iHeartMedia announced this morning that it has entered into agreements with the lenders and holders of approximately 80% of the aggregate principal amount of its existing debt including 77% of the aggregate principal amount of its outstanding senior secured notes due 2026, 79% of the aggregate principal amount of its outstanding senior secured notes due 2027, 38% of the aggregate principal amount of its outstanding senior secured notes due 2028, 71% of the aggregate principal amount of its outstanding senior unsecured notes due 2027, and 92% of the aggregate principal amount of its outstanding term loans.
The deals will extend the maturity of the company’s existing debt by three years through one of two transactions. The first will bee structured that if certain thresholds of holder participation are met, iHeart will issue new secured debt in exchange for the existing debt held by participating holders. The second says if certain thresholds of holder participation are not met, newly-formed subsidiaries of the company holding certain transferred assets and an intercompany note (to be issued by iHeartMedia + Entertainment, Inc.) will issue new secured debt in exchange for the existing debt held by participating holders.
President/COO/CFO Rich Bressler said in the company’s earnings report, “We’re happy to announce that we have entered into a Transaction Support Agreement with a group of debt holders representing, on an aggregate basis, approximately 80% of the Company’s outstanding debt to support an exchange of approximately $4.1 billion of debt for new notes and term loans. The exchange offers will extend maturities by three years; keep consolidated annual cash interest essentially flat; and provide debt reduction – all of which will strengthen the Company’s financial flexibility, and provide us with the runway to accelerate our strategic growth initiatives. This marks a significant step in iHeart’s strategy of disciplined balance sheet and capital structure management.”
iHeart also confirmed the company’s ongoing restructuring and staff cuts as part of a “cost program” expected to generate $150 million of annual cost savings in 2025. Cost reductions from earlier this year will generate another $50 million in savings in 2025, but ffset by $50 million of cost increases for 2025.
Chairman/CEO Bob Pittman said, “We’re pleased to report that our third quarter results were in line with our previously provided Adjusted EBITDA and Revenue guidance ranges. We continue to see evidence that this is a recovery year for advertising revenues, and the strong momentum in our podcast business, our digital ex-podcast business, and the sequential improvement of our Multiplatform Group’s year over year revenue performance reflect the power of our unparalleled reach, consumer relationships and range of assets.” Pittman continued, “Technology is the key to increasing our operating leverage because it allows us to speed up processes, streamline legacy systems, and enables us to take another significant step in our modernization journey. We have flattened our organization, eliminated redundancies and broken down silos, which will have a major impact on costs, expected to generate $200 million of annual savings in 2025 compared to 2024, and benefiting full year 2025 Adjusted EBITDA by $150 million on a year over year basis.”
The company’s earnings report showed.
Q3 2024 Consolidated Results
- Q3 Revenue of $1,008 million, up 5.8%; within guidance of up mid-single digits
- Excluding Q3 Political Revenue, Q3 Revenue up 2.0%
- GAAP Operating income of $77 million vs. $69 million in Q3 2023
- Consolidated Adjusted EBITDA of $205 million, within previously disclosed guidance range of $200 million to $220 million, compared to $204 million in Q3 2023
- Cash provided by operating activities of $103 million
- Free Cash Flow of $73 million
- Cash balance and total available liquidity 2 of $432 million and $858 million, respectively, as of September 30, 2024
Q3 2024 Digital Audio Group Results
- Digital Audio Group Revenue of $301 million up 13%
- Podcast Revenue of $114 million up 11%
- Digital Revenue excluding Podcast of $187 million up 14%
- Segment Adjusted EBITDA of $100 million up 7%
- Digital Audio Group Adjusted EBITDA margin of 33.2%
Q3 2024 Multiplatform Group Results
- Multiplatform Group Revenue of $620 million down 1%
- Excluding Multiplatform Group Q3 Political Revenue, Multiplatform Group Q3 Revenue down 3%
- Segment Adjusted EBITDA of $130 million down 20%
- Multiplatform Group Adjusted EBITDA margin of 21.0%
Guidance
- Q4 Consolidated Revenue expected to increase in the high-single digits
- Full Year 2024 Consolidated Revenue expected to increase in the mid-single digits
- Q4 Consolidated Adjusted EBITDA 3 expected to be approximately $290 million, up approximately 39%
- Full Year 2024 Consolidated Adjusted EBITDA 3 expected to be approximately $750 million, up approximately 8%
- Full Year 2025 Consolidated Revenue expected to be approximately flat in a non-political year
- Full Year 2025 Consolidated Adjusted EBITDA 3 expected to be approximately $770 million, up approximately 3% in a non-political year
Simpson Thacher & Bartlett LLP served as counsel and PJT Partners served as financial advisor to the Company. Davis Polk & Wardwell LLP served as counsel and Perella Weinberg Partners served as financial advisor to an ad hoc group of certain of the Initial Supporting Holders.
This story first appeared on radioinsight.com