According to the link in post #6, they own 38%. By far the largest owner of company stock.
The majority of their stock (25%) is listed as insider ownership. The rest is institutional.
-
Get involved.
We want your input!
Apply for Membership and join the conversations about everything related to broadcasting.
After we receive your registration, a moderator will review it. After your registration is approved, you will be permitted to post.
If you use a disposable or false email address, your registration will be rejected.
After your membership is approved, please take a minute to tell us a little bit about yourself.
https://www.radiodiscussions.com/forums/introduce-yourself.1088/
Thanks in advance and have fun!
RadioDiscussions Administrators
IHeart stock in a death spiral?
- Thread starter RadioGuy1864
- Start date
According to the link in post #6, they own 38%. By far the largest owner of company stock.
The majority of their stock (25%) is listed as insider ownership. The rest is institutional.
Thanks.
For Global's sake, I sure hope they are buying up some of the senior secured debt!
I found a formula error in Base Case from earlier. I ran the repayment test with a commencement date of 2024 as opposed to a commencement date of 2026, the probable year any Plan of Reorganization would take effect. I project unlevered free cash flow will be lower in 2026 than 2024, so this obviously has an impact on maximum loan size. As such, my earlier comment that $3.32 billion in senior debt would be supportable in my base case was incorrect. The correct figure is $2.69 billion.
I also ran a couple of conservative case scenarios from a debt load vantage point. Conservative scenario #1 assumes debt load is geared to theoretical capacity of free cash flow to repay debt by 2033 (approximately 7 years from reorganization date). Conservative scenario #2 assumes debt load is geared to theoretical capacity of free cash flow to repay debt by 2036 (approximately 10 years from reorganization date).
Because of the smaller debt amounts under these conservative scenarios, I reduce the 8.50% interest coupon used in my base case to 8.00% in conservative scenario #1 and to 8.25% in conservative scenario #2.
(In reality, it is extremely unlikely 100 percent of actual free cash flow would truly be used to prepay debt. These are strictly theoretical calculations often used in leveraged finance as a guide post.)
Under conservative scenario #1, a maximum debt load of $2.050 billion is supported.
Under conservative scenario #2, a maximum debt load of $2.190 billion is supported.
If senior secured debt holders were proposed to receive all or nearly all of 100% equity in a reorganized iHM as part of a reorganization plan, it would not surprise me if they are willing to express support for something similar to one of these smaller debt load scenarios as opposed to the $2.69 billion in my amended Base Case.
I also made one more major boo-boo (this is what happens when I do back-of-envelope financial analysis on a Saturday morning...LOL!):
The trading range of the current senior secured debt instruments to par value is mainly based on (a) the ratio of enterprise value ("EV") to current senior secured debt load and (b) interest coupon compared to the "market" coupon for other instruments of similar risk characteristics. The trading range is NOT based on the expected ratio of reorganized senior secured debt load to current senior secured debt load. Remember, senior secured debt holders are "first in line" with regard to satisfaction of claims in a BK case. If the enterprise value of the reorganized company is less than the value of the prepetition senior secured debt claims, then as noted earlier, senior secured debt claim holders can expect to receive 100 percent or nearly 100 percent of the equity in the reorganized company.
My estimated EV of $4.0 billion is equivalent to 93 percent of the current outstanding senior secured debt of $4.3 billion.
So, if the above proportion is 93 percent, why are the senior secured debt instruments only trading in the ~70s range?
- Many investors may have a more pessimistic view of EV than the one I expressed.
- Interest coupon is underpriced relative to debt instruments with a similar risk profile (this is certainly true with regard to the 6.375% 2026 notes, 5.25% 2027 notes, and 4.75% 2028 notes). I believe appropriate pricing would be closer to 8.50%.
For Global's sake, I sure hope they are buying up some of the senior secured debt!
I found a formula error in Base Case from earlier. I ran the repayment test with a commencement date of 2024 as opposed to a commencement date of 2026, the probable year any Plan of Reorganization would take effect. I project unlevered free cash flow will be lower in 2026 than 2024, so this obviously has an impact on maximum loan size. As such, my earlier comment that $3.32 billion in senior debt would be supportable in my base case was incorrect. The correct figure is $2.69 billion.
I also ran a couple of conservative case scenarios from a debt load vantage point. Conservative scenario #1 assumes debt load is geared to theoretical capacity of free cash flow to repay debt by 2033 (approximately 7 years from reorganization date). Conservative scenario #2 assumes debt load is geared to theoretical capacity of free cash flow to repay debt by 2036 (approximately 10 years from reorganization date).
Because of the smaller debt amounts under these conservative scenarios, I reduce the 8.50% interest coupon used in my base case to 8.00% in conservative scenario #1 and to 8.25% in conservative scenario #2.
(In reality, it is extremely unlikely 100 percent of actual free cash flow would truly be used to prepay debt. These are strictly theoretical calculations often used in leveraged finance as a guide post.)
Under conservative scenario #1, a maximum debt load of $2.050 billion is supported.
Under conservative scenario #2, a maximum debt load of $2.190 billion is supported.
If senior secured debt holders were proposed to receive all or nearly all of 100% equity in a reorganized iHM as part of a reorganization plan, it would not surprise me if they are willing to express support for something similar to one of these smaller debt load scenarios as opposed to the $2.69 billion in my amended Base Case.
I also made one more major boo-boo (this is what happens when I do back-of-envelope financial analysis on a Saturday morning...LOL!):
The trading range of the current senior secured debt instruments to par value is mainly based on (a) the ratio of enterprise value ("EV") to current senior secured debt load and (b) interest coupon compared to the "market" coupon for other instruments of similar risk characteristics. The trading range is NOT based on the expected ratio of reorganized senior secured debt load to current senior secured debt load. Remember, senior secured debt holders are "first in line" with regard to satisfaction of claims in a BK case. If the enterprise value of the reorganized company is less than the value of the prepetition senior secured debt claims, then as noted earlier, senior secured debt claim holders can expect to receive 100 percent or nearly 100 percent of the equity in the reorganized company.
My estimated EV of $4.0 billion is equivalent to 93 percent of the current outstanding senior secured debt of $4.3 billion.
So, if the above proportion is 93 percent, why are the senior secured debt instruments only trading in the ~70s range?
- Many investors may have a more pessimistic view of EV than the one I expressed.
- Interest coupon is underpriced relative to debt instruments with a similar risk profile (this is certainly true with regard to the 6.375% 2026 notes, 5.25% 2027 notes, and 4.75% 2028 notes). I believe appropriate pricing would be closer to 8.50%.
Last edited:
Thanks for the thoughtful analysis Mark. I feel like I just earned some MBA credit!
Global has been very active with iHeart. At one point (2021) they were interested in buying half of the company. Most recently, they did an international podcast distribution deal:
iHeartMedia and Global Sign Multi-Year Podcast Partnership Deal in the UK, Ireland and USA
So they're doing their part to improve company value.
The perspective you presented is important to understanding how these companies operate. The easy way to look at it is from the programming view. If they just changed a few formats, they might make more money. But when you look at the finances, you get a better picture of what they're doing and why. Great stuff!
The Associated Press names iHeartMedia a "zombie company" in a story describing "companies so laden with debt that they are just stumbling by on the brink of survival."
AP notes, "Radio giant iHeartMedia, after exiting bankruptcy five years ago with less debt, is still struggling to pay what it owes by unloading real estate and radio towers. Its stock has fallen from $16.50 to $1.10 in five years."
apnews.com
AP notes, "Radio giant iHeartMedia, after exiting bankruptcy five years ago with less debt, is still struggling to pay what it owes by unloading real estate and radio towers. Its stock has fallen from $16.50 to $1.10 in five years."
Zombies: Ranks of world's most debt-hobbled companies are soaring, and not all will survive
They are called zombies, companies so laden with debt that they are just stumbling by on the brink of survival, barely able to pay even the interest on their loans and often just a bad business hit away from dying off for good.
apnews.com
Poorly researched article that reads like click-bait. iHeart sold its towers ten years ago.
iHeartMedia, Inc. Announces Sale of a Select Portfolio of Its Radio Towers to Vertical Bridge for $400 Million
iHeartMedia is a leading global media and entertainment company specializing in radio, digital, mobile, social, live events and on-demand entertainment.
Is this a bad economy for media? Yes. Everyone is laying off staff and unloading real estate. Even the big tech companies.
- Status