Subject: RCN
iHeartCommunications Creditors Receive Restructuring Term Sheet From Liberty Media Corporation
NEW YORK, Feb. 26, 2018 /PRNewswire/ -- Certain iHeartCommunications, Inc. lenders and noteholders, today provided the following update regarding discussions concerning iHeartCommunications, Inc. ("iHeartCommunications" or "the Company").
On February 24, 2018, certain of the Company's lenders and noteholders received a term sheet for a restructuring of the Company from Liberty Media Corporation. A copy of the term sheet is below.
IHEARTMEDIA, INC.
RESTRUCTURING TERM SHEET
FEBRUARY 23, 2018
This term sheet (this "Term Sheet")1 sets forth the principal terms of the Restructuring of iHeartMedia, Inc. ("Parent") and the subsidiaries specified below (each, a "Debtor," and collectively, the "Company" or the "Debtors"), including the Plan to be filed and implemented in cases to be commenced by the Company under chapter 11 of the Bankruptcy Code (the "Chapter 11 Cases").
THIS TERM SHEET DOES NOT CONSTITUTE (NOR SHALL IT BE CONSTRUED AS) AN OFFER WITH RESPECT TO ANY SECURITIES OR A SOLICITATION OF ACCEPTANCES OR REJECTIONS AS TO ANY PLAN OF REORGANIZATION, IT BEING UNDERSTOOD THAT SUCH A SOLICITATION, IF ANY, ONLY WILL BE MADE IN COMPLIANCE WITH APPLICABLE PROVISIONS OF SECURITIES, BANKRUPTCY, AND/OR OTHER APPLICABLE LAWS. THIS TERM SHEET DOES NOT ADDRESS ALL TERMS THAT WOULD BE REQUIRED TO CONFIRM THE PLAN AND ENTRY INTO OR THE CREATION OF ANY BINDING AGREEMENT IS SUBJECT TO THE EXECUTION OF DEFINITIVE DOCUMENTATION IN FORM AND SUBSTANCE CONSISTENT WITH THIS TERM SHEET AND OTHERWISE REASONABLY SATISFACTORY IN ALL RESPECTS TO THE COMPANY AND LIBERTY MEDIA CORPORATION ("LIBERTY"). THIS TERM SHEET HAS BEEN PRODUCED FOR DISCUSSION AND SETTLEMENT PURPOSES ONLY AND IS SUBJECT TO THE PROVISIONS OF RULE 408 OF THE FEDERAL RULES OF EVIDENCE AND OTHER, SIMILAR APPLICABLE STATE AND FEDERAL RULES. THIS TERM SHEET AND THE INFORMATION CONTAINED HEREIN ARE STRICTLY CONFIDENTIAL AND MAY NOT BE SHARED WITH ANY OTHER PARTY ABSENT THE PRIOR WRITTEN CONSENT OF THE COMPANY AND LIBERTY, EXCEPT AS REQUIRED BY LAW. THE TERMS HEREIN ARE SUBJECT TO CONFIRMATORY DUE DILIGENCE BY LIBERTY, SIRIUS AND THEIR ADVISORS.
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General Terms | |
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The Debtors: |
(1) Parent (2) iHeartMedia Capital I, LLC ("Capital I") (3) iHeartMedia Capital II, LLC ("Capital II") (4) iHeartCommunications, Inc. ("Communications") (5) iHeartMedia Management Services, Inc. (6) Clear Channel Investments, Inc. (7) iHM Identity, Inc. (8) iHeartMedia Satellite Services, Inc. (9) Premiere Radio Networks, Inc. (10) Citicasters Co. (11) Cine Guarantors II, Inc. (12) Citicasters Licenses, L.P. (13) Critical Mass Media, Inc. (14) M Street Corporation (15) Clear Channel Broadcasting Licenses, Inc. (16) CC Broadcast Holdings, Inc. (17) iHeartMedia + Entertainment, Inc. (18) Terrestrial RF Licensing, Inc. (19) CC Licenses, LLC |
1 Capitalized terms used but not otherwise defined in the body of this Term Sheet have the meanings set forth in Annex 1 to this Term Sheet.
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(20) AMFM Operating Inc. (21) Katz Media Group, Inc. (22) Katz Communications, Inc. (23) Christal Radio Sales, Inc. (24) Katz Net Radio Sales, Inc. (25) Katz Millennium Sales & Marketing Inc. (26) AMFM Broadcasting, Inc. (27) AMFM Broadcasting Licenses, LLC (28) AMFM Texas, LLC (29) Capstar Radio Operating Company (30) AMFM Texas Licenses, LP (31) AMFM Radio Licenses, LLC (32) Capstar TX Limited Partnership (33) Clear Channel Holdings, Inc. (34) Clear Channel Mexico Holdings, Inc. (35) Clear Channel Real Estate, LLC (36) [any other entities necessary or appropriate to effectuate the restructuring] | |
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Petition Date: |
March [ ], 2018 |
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Classification of Claims and Interests: |
To be negotiated among the Company and its other economic constituencies but likely including:2 ABL Facility Claims: Approximately $[365] million in unpaid principal plus interest, fees, and other expenses under that certain ABL Facility, or any indebtedness refinancing that Facility. Senior Communications Claims: Approximately $[ ] billion in unpaid principal plus interest, fees, and other expenses under:
Secured Subsidiary Claims: Approximately $[ ] million in unpaid principal plus interest, fees, and other expenses under secured long-term obligations of Debtors other |
2 Final Plan structure and distributions to be acceptable to Liberty. For purposes of submitting this proposal, Liberty has assumed that it will sign a Restructuring Support Agreement along with the Company and other consenting creditors. This proposal is intended to work in concert with the Company's existing Restructuring Support Agreement discussions and in effect be added to that Plan. Accordingly, this proposal does not address every Claim classification in the Plan, but parties should presume that Liberty is familiar with, and does not have significant issues with, latest creditor proposals to the Company that have been publicly disclosed.
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than Communications. Unsecured Notes Claims: Approximately $[ ] billion in unpaid principal plus interest, fees, and other expenses under:
General Unsecured Claims: Approximately $[6] million in unpaid principal amount of General Unsecured Claims against the Company as of the Petition Date. Unsecured Subsidiary Claims: Approximately $[26] million in unpaid principal plus interest, fees, and other expenses under unsecured long-term obligations of Debtors other than Communications. CCO Intercompany Claims against Parent: [TBD] Debt Held by Company: [Company-held debt to be cancelled.] Intercompany Interests: All preferred stock, common stock, options, warrants, other rights to acquire any interests, and other equity interests, in a Debtor or an affiliate of a Debtor that are held by another Debtor or another affiliate of a Debtor. Existing Parent Interests: All preferred stock, common stock, options, warrants, other rights to acquire any interests, and other equity interests, in iHeartMedia.3 | |
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Venue: |
To be discussed. |
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New Cash Investment and Exit Financing | |
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New Cash Investment & Liberty Plan Distributions: |
On account of $1.159 billion new Cash investment in Communications under the Plan, Liberty and Sirius, collectively, will receive 40% of the New Common Shares. 20% of the New Common Shares shall be held by Sirius and 20% of the New Common Shares shall be held by Liberty. Notwithstanding the foregoing, the amount of the new Cash investment may be offset by Senior Communications Claims held by Liberty, in Liberty's sole discretion, on account of which Liberty will receive distributions solely in the form of New Common Shares. To the extent that holders of Senior Communications Claims are generally entitled to receive distributions in the form of Cash or other securities under the Plan, Liberty's pro rata share of such forms of distribution shall be deemed contributed to the remaining holders of Senior Communications Claims in exchange for Liberty's receipt of an equivalent value of New Common Shares at Plan value. |
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Investment and Restructuring Support Agreement: |
The Company and Liberty will enter into an investment and restructuring support agreement memorializing the terms of Liberty's new Cash investment in Communications in accordance with the terms set forth in this Term Sheet (such |
3 Equity class divisible into subclasses if appropriate.
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agreement, the "Investment Agreement"). The Investment Agreement will provide for, among other things, an equity commitment fee of 2.0%, a breakup fee of 3.0%, a no-shop obligation of the Debtors (subject to a fiduciary out), and provisions for the full and prompt payment of the reasonable and documented fees and out-of-pocket expenses of Millstein & Co., KPMG, Baker Botts LLP, and Weil, Gotshal & Manges LLP, as advisors to Liberty, incurred in connection with the Restructuring. The Investment Agreement will be expressly incorporated into and made part of the Plan. The Debtors will file a motion to assume the Investment Agreement and thereafter use reasonable best efforts to obtain the Bankruptcy Court's approval of such motion as promptly as possible. | |
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Implementation: |
Outdoor shall be spun off in a taxable transaction. Parties to cooperate to ensure transaction is taxable and otherwise done in a tax efficient manner. |
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Exit Financing: |
Assumes new secured exit financing, with gross proceeds of $5.250 billion.4 |
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Plan Treatment of Prepetition Claims and Interests | |
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Plan Treatment: |
Treatment of each Class to be negotiated among the Company and its other economic constituencies but consistent with the terms set forth in this Term Sheet. |
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Certain Other Terms | |
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Plan Milestones |
Plan to be consummated no later than December 21, 2018 and other interim milestones to be negotiated. |
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Definitive Documents: |
This Term Sheet is indicative, and any final agreement will be subject to the Definitive Documents. The Definitive Documents will contain terms, conditions, representations, warranties, and covenants, each customary for the transactions described herein, consistent with the terms of this Term Sheet, and acceptable to Liberty. |
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Funding for Chapter 11 Cases/Working Capital Requirements: |
The Debtors will use Cash collateral or obtain postpetition financing pursuant to terms agreed upon with their secured creditors and acceptable to Liberty. Liberty is willing to finance working capital needs in chapter 11 through a DIP facility. |
4 Terms of the Exit Financing TBD. Assumes ~5.2x pro forma net leverage with ~$500 million of excess cash generated by Radio businesses by end of 2018 to be distributed to holders of Senior Communications Claims under the Plan.
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Executory Contracts and Unexpired Leases: |
The Company reserves the right to reject certain executory contracts and unexpired leases subject to Liberty's consent. All executory contracts and unexpired leases not expressly rejected will be deemed assumed pursuant to the Plan.5 |
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Corporate Governance: |
See Annex 3. The members of the New Board shall be identified no later than the confirmation hearing or otherwise in accordance with section 1129(a)(5) of the Bankruptcy Code. On the Effective Date, the terms of the current members of the boards of directors of Parent, Capital I, Capital II, and Communications shall expire. The terms and conditions of the new corporate governance documents of the Reorganized Company (including the bylaws, certificates of incorporation, partnership agreements, and other organizational and governance documents) shall be acceptable to Liberty. |
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Cancellation of Existing Securities and Agreements |
Except as expressly provided in the Plan, on the Effective Date, all notes, instruments, and certificates evidencing debt of or equity interests in the Debtors, other than the ABL Facility, shall be deemed surrendered and cancelled, and all obligations of the Debtors thereunder shall be discharged. |
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Management Incentive Plan: |
The Plan will establish the MIP consistent with the terms set forth in the term sheet attached as Annex 2 hereto and acceptable to Liberty, but which will include 4% of the equity of Reorganized Communications to be issued in the form of restricted shares and 4% to be issued in the form of stock options of the equity of Reorganized Communication in a form and on terms to be negotiated. |
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Releases, Exculpation, and Indemnification: |
The Plan and Confirmation Order will provide for customary releases (including third- party releases), an exculpation, and indemnification provisions, in each case, to the fullest extent permitted by law, for the benefit of the Released Parties. |
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Injunction: |
The Plan will contain customary injunction provisions. |
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Securities Exemptions: |
The issuance and distribution under the Plan of (a) the New Common Communications Shares to Liberty and other parties in interest; (b) the new secured debt; and (c) the restricted stock and stock options issued under the MIP and the New Common Shares issuable upon exercise thereof, in each case, will be exempt from registration under the Securities Act or applicable securities laws without further act or action by any person pursuant to section 1145(a) of the Bankruptcy Code and/or any other applicable exemptions. |
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Conditions to Effectiveness: |
[Conditions to be discussed.] |
5 Subject to due diligence.
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Retention of Jurisdiction: |
The Plan will contain customary provisions for the retention of the Bankruptcy Court's jurisdiction. |
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Other Terms: |
The Plan will contain other provisions necessary or appropriate to implement the Restructuring consistent with this Term Sheet and acceptable to Liberty. |
Annex 1
Definitions
ABL Facility means that certain Credit Agreement, dated as of November 30, 2017, by and among iHeartCommunications, Inc., iHeartMedia Capital I, LLC, the subsidiary borrowers party thereto, TPG Specialty Lending, Inc., as Administrative Agent and Sole Lead Arranger, the other lenders and letter of credit issuers from time to time party thereto and other agents party thereto., and Wells Fargo Bank, National Association and PNC Bank, National Association, as Syndication Agents.
ABL Facility Claims means all Claims arising out of, related to, or in connection with the ABL Facility, or Claims relating to any indebtedness refinancing that Facility.
Bankruptcy Code means Title 11 of the United States Code.
Bankruptcy Court means the United States Bankruptcy Court for the [District TBD].
Bankruptcy Rules means the Federal Rules of Bankruptcy Procedure.
Capital I has the meaning ascribed to such term in the body of this Term Sheet. Capital II has the meaning ascribed to such term in the body of this Term Sheet. Cash means legal tender of the United States of America.
Chapter 11 Cases has the meaning ascribed to such term in the body of this Term Sheet.
Claim means a "claim," as defined in section 101(5) of the Bankruptcy Code, against a Debtor.
Class means a group of Claims or Interests classified by the Plan pursuant to section 1122(a)(1) of the Bankruptcy Code.
Communications has the meaning ascribed to such term in the body of this Term Sheet.
Company has the meaning ascribed to such term in the body of this Term Sheet.
Confirmation Hearing means the hearing to be held by the Bankruptcy Court regarding confirmation of the Plan, as such hearing may be from time to time adjourned or continued.
Confirmation Order means the order of the Bankruptcy Court confirming the Plan pursuant to section 1129 of the Bankruptcy Code, which must be in form and substance acceptable to Liberty in its sole discretion.
Debtor has the meaning ascribed to such term in the body of this Term Sheet.
Definitive Documents means the documents (including any related agreements, instruments, schedules, or exhibits) that are necessary or desirable to implement the Restructuring, including the Restructuring Support Agreement, the Plan (including any Plan Supplement(s)), the Disclosure Statement, any order of the Bankruptcy Court approving the Disclosure Statement, and the Confirmation Order, in each case on terms and conditions consistent with this Term Sheet and in form and substance acceptable to Liberty.
Disclosure Statement means the disclosure statement for the Plan, as may be supplemented from time to time, that is prepared and distributed in accordance with sections 1125, 1126(b), or 1145 of the Bankruptcy Code, Bankruptcy Rules 3016 and 3018, or other applicable law.
Effective Date means the date on which all conditions to the effectiveness of the Plan have been satisfied or waived in accordance with the terms of the Plan.
Estate means the estate of a Debtor created under section 541 of the Bankruptcy Code.
Existing Parent Interests means all Interests in Parent.
Final Order means an order, ruling, or judgment of the Bankruptcy Court (or other court of competent jurisdiction) that: (a) is in full force and effect; (b) is not stayed; and (c) is no longer subject to review, reversal, vacatur, modification, or amendment, whether by appeal or by writ of certiorari; provided, that the possibility that a motion under Federal rules of Civil Procedure 50 or 60 or any analogous Bankruptcy Rule (or any analogous rules applicable in such other court of competent jurisdiction) may be filed relating to such order, ruling, or judgment does not, without more, cause such order, ruling, or judgment not to be a Final Order.
General Unsecured Claim means [TBD]
Intercompany Claim means a Claim held by a Debtor.
Intercompany Interest means an Interest held by a Debtor or an affiliate of a Debtor.
Interest means any ownership interest in a Debtor, including all partnership interests, common stock or units, preferred stock or units, or other instrument evidencing an ownership interest in a Debtor, whether or not transferable and including any option, warrant, or other right, contractual or otherwise, to acquire any such interest in a Debtor that existed immediately before the Effective Date.
Investment Agreement has the meaning ascribed to such term in the body of this Term Sheet.
Liberty has the meaning ascribed to such term in the body of this Term Sheet.
MIP means the management incentive plan for Reorganized Communications, the principal terms of which are set forth on Annex 2 to this Term Sheet.
New Board means the board of directors of Reorganized Communications.
New Common Share means one of the common shares, par value $0.01 per share, of Reorganized Communications, to be issued and distributed under the Plan.
Outdoor means Clear Channel Outdoor Holdings, Inc.
Outdoor Common Shares means the Class A and Class B common stock of, and all other equity interests of the Debtors in, Outdoor.
Parent has the meaning ascribed to such term in the body of this Term Sheet.
Petition Date means the date on which the Chapter 11 Cases are commenced.
Plan means the joint chapter 11 plan for the Debtors, including all appendices, exhibits, schedules, and supplements thereto and any appendices, schedules, and supplements set forth in the Plan Supplement, in each case, as may be amended, supplemented, or otherwise modified from time to time in accordance with the Bankruptcy Code, the terms of this Term Sheet, and the consent of Liberty in its sole discretion.
Plan Supplement means a supplemental appendix to the Plan containing, among other things, (a) Reorganized Communications' certificate of incorporation; (b) Reorganized Communications' by-laws; (c) the Schedule of Assumed Contracts and Leases; (d) the Schedule of Rejected Contracts and Leases; and (e) information regarding the members of the New Board that is required by the disclosed in accordance with section 1129(a)(5) of the Bankruptcy Code.
Pro Rata means in the proportion that an Allowed Claim or Allowed Interest in a particular Class bears to the aggregate amount of Allowed Claims or Allowed Interests in such Class.
Released Parties means, collectively and in each case in its capacity as such: (a) the Debtors; (b) the Reorganized Debtors; (c) Liberty; (d) each Restructuring Support Party; and (e) the predecessors, successors, assigns, subsidiaries, affiliates, and managed accounts or funds of each of the foregoing, and all of their respective current and former officers, directors, principals, shareholders, members, partners, employees, agents, advisory board members, financial advisors, attorneys, accountants, investment bankers, consultants, representatives, management companies, fund advisors, and other professionals, and such persons' respective heirs, executors, estates, servants and nominees.
Reorganized means, with respect to a Debtor, such Debtor as reorganized as of the Effective Date in accordance with the Plan.
Restructuring means the financial restructuring of the Debtors, the principal terms of which are set forth in this Term Sheet.
Restructuring Support Agreement means that certain Restructuring Support Agreement, dated as of [date], by and among (a) the Debtors; (b) Liberty; (c) Bain Capital Partners, LLC; (d) Thomas H. Lee Partners, L.P.; and (e) [other parties TBD].
Restructuring Support Parties means the parties to the Restructuring Support Agreement.
Schedule of Assumed Contracts and Leases means the schedule, as may be amended, supplemented, or otherwise modified, of certain executory contracts and unexpired leases to be assumed by the Debtors pursuant to the Plan; provided, that such schedule shall be in form and substance acceptable to Liberty in its sole discretion.
Schedule of Rejected Contracts and Leases means the schedule, as may be amended, supplemented, or otherwise modified, of certain executory contracts and unexpired leases to be rejected by the Debtors pursuant to the Plan; provided, that such schedule shall be in form and substance acceptable to Liberty in its sole discretion.
Senior Communications Claims means all Claims arising out of, related to, or in connection with each series of term loans and secured notes issued by Communications.
Secured Subsidiary Claims means [TBD].
Term Sheet has the meaning ascribed to such term in the body of this Term Sheet.
Unimpaired means, with respect to a Claim, Interest, or Class of Claims or Interests, not "impaired," within the meaning of such term in sections 1123(a)(4) and 1124 of the Bankruptcy Code.
Unsecured Notes Claims means all Claims arising out of, related to, or in connection with each series of unsecured notes issued by Communications.
Unsecured Subsidiary Claims means [TBD].
Annex 2
MIP Term Sheet
[To be negotiated]
Annex 3
OVERVIEW OF GOVERNANCE TERMS
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Term |
Summary |
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Governance Rights | |
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Board Representation: |
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Approval Rights: |
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Liquidity Provisions | |
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Liquidity Rights: |
Liberty to have the following registration rights:
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Other Rights | |
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Preemptive Rights: |
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Section 203 Opt Out: |
Reorganized Communications shall opt out of Section 203 of the DGCL. |
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Poison Pill |
No poison pill. |
Contact
Julie Oakes
212-895-8697
SOURCE Certain iHeartCommunications, Inc. Lenders and Noteholders
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