iHeartMedia Inc

Current report

Our substantial indebtedness may adversely affect our financial health and operating flexibility. If we are unable to consummate the transactions contemplated by the Transaction Support Agreement, our financial condition and future operations may be adversely affected.

Current report

We currently have a $450.0 million undrawn senior secured asset-based revolving credit facility that matures in 2027, $4.3 billion in principal amount of secured debt, $3.1 billion of which matures in 2026, and $916.4 million in principal amount of unsecured debt that matures in 2027. This substantial amount of indebtedness could have important consequences to us, including:

Current report

•increasing our vulnerability to adverse general economic, industry, or competitive developments;

Current report

•requiring us to dedicate a more substantial portion of our cash flows from operations to payments on our indebtedness, thereby reducing the availability of our cash flows to fund working capital, investments, acquisitions, capital expenditures, and other general corporate purposes;

Current report

•limiting our ability to make required payments under our existing contractual commitments, including our existing long-term indebtedness;

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•requiring us to sell certain assets;

Current report

•restricting us from making strategic investments, including acquisitions, or causing us to make non-strategic divestitures;

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•causing us to incur substantial fees from time to time in connection with debt amendments or refinancings;

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•increasing our exposure to rising interest rates because a substantial portion of our borrowings is at variable interest rates; and

Current report

•limiting our ability to borrow additional funds or to borrow on terms that are satisfactory to us.

Current report

On November 6, 2024, we entered into a Transaction Support Agreement (the “TSA”) with certain lenders and holders (or their managers, advisors, or sub-advisors) of iHeartCommunications' outstanding notes and term loans (collectively, the “Supporting Holders”). The Supporting Holders represent approximately 80% of the aggregate principal amount of iHeartCommunications’ outstanding notes and term loans (collectively, the “Existing Debt”).

Current report

We and the Supporting Holders have agreed to the terms of, and to support, (i) exchange offer transactions that will be offered to all holders of the Existing Debt, consisting of two alternative exchange transaction structures, each of which will extend the maturity of the Existing Debt tendered in the exchange offer transactions by three years and (ii) concurrent consent solicitations to amend certain provisions in the indentures and credit agreement governing the Existing Debt. In the first transaction structure, if certain thresholds of holder participation are met, iHeartCommunications will issue new secured debt in exchange for the Existing Debt held by participating holders. Alternatively, 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., a wholly owned subsidiary of iHeartCommunications) will issue new secured debt in exchange for the Existing Debt held by participating holders.

Current report

There can be no assurance that we will complete the transactions contemplated by the TSA and if we do, whether we will obtain the benefits we expect therefrom. If we are unable to consummate the transactions contemplated by the TSA or otherwise generate sufficient cash flow to repay or refinance our debt on favorable terms, it could significantly and adversely affect our financial condition and the value of our outstanding debt. Our ability to restructure or refinance our debt will depend on the condition of the capital markets and our financial condition. Any refinancing of our debt could be at higher interest rates and may require us to comply with more onerous covenants, which could further restrict our business operations.

Current report

The agreements governing the secured notes and term loans contemplated under the TSA will contain covenants restricting our or our subsidiaries’ ability to, among other things, incur additional indebtedness, create liens on assets, engage in mergers, consolidations, liquidations and dissolutions, sell assets, pay dividends and distributions, make investments, loans, or advances, prepay certain junior indebtedness, engage in certain transactions with affiliates, amend material agreements governing certain junior indebtedness, and change lines of business. Although the covenants in our financing agreements are subject to various exceptions, these covenants are more restrictive than under our current financing agreements and we cannot assure you that these covenants will not adversely affect our ability to finance future operations, capital needs, or to engage in other activities that may be in our best interest. In addition, in certain circumstances, our long-term debt may require us to maintain specified financial ratios, which may require that we take action to reduce our debt or to act in a manner contrary to our business objectives. A breach of any of these covenants could result in a default under our financing agreements.

Current report

In addition, we may be able to incur additional indebtedness in the future. To the extent we incur additional indebtedness, the risks associated with our leverage described above would increase.

Current report

The transactions contemplated by the TSA may not be consummated as scheduled or at all, and even if such transactions are consummated, we may not achieve their anticipated benefits.

Current report

We expect that the completion of the transactions contemplated by the TSA, if consummated, will result in a strengthened financial position, providing us with additional flexibility to execute on our strategy and business initiatives. However, transactions contemplated by the TSA are subject to the satisfaction of certain conditions and the TSA may be terminated under certain circumstances, including, among others, (i) a material breach by us or our subsidiaries party thereto of any of our representations, warranties, covenants or obligations set forth in the TSA that remains uncured within five business days after receipt of written notice; (ii) the occurrence and continuation, beyond any grace or cure period, of any events of default under our existing indentures and credit agreement; (iii) the occurrence of any event or condition (other than relating to the transactions or as contemplated under the TSA) that has had or would be reasonably expected to have a material adverse effect on our business, operations, assets or liabilities; or (iv) the issuance by any governmental authority of any final, unappealable ruling or order making illegal or otherwise permanently enjoining, preventing or prohibiting the consummation of a material portion of the transactions. In addition, if the closing date of the transactions contemplated by the TSA does not occur prior to December 31, 2024, unless such date is extended in accordance with the terms of the TSA, the TSA will automatically terminate.

Current report

As a result, any or all of the transactions may not be consummated as originally scheduled or at all. Accordingly, we may not be able to realize the expected benefits from these transactions on a timely basis or at all. Even if we are successful in completing the transactions contemplated by the TSA, we may not realize some or all of the expected benefits from such transactions. We have incurred, and will continue to incur, significant costs, expenses and fees for professional services and other transaction costs in connection with the transactions contemplated by the TSA, and these fees and costs are payable by us regardless of whether such transactions are consummated.