John Malone’s Liberty Media offers to prop up tottering radio giant iHeartMedia with $1.16 billion

John Malone’s Liberty Media has swooped in as a potential white knight for iHeartMedia Inc. to help the biggest U.S. radio broadcaster ease its crushing debt load of more than $20 billion.

Douglas County-based Liberty’s proposed deal could link some of the biggest assets in music entertainment, bringing together traditional and satellite radio stations, online services and live events. Plans call for Liberty and Sirius XM Holdings Inc. to sponsor iHeart through a Chapter 11 bankruptcy in exchange for a 40 percent stake, according to a news release. Sirius, which is mostly owned by Liberty, operates the largest satellite radio company. In addition to its land-based radio network, iHeart runs a streaming music service and a division that stages concerts and festivals.

IHeart is strapped for cash in part because of debts run up by Bain Capital and Thomas H. Lee Partners after a 2008 leveraged buyout. Malone’s Liberty empire and Sirius would chip in $1.16 billion in new money, with an assumption that iHeart would also get exit financing with $5.25 billion in gross proceeds, according to the plan. Liberty also would offer a loan to keep iHeart in business during the bankruptcy process, according to the statement.

“It’s certainly positive that you have a strategic investor coming in here and willing to buy the equity, the lowest part of the capital structure,” said Philip Brendel, a credit analyst who follows distressed companies for Bloomberg Intelligence. But it’s also a distraction, albeit a positive one, because IHeart and its key creditors were likely close to finishing details on their existing reorganization plan, Brendel said.

Some of iHeart’s debt, which has traded at deeply distressed prices, rallied as prospects for getting repaid improved. The San Antonio, Texas-based company already missed a bond payment Feb. 1, putting it on a 30-day countdown to a default. Representatives for Liberty and Bain didn’t respond to messages seeking comment.

Officials at iHeart and Thomas H. Lee declined to comment. IHeart has more than 850 stations nationwide and 24 in Colorado, including KOA NewsRadio (850 AM), 95.7 The Party, 93.3 KTCL and 97.3 KBCO.


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