(Bloomberg) -- A group of iHeartMedia Inc. bondholders intends to fight a proposed debt exchange offer, potentially setting the stage for a hostile debt restructuring, according to people with knowledge of the situation.
The bondholders, who are being advised by law firm Akin Gump Strauss Hauer & Feld have started to make preparations to fight the exchange in court, said the people, who asked not to be identified discussing private talks.
The radio and podcast company has said that if it can’t persuade holders of at least 95% of the pertinent bonds and term loans to accept the debt exchange’s terms, it would shift to an alternative plan in which iHeart would effectively move collateral outside the reach of its creditors.
An agreement on the debt swap was disclosed last week but has yet to be launched. IHeart said on Nov. 7 that holders of about 80% of various bonds and term loans agreed to extend maturities by three years. By far the lowest support total of the debt involved was the 2028 bond at 38%.
The investor group alleges the offer runs afoul of the 2028 note’s terms and applicable law, plus doesn’t provide equal treatment across debtholders, said the people, who asked not to identified discussing a private matter. They added the bond’s holders are in the process of replacing the note’s trustee — US Bancorp — which is generally viewed as precursor to litigation.
A representative with iHeart declined to comment, while messages left with Akin and US Bancorp were not returned.
©2024 Bloomberg L.P.