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iHeartMedia Reduces Debt Load, Extends Maturity Dates

iHeartMedia reduced its debt load and extended its maturity dates, reducing its debt by $440 million. S&P Global called it “tantamount to a default."

The end result is that the “vast majority” of the debt’s maturities have been extended by three years and annual cash interest payments are expected to remain “relatively flat,” according to a Monday (Dec. 23) press release. Ratings agency S&P Global called the debt restructuring “tantamount to a default” because “lenders will receive less than originally promised without offsetting adequate compensation.” Even though the new debt carries a higher interest rate, S&P believes “the rates are well below what the company would be required to pay for new capital under current market conditions and what an issuer with a similar risk profile would have to pay to raise new capital.” The agency lowered iHeartCommunications’ rating to “SD” (selective default) from “CC” and dropped the issue-level rating on iHeartCommunications’ senior secured and unsecured debt to “D” from “CC.” That said, S&P Global admitted the exchange was beneficial because without the restructuring “there was a realistic possibility of a conventional default.”

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