IHRT 14 02/01/21

Publicly traded companies mentioned herein: Clear Channel Outdoor Holdings Inc (CCO), iHeartMedia Inc (IHRT), Lamar Advertising Company (LAMR)

Highlights

The presenter briefly reviewed the history of the iHeartMedia (“IHRT”) situation, which dates back to 2006 when the Mays family agreed to sell the company to private equity firms Thomas H. Lee Partners and Bain Capital. What ended up being a poorly-timed, $19 billion LBO simply hasn't worked out and the company remains saddled with billions in debt (~$20 billion, as of March 2017, which is only slightly less than the amount of debt outstanding when the deal closed in 2008). He is now long the IHRT 14s (maturing 02/01/21), which are junior to the ~$14 billion of senior securities, but above Bain, TH Lee, and about $2 billion of equity. He believes the priority guarantee note (PGN) holders and other holders of the 14s are willing to do a deal because IHRT is at risk on a going concern basis, despite its business performing relatively well recently. In his opinion, “We are 9-10 months away from a resolution, at most (because of the massive amount of senior debt maturing in 2018 and 2019)”. It is known that the company is looking to exchange bonds and negotiate with creditors, and a bankruptcy could wipe out the equity for the sponsors. Based on the recent offering/ deal proposed, he sees at least 7 points of upside potential for the 14s, which “stand in between the sponsors seeing zero, or ~$2 billion”.