In all industries themes will come forward and some organizations will run with them. In the radio business, a consolidation of radio stations went forth and iHeart ended up with 849 radio stations. However the big problem was establishing the chain meant using debt. iHeart Media according to Tom Hals of Reuter over $20 billion in debt. The company started with one radio station in San Antonio, Texas where its headquarters is still located. The company had $3.58 billion in revenue, reached 217 million radio listeners. The company sells advertising on digital platforms, live concerts and syndicated programs.

The company spent $1.4 billion on interest payments and has more than $8 billion in debt maturities by the end of 2019. Bond holders – if they are secured and owed $13 billion accepted $5.6 billion in new notes and 94% of the equity in the reorganized company. The creditors also took 89.5% in Clear Channel Outdoor Holdings – the world’s largest billboard company.

The junior debt holders who are owed $2 billion took 5% of the company and $200 million in new notes. The existing shareholders would receive 1% of the company.

Linking to dividend paying stocks, the example above shows the pecking order when too much debt is with a company. The secured bondholders take the lion’s share, the junior bondholders are left little and generally are mad; and the existing shareholders are left with almost nothing. It is why if the company is having difficulty paying their debt it is time to look for alternatives quickly.

There are more questions than answers, till the next time – to raising questions.