IHeartMedia Inc filed for Chapter 11 bankruptcy this Thursday as the largest U.S. radio station owner reached an in-principle agreement with creditors to more than halve its $20 billion in debt.
The company said it reached the agreement with holders of more than $10 billion of its outstanding debt that would restructure its balance sheet by transferring 94 percent of the stock in the reorganized company to its lenders.
According to Reuters, IHeartMedia has struggled with debt that was taken on to finance a $17.9 billion leveraged buyout in 2008 of what was then Clear Channel Communications Inc. That deal led by Bain Capital LLC and Thomas H. Lee Partners LP closed just as a financial crisis began to undermine the U.S. economy.
In the years that followed, the operator of 849 radio stations has faced intensifying competition for advertisers and listeners from internet platforms such as music streaming services.
“The agreement … is a significant accomplishment, as it allows us to definitively address the more than $20 billion in debt that has burdened our capital structure,” Chief Executive Bob Pittman said in a statement.
The company, which traces its roots to the 1972 purchase of KEEZ-FM in San Antonio, Texas, where it is currently headquartered said it would fund the business and bankruptcy process from cash on hand and cash generated from operations.
It said in a statement it was seeking to maintain business as usual during the bankruptcy, and to “uphold its commitments” to its staff. It employs 12,400 people, according to court records.
The filing comes less than four months after Cumulus Media Inc, which operates 445 U.S. radio stations, filed for Chapter 11.