On Tuesday, iHeartMedia and its private-equity sponsors presented a restructuring proposal to principal members from, and advisors to, both the term loan and PGN holdout group represented by PJT and Jones Day and the term loan lender group represented by Ducera and Arnold & Porter Kaye Scholer, according to sources. The groups, which signed non-disclosure agreements in order to review the company’s proposal, are expected to be cleansed by an SEC filing this week, sources say, adding that the parties are continuing to pursue an out-of-court restructuring.

The iHeart proposal counters the holdout group’s restructuring proposal presented earlier this month, which contemplates a separation of the iHeartMedia and Clear Channel Outdoor businesses in a taxable transaction. While iHeart’s counter-proposal works off the structure contemplated in the PJT/Jones Day group proposal, it is subject to company advisors Moelis and Kirkland completing further due diligence on how the taxable spinoff of the iHeartMedia and Clear Channel Outdoor businesses contemplated in the PJT/Jones Day structure would mitigate the risk of the transaction resulting in a taxable gain, according to sources. The company has disclosed that it estimates, on the basis of certain assumptions, that a “taxable disposition of all of iHeartMedia Inc.’s interest in Clear Channel Outdoor Holdings, Inc. would give rise to taxable gain in excess of $3.7 billion,” but PJT and Jones Day maintain that their proposal would minimize the risk of giving rise to that taxable gain, sources note.

Among the changes to the holdout proposal that are included in the company’s counterproposal is a significant increase of the proposed amount of equity value that would go to the company’s public and private shareholders and iHeart creditors that are not term loan lenders and PGN noteholders, sources note. The restructuring proposed by the PJT/Jones Day group would hand PGN noteholders and term loan lenders the majority of equity in both companies, leaving a remaining pool of iHeart and Clear Channel equity value - which would total approximately $300 million in aggregate - to iHeartMedia’s remaining creditors (including the legacy notes and 14% unsecured notes) as well as both public shareholders and the private-equity sponsors, Bain Capital and Thomas H. Lee. While advisors to the holdout group have indicated that they expect the amount of the remaining equity value pool to increase from their proposal, the bid/ask remains wide between what the company proposes for the size of that equity pool in its counter and what the holdout group is willing to contemplate, sources note. As in the PJT/Jones Day proposal, the Clear Channel capital structure would remain in place under the company’s counter, according to sources.

The PJT/Jones Day group represents a majority of the company’s term loan holdings and has been operating under a cooperation agreement to hold out from the company’s outstanding exchange offers since April. The Ducera/APKS group represents more than $1 billion of the company’s term loans, and it exchanged proposals with the company this summer.

The Ducera/APKS group and the company exchanged term sheets contemplating a holdco structure that, according to Ducera’s July 12 presentation, would keep majority equity control with the existing shareholders (and eliminate the risk of a taxable gain) but “reduce[] value leakage to existing equity holders to the benefit of creditors and prevent[] Sponsors from monetizing value until HoldCo debt is repaid.” Principal members of the Ducera/APKS group have signed NDAs and are currently performing due diligence for further negotiations, sources add.

As previously reported, GLC Advisors and Gibson Dunn, as advisors to a group of the company’s 14% unsecured noteholders, have been performing due diligence under non-disclosure agreements with iHeart.

The PJT/Jones Day holdout group’s proposed restructuring contemplates a consensual transaction that would require participation from all of the company’s existing creditors, including those not currently involved in negotiations.