iHeartCommunications, Inc., an indirect subsidiary of iHeartMedia, Inc. was given a temporary reprieve from its lenders, delaying an expected bankruptcy filing from the troubled communications firm. The company entered into a Forbearance Agreement with respect to the Credit Agreement, dated as of May 13, 2008 with Citibank, N.A., as administrative agent, swing line lender and letter of credit issuer.
As previously disclosed, iHeartCommunications has engaged in discussions with its stakeholders with respect to the restructuring of its capital structure. In connection with such discussions, iHeartMedia and iHeartCommunications have been working on a proposed draft restructuring support agreement and related proposed draft restructuring term sheet with advisors to groups of iHeartCommunications’ noteholders, lenders and equity holders.
The company, which has debt of more than $20 billion, is expected to file Chapter 11 as early as this week. According to published reports, much of iHeart’s debt stems from its 2008 leveraged buyout by Boston private equity firms Bain Capital Partners and Thomas H. Lee Partners. Prior to the acquisition, the company had $18.8 billion in assets and $5.2 billion in long-term debt.
Pursuant to the Forbearance Agreement, the Consenting Lenders agreed to temporarily forbear from accelerating the obligations under the Credit Agreement or otherwise exercising any rights or remedies thereunder as a result of any actual or prospective event of default under Section 8.01(e) of the Credit Agreement resulting from iHeartCommunications’ failure to make an interest payment beyond the applicable grace period with respect to its 14.00% Senior Notes due 2021 that was originally due on February 1, 2018. The forbearance became effective upon all parties’ execution thereof and will terminate immediately and automatically upon the earliest to occur of (i) March 7, 2018 at 11:59 p.m. Central time and (ii) an event of default under the Credit Agreement other than those that resulted in the entry into the Forbearance Agreement.
Pursuant to the Forbearance Agreement, iHeartCommunications agreed to not make payments on account of any indebtedness or obligations under the indentures governing iHeartCommunications’ legacy notes and iHeartCommunications’ 14.00% Senior Notes due 2021 during the Forbearance Period.