The inevitable time has come for one of the largest American entertainment companies after drowning in $20 million in debt.
iHeart Radio has officially filed for Chapter 11 bankruptcy late Wednesday. According to their statement on their website, the company has “reached an agreement in principle with holders of more than $10 billion of its outstanding debt and its financial sponsors."
The significant amount of debt has been growing since 2008 which took part of a leveraged buyout with Clear Channel Outdoor.
The agreement will reduce their debt in half to $10 million. While the discount is significant, iHeart has a long road ahead of them.
Even though the company has filed for Chapter 11, it doesn't necessarily mean they will be shutting down right away. In fact, they claim that they will “continue operating the business in the ordinary course as a leading global multi-platform media, entertainment, and data company."
"The agreement we announced today ... allows us to definitively address the more than $20 billion in debt that has burdened our capital structure," iHeartMedia CEO Bob Pittman said in a statement.
Apparently, the company has enough cash to sustain themselves as they go through the Chapter 11 proceedings.
iHeart is the operator of 850 stations across the United States. It's based out of San Antonio and previously called Clear Channel.
"We believe there is still inherent value in the traditional radio broadcasting sector, but balance sheets will continue to need to be right-sized to support the underlying economics of the industry," analyst Sharon Bonelli of Fitch Ratings said.
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