iHeartMedia falls into bankruptcy seeking to restructure massive debt load.
Radio and media giant iHeartMedia ran out of options as it struggled with over $16 billion of debt and was forced in chapter 11. The company will seek to cut around $10 billion of debt in an agreement reached with holders of over $10 billion in debt. However, the agreement must be approved by the court, and it is likely that it will face opposition from other creditors in iHeartMedia’s complex capital structure.
The company’s proposed restructuring would, if approved by the court, separate iHeartMedia and non-debtor affiliate Clear Channel Outdoor Holdings and give certain senior secured lenders all of iHeartMedia’s ownership interests in Clear Channel Outdoors and all debt and equity of reorganized iHeart. Reorganized iHeart would have a new debt of $5.75 billion upon emergence with a five- to seven-year maturity.
As of the filing, a group of noteholders with about $190 million of notes does not support the plan. It is possible others will join the noteholders to fight the plan.
Read Senior VP and Treasurer Brian Coleman’s declaration in support of the first-day motions here.
View the Chapter 11 Petition here.
Zohar Funds end up in bankruptcy to sell businesses without threat of lawsuits.
Lynn Tilton’s three Zohar funds filed for chapter 11 protection to shield it from the litigation preventing the company from refinancing and selling certain portfolio companies. The Zohar funds contains numerous business in its portfolio including MD Helicopters, Rand McNally and Stila Cosmetics, among others. The Zohar funds, led by Tilton have been tied up in litigation for years in connection with the controversial ways of using structured debt vehicles to finance distressed companies. At the time of the filing, Tilton was fighting lawsuits from bond insurer MBIA.
Tilton believes the protection afforded by chapter 11 will unlock value of the funds with refinancings and sales of portfolio companies. The filing indicates that it all creditors, including Tilton, which has invested $218.5 million, are expected to be paid in full, with interest. However, the plan already faces opposition from certain investors.
As of the filing, the outstanding debt comprised $436.5 million of Zohar I notes, $960 million of Zohar II notes and $987 million of Zohar III notes for a total of roughly $2.38 billion. Total assets are listed between $1 billion and $10 billion.
Read owner and sole director, Lynn Tilton’s declaration in support of the first-day motions here.
View the Chapter 11 Petition here.
Weight loss drug maker Orexigen aims to sell business in bankruptcy.
Orexigen Therapeutics, maker of the number one prescribed weight-loss pill Contrave, is seeking to use chapter 11 to sell the business at auction. Despite the success of Contrave, Orexigen has experienced losses due to the high costs of clinical development.
The case will be funded by a $35 million new-money loan from certain lenders and the company will proceed with an auction for the business’s assets. No stalking horse bidder was identified, but the company stated there were many parties interested in bidding on the assets. The sale is anticipated to conclude by July.
At the time of the filing, Orexigen had roughly $230 million in outstanding funded debt and $38 million in outstanding trade payables, among other things.
Read President and CEO Michael A. Narachi’s declaration in support of the first day motions here.
View the Chapter 11 Petition here.
