Lenders to IHeartMedia Inc have agreed to give the largest U.S. radio broadcaster through Wednesday to try to reach a deal to restructure its $20 billion in debt.
IHeartMedia, which owns 858 radio stations, skipped a $106 million interest payment last month, and a 30-day grace period expired.
The San Antonio, Texas-based company said in a regulatory filing on Monday that it reached a forbearance agreement with lenders that expires at 12:59 am EST Thursday (0559 GMT).
The company has been in talks with creditors for months, but said no agreement had been reached, although it continued to discuss a proposed term sheet.
IHeartMedia has been struggling with falling radio revenue and debt taken on to finance a $17.9 billion leveraged buyout in 2008 of what was then Clear Channel Communications Inc, a deal led by Bain Capital LLC and Thomas H. Lee Partners LP.
John Malone’s Liberty Media Corp proposed last week a deal to buy a 40 percent stake in a restructured iHeartMedia for $1.16 billion, uniting the company with Liberty’s Sirius XM Holdings Inc satellite radio provider.
Liberty Media on Friday priced a private offering of $400 million in debt that was expected to close on Tuesday.
IHeartMedia disclosed a draft restructuring proposal that would given holders of secured loans, who are owed nearly $13 billion, $5.6 billion in new debt and 93.25 percent of the equity in a reorganized iHeartMedia. These creditors also would receive iHeartMedia’s 89.5 percent stake in Clear Channel Outdoor Holdings Inc, one of the world’s largest billboard companies.
Holders of unsecured notes, who are owed about $2.2 billion, would receive $200 million in new debt and 5 percent of the equity in a reorganized iHeartMedia.
The proposal would have allowed current equity holders to receive 1.75 percent of the equity in a reorganized iHeartMedia.
Bain Capital and Thomas H. Lee Partners control 68 percent of the voting stock of iHeartMedia, according to the company’s most recent annual report.
The pink sheet shares of iHeartMedia, whose syndicated programs feature “American Idol” host Ryan Seacrest and political personalities Rush Limbaugh and Sean Hannity, were up about 11 percent at 5 cents in Monday morning trade.