Item 1.01 Entry into a Material Definitive Agreement
On November 22, 2019, iHeartCommunications, Inc. ("iHeartCommunications"), an
indirect, wholly-owned subsidiary of iHeartMedia, Inc. (the "Company"),
completed the sale of $500,000,000 in aggregate principal amount of 4.75% Senior
Secured Notes due 2028 (the "Notes") in a private placement to qualified
institutional buyers under Rule 144A under the Securities Act of 1933, as
amended (the "Securities Act"), and to persons outside the United States
pursuant to Regulation S under the Securities Act. iHeartCommunications used the
net proceeds from the Notes, together with cash on hand, to prepay at par
$500,000,000 of borrowings outstanding under its term loan facility (the "Term
Loan Facility").
The Notes were issued pursuant to an indenture, dated as of November 22, 2019
(the "Indenture"), by and among iHeartCommunications, iHeartMedia Capital I,
LLC, iHeartCommunications' direct parent (the "Parent Guarantor"), the
subsidiary guarantors party thereto (collectively with the Parent Guarantor, the
"Guarantors"), and U.S. Bank National Association, a national banking
association, as trustee and as collateral agent. The Notes mature on January 15,
2028 and bear interest at a rate of 4.75% per annum. Interest will be payable
semi-annually on January 15 and July 15 of each year, beginning on July 15,
2020.
The Notes are guaranteed on a senior secured basis by the Parent Guarantor and
the subsidiaries of iHeartCommunications that guarantee the Term Loan Facility.
The Notes and the related guarantees are secured, subject to permitted liens and
certain other exceptions, by a first priority lien on the capital stock of
iHeartCommunications and substantially all of the assets of iHeartCommunications
and the Guarantors (the "Notes Collateral"), other than accounts receivable and
related assets (the "ABL Collateral"), and by a second priority lien on accounts
receivable and related assets securing iHeartCommunications' asset-based
revolving credit facility (the "ABL Facility").
The Notes and the related guarantees rank equally in right of payment with all
of iHeartCommunications' and the Guarantors' existing and future indebtedness
that is not expressly subordinated to the Notes (including the Term Loan
Facility, iHeartCommunications' 5.25% Senior Secured Notes due 2027 and 6.375%
Senior Secured Notes due 2026 (together, the "Existing Secured Notes") and
iHeartCommunications' 8.375% Senior Notes due 2027), effectively equal with
iHeartCommunications' and the Guarantors' existing and future indebtedness
secured by a first priority lien on the Notes Collateral (including the Term
Loan Facility and the Existing Secured Notes) to the extent of the value of such
collateral, effectively subordinated to all of iHeartCommunications' and the
Guarantors' existing and future indebtedness that is secured by ABL Collateral
(including the ABL Facility) to the extent of the value of such collateral, and
structurally subordinated to all existing and future indebtedness and other
liabilities of any subsidiary of iHeartCommunications that is not a guarantor of
the Notes.
iHeartCommunications may redeem the Notes at its option, in whole or part, at
any time prior to January 15, 2023, at a price equal to 100% of the principal
amount of the Notes redeemed, plus a make-whole premium, plus accrued and unpaid
interest to the redemption date. iHeartCommunications may redeem the Notes, in
whole or in part, on or after January 15, 2023, at the redemption prices set
forth in the Indenture plus accrued and unpaid interest to the redemption date.
At any time on or before November 15, 2022, iHeartCommunications may elect to
redeem up to 40% of the aggregate principal amount of the Notes at a redemption
price equal to 104.75% of the principal amount thereof, plus accrued and unpaid
interest to the redemption date, with the net proceeds of one or more equity
offerings.
The Indenture contains covenants that limit the Parent Guarantor's ability and
the ability of its restricted subsidiaries to, among other things: (i) incur or
guarantee additional debt or issue certain preferred stock; (ii) redeem,
purchase or retire subordinated debt; (iii) make certain investments;
(iv) create restrictions on the payment of dividends or other amounts from the
Parent Guarantor's restricted subsidiaries; (v) enter into certain transactions
with affiliates; (vi) merge or consolidate with another person, or sell or
otherwise dispose of all or substantially all of their assets; (vii) sell
certain assets; (viii) designate the Parent Guarantor's subsidiaries as
unrestricted subsidiaries, and (ix) pay dividends, redeem or repurchase capital
stock or make other restricted payments
The description of the Notes and the Indenture contained in this Current Report
on Form 8-K is qualified in its entirety by reference to the complete text of
the Indenture and the Notes, copies of which are filed as Exhibits 4.1 and 4.2
hereto, respectively, and are incorporated herein by reference.
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Item 2.03. Creation of a Direct Financial Obligation or an Obligation under an
Off-Balance Sheet Arrangement of a Registrant.
The information set forth in Item 1.01 above is incorporated by reference into
this Item 2.03.
Item 8.01. Other Events.
On November 18, 2019, the Company issued a press release announcing the pricing
of the offering of the Notes. A copy of the press release is attached hereto as
Exhibit 99.1 and is incorporated in this Item 8.01 by reference.
In connection with the pricing of the Notes, on November 18, 2019,
iHeartCommunications and the Guarantors entered into a Purchase Agreement with
Morgan Stanley & Co. LLC, relating to the issuance and sale of the Notes. The
Purchase Agreement contained customary representations, warranties and
agreements by iHeartCommunications and the Guarantors, and customary conditions
to closing, indemnification obligations of iHeartCommunications and the
Guarantors, including for liabilities under the Securities Act, other
obligations of the parties and termination provisions.
Item 9.01 Financial Statements and Exhibits
Exhibit
No. Description
4.1 Indenture, dated as of November 22, 2019, by and among
iHeartCommunications, Inc., the guarantors party thereto and U.S.
Bank National Association, as trustee and as collateral agent.
4.2 Form of 4.75% Senior Secured Notes due 2028 (incorporated by
reference to Exhibit A to Exhibit 4.1 filed herewith).
99.1 Press Release issued by iHeartMedia, Inc. dated November 18,
2019.
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