During the penultimate full week of December, the iHeartMedia cooperation group, advised by PJT Partners and Jones Day, hosted a two-day meeting in San Francisco (complete with breakout sessions), according to sources. In addition to the cooperation group, in attendance at the meeting were the term loan group represented by Ducera and Arnold & Porter Kaye Scholer, a legacy noteholder group represented by White & Case and the 14% noteholder group represented by GLC Advisors and Gibson Dunn, according to sources. iHeart faces a Jan. 15 bond maturity on its $51.5 million of 10% senior notes (which traded at 100 today, according to TRACE), a Feb. 1 coupon payment on its $1.76 billion of 14% 2021 notes and year-end financials (typically arriving in late February or early March), which the company’s auditor will need to evaluate to determine whether the company can continue as a going concern.

Although a proposal to restructure iHeartMedia’s $15.5 billion in debt was not submitted to the company or its sponsors, Bain Capital and T.H. Lee, as a result of the San Francisco creditor meeting, sources in attendance told Reorg that, on the basis of various asks presented by creditors, there is less than a $100 million bid/ask between the bottom of the capital structure and the cooperation group.

According to sources, representatives from the legacy noteholder group indicated that they would need recovery in the range of low 50 cents on the dollar in order to consent to a restructuring transaction, and representatives from the 14% noteholder group said they would not take less than primary recovery in the mid-teens, in addition to warrants. Certain members of the cooperation group said they would not allow more than $400 million in value leakage to the bottom of the capital structure, but other members of the cooperation group said they would be willing to allow $475 million in value leakage on the basis of their understanding that the additional $75 million may get a deal done with creditors, sources said.

Because the out-of-court proposals have contemplated fully consensual transactions, and because lower consent thresholds are required in a chapter 11 scenario, creditors are contemplating a prepackaged in-court restructuring proposal, sources note. If creditors reach consensus, the stakeholders could then turn to negotiating what value distribution to the equity sponsors and public shareholders, if any, would look like. Chapter 11 plans typically require approval from just one-half in number, and two-thirds in amount, of each creditor class deemed eligible to vote. In terms of structure, the proposal discussions are focused on the spinoff transaction structure developed by the cooperation group’s advisors that would separate the iHeartMedia and Clear Channel Outdoor businesses in a taxable transaction while also mitigating the risk of giving rise to a taxable gain.

iHeart’s 14% notes last traded at 7.75 on Dec. 29, and the 7.25% legacy notes due 2027 last traded at 29.5 on Nov. 28, according to TRACE. The company’s PGN notes are trading in the 71/72 context, according to TRACE.

In conjunction with iHeart’s full-year financials, typically released in late February or early March, the company’s auditor will evaluate iHeart’s ability to continue as a going concern for a period not less than one year following the date of the financial statements being audited. The company’s management has stated in each quarterly report since adopting the FASB-issued ASU No. 2014-15 that it has determined that there is substantial doubt as to the company’s ability to continue as a going concern for a period of 12 months following each such report.

Advisors to each of the aforementioned creditor groups have also been in communication with the company and its advisors, Moelis & Co. and Kirkland & Ellis, as the creditor advisors complete due diligence under non-disclosure agreements. The cooperation group, which represents PGN note holdings and a majority of term loan holdings has held out from the company's outstanding exchange offers since April 2017.