(Bloomberg) -- GSO Capital Partners, which played a key role in restructuring talks over iHeartMedia Inc.’s debt, exited its position as the biggest U.S. radio broadcaster headed toward a bankruptcy filing, according to people with knowledge of the matter.
The credit unit of Blackstone Group sold roughly $400 million of iHeart debt to billionaire John Malone’s Liberty Media, said the people, asking not to be identified because the information is private. Malone’s company accumulated a position in the debt to inject itself into restructuring talks for iHeart in an effort to take control of its radio business.
GSO along with Franklin Resources had until recently been the leading force in a senior lender group negotiating with iHeart. The company’s talks with holders have extended well over a year without a resolution.
A spokeswoman for GSO declined to comment and a representative for Liberty didn’t immediately respond to requests for comment.
IHeart, which is strapped for cash in part because of debts run up by Bain Capital and Thomas H. Lee Partners after a 2008 leveraged buyout, is preparing for a bankruptcy filing as early as this weekend, people with knowledge of the discussions said. Advisers to some of iHeart’s senior creditors have been shown bankruptcy papers that would be used on the first day of court proceedings.
Earlier this week, Liberty Media emerged as a potential white knight for iHeart, proposing a tie-up with Sirius XM Holdings Inc. to sponsor iHeart through a Chapter 11 bankruptcy, in exchange for a 40 percent stake in the reorganized company, according to a news release. Liberty is still negotiating with the senior creditor group.
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