Wednesday, March 02, 2016

How Bad is iHeart's Debt?

It's even worse than I thought it was. From Tom Taylor's NOW column today...

Bloomberg says in the last full year under the Mays family, then-Clear Channel had net income of $938.5 million for 2007. That’s good. But that figure turned upside down following the mid-2008 go-private deal led by Bain Capital and Thomas H. Lee Partners. They financed it with a lot of debt, which is typical (“other people’s money”). Bloomberg says “in each year since then, the company has lost between $219.5 million and $4 billion, partly due to interest payments on its debt.” Looking ahead, Bloomberg says $193 million worth of notes mature this year, $230 million (in a revolver) come due in 2017, and what Bloomberg says is “more than $1 billion in obligations maturing in 2018, and $8.3 billion in bonds and term loans due in 2019.” Do Bain and THLPartners still have any equity in iHeart, or has that been wiped out? Probably the latter. In the dance being performed by the company and the lenders led by PJT Partners, there’s some debt that’s already trading very cheaply – like at one-third its face amount. Bloomberg says “the cheapest of the bonds being targeted for paydown…last traded at 32 cents on the dollar.”

Woah. Bain Capital, in case you don't remember, is Mitt Romney's outfit.