iHeartMedia is the largest operator of radio stations in the United States. It counts more than 250 million listeners in its ranks.
The company, however, is so saddled with debt , it may be just one step ahead of bankruptcy. The group went on a buying spree grabbing 850 radio stations among other investments. To do so, it borrowed staggering amounts of money. According to its recent SEC filing, the company is currently $20 billion dollars in debt.
Nearly $350 million is due this year. $8.3 billion is due to be paid in 2019. At the same time, the company is projecting negative cash flow and is struggling to refinance the debts. It tried to refinance $14 billion dollars this year, but had no takers so far.
Marketwatch reports iHeartMedia posted a net loss of $240 million in 2016 – a dramatic improvement from a net loss of $737 million in 2015. That’s nearly a billion dollar net loss in the last two years with debt coming due.
The company believes it will need to disclose they aren’t sure whether they can be in business a year from now.
“Management anticipates that our financial statements to be issued for the three months ended March 31, 2017, will include disclosure indicating there will be substantial doubt as to our ability to continue as a going concern for a period of 12 months following the date the first quarter 2017 financial statements are issued.” – SEC filing on behalf of iHeartMedia
MarketWatch reports that Moody’s, which had already changed its rating of iHeartMedia to negative, suggested it might move it into the junk (Caa2) category.
NASDAQ DEFINITION: Obligations rated Caa2 are judged to be of poor standing and are subject to very high credit risk