iHeartMedia given a final 24 hours to find debt solution

iHeartMedia’s creditors yesterday gave themselves another 24 hours to hammer out an agreement on its $20 billion debt.

It’s the third time that the parties have extended the time so they could continue discussions and nail a solution on how to restructure the embattled media and entertainment company to bring the debt down to $8.75 billion.

iHeartMedia is the broadcast company that owns internet radio station iHeartRadio.

The discussions are about spinning off iHeartMedia’s billboard and outdoor advertising division Clear Channel Outdoor Holdings.

Bondholders would receive both stock in Clear Channel and equity in a newly recapitalized iHeart, which could save the company.

Rival Liberty Media has offered to put in $1.16 billion for its financing needs in return for a 40% stake.

The latest, and presumably final, deadline is 11:59pm Tuesday night New York time, which is just past 2pm today Sydney time.

Analysts say the 24-hour deadline could mean two things.

Either they’re close to a deal, or they’re losing patience, and going for a bankruptcy solution which would lead to huge losses for them.

iHeartMedia set the 30-day clock ticking on a possible default when it failed to pay a $106 million interest payment on February 1.

When that 30-day window was about to close, the two sides gave themselves another 72 hours.

Meantime, iHeartMedia failed to deliver on a $138 million in interest payments.

IHeartMedia owns 855 US radio stations and a strong brand which includes a streaming service and a high profile awards event.

It has been operating under forbearance agreements with creditors off and on since 2011.

Its problem began when private equity firms Bain Capital and Thomas H. Lee Partners bought what was then called Clear Channel and financed the $20 billion deal with loans equal to nine times the company’s pre-tax cash flow.

Since then it’s struggled with repayment adding to a net loss of $300 million.