FREQUENCY’S OFF
Creditors could force iHeartMedia restructure
Two creditors of iHeartMedia, including Lloyd Blankfein’s Goldman Sachs, are expected to put the squeeze on the debtladen radio giant — a move that could make it a lot harder for its private equity owners to keep the music playing.
Goldman and hedge fund Canyon Capital Advisors are putting together a group of senior lenders to pressure the company to use a $196 million dividend it will receive Jan. 4 to pay down their debt — and not that of junior bondholders, The Post has learned.
The lenders, in their gutsy move, are claiming the dividend — which will come from Clear Channel Outdoor, which is 90 percent owned by the radio giant — is restricted and belongs to them, a source very close to the matter said.
San Antoniobased iHeart, which owns 850 stations, has $193 million in bond payments due in 2016. Senior creditors are due to be paid later.
The power play could lead to a soonerthanexpected financial restructuring of the entire moneylosing radio colossus, said the source, who also noted the possibility it could lead to a court battle over the payment.
“I could see a court case happening. The first liens are unhappy with things,” a source said.
With 245 million monthly listeners, iHeartMedia has the largest reach of any US radio
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and television outlet.
However, the Bob Pittmanled company is losing money and, with the highyield market crashing, may find it difficult to simply amend and extend its $20 billion in debt.
Los Angelesbased Canyon on Tuesday held a conference call with senior lenders and asked them to contact their le gal eagles at Jones Day if they would like to join its adhoc group, the source said.
A source familiar with the call told The Post that Goldman, too, was making calls — although a second source close to the Wall Street bank insisted it was not a part of any group.
There are already lenders holding about $2 billion of iHeart’s $12.8 billion in senior loans that have joined the dissident group, a source said.
Canyon recently sent a letter to iHeart’s management team saying they do not have the right to claim $196 million of dividends, a source said.
Canyon, whose founders learned their trade at nowdefunct Drexel Burnham, earlier this month wrote a letter to Yahoo!’s board to demand it explore a sale.
Formerly known as Clear Channel Communications, iHeartMedia was taken over by Thomas H. Lee Partners and Bain Capital in a nearly $25 billion buyout at the peak of the market in 2008.
The PE firms have succeeded in continually amending the balance sheet to extend the huge pile of debt.
Revenue fell slightly in the nine months ended Sept. 30, to $4.5 billion. The net loss shrank a bit, to $661 million.
Meanwhile, some less senior debt, which traded at more than 80 cents in January, is now down in the 30s range.
“In our view, it’s clearly not a sustainable capital structure,” a second lender said.
Senior lenders, who are likely to get paid in full in any restructuring, do not want to see the company spend more money paying junior lenders or covering the $80 million cash flow shortfall iHeart is projected to lose next year, which jumps to $120 million in 2017.
If the power play sparks a restructuring, it could succeed in reducing the company’s interest expenses and help it to break even, a source said.
Goldman and iHeart declined to comment. Canyon could not be reached for comment.