it undervalues the owner of 850 stations, the source said.

If no deal is reached, iHeart is likely to file for Chapter 11 reorganization on March 3, the source said.

“There is a 98 percent chance there will be a bankruptcy,” said the source, who emphasized that it is not what he is hoping for.

Liberty, which controls satellite broadcaster SiriusXM, announced its offer for iHeart, which owns Z100 and 103.5 KTU in New York, in a regulatory filing on Monday.

In the wake of the offer, iHeart’s $6.3 billion in term loans rose in value Monday from 75 cents to 78 cents.

Liberty’s offer values iHeart at $7.5 billion, a source said. Senior creditors of the company, led by Franklin Resources, believe the radio operator, led by Chief Executive Bob Pittman (pictured), is worth 12 percent more, or roughly $8.5 billion, the source said.

“I don’t think Liberty has enough time to get the support they need,” the source said.

Liberty has not even started speaking to key creditors yet to gain their support, the source said. “The timing would have been better had this offer come one month ago.”

iHeart owes $20 billion in debt and, on Feb. 1, skipped an interest payment.

The San Antonio company will go into default when the grace period for that payment ends Friday.

The biggest iHeart creditor, Franklin, is offering iHeart’s private equity owners — Bain Capital and Thomas H. Lee Partners — about a 1 percent recovery on their $4 billion equity investment if they agree to an outof-court or prepack restructuring, the source said.

The owners instead want about a 4 percent recovery in such a restructuring.

In a straight-up Chapter 11, the owners will be wiped out.

“It’s hard for me to understand what Bain is doing,” the source said.

Since 2017, Bain has watched its Gymboree and Toys ‘R’ Us file for bankruptcy.

Liberty Media President and CEO Greg Maffei believes in terrestrial radio, and even if he does not buy iHeart now may bag the company later in a bankruptcy process, the source said.

Franklin and iHeart declined to comment. Liberty did not return calls.