In what must be the most ingenious method of avoiding paying debt, iHeartMedia -- which is carrying a staggering debt load of $21 billion -- plans to buy its way into solvency. Or buy some time, as the case may be.
According to The New York Post, iHeart, formerly known as Clear Channel Communications, is planning to convert most of the $2.4 billion in unsecured debt into equity. This in turn will lower interest payments to the point where the company could actually break even.
How can it convert debt to equity? By buying it.
As near as I can tell, the scheme appears to be akin to buying debt on the open market, similar to how home loans get lumped together and then purchased by other companies. Only in this case iHeart appears to be buying itself, and then using the “equity” it has to do an end run on its balance sheets.
If it can convince enough investors to go along and thus convert all the unsecured debt into faux equity, iHeart could save $100 million in interest payments every year, putting the company into the black instead of losing a predicted $50 million, $80 million and $120 million in 2015, 2016 and 2017, respectively.
Now to find a bunch of really stupid investors and convince them this is a good idea. Interestingly, history is on the side of iHeart, as investors constantly make bone-headed moves such as this. I mean, just look at Cumulus ... or iHeart ... or ...
As one source put it, the move “definitely reflects risk and desperation.”
Mike Wagner, former programmer of the original KRLA (now KDIS, 1110 AM) wrote to clarify a bit of information on the dance club owned by former KRLA DJ and popular television personality Bob Eubanks.
There were actually several locations of Eubanks' teen nightclubs called the Cinnamon Cinder. And they were the inspiration for a 1963 hit by the Pastel Six,” which like everything in life can be found on YouTube (www.youtube.com/watch?v=7CWlyeuhz40)
“This info comes from the You Tube page: ‘The Cinnamon Cinder was released by The Pastel Six (Bill Meyers) in early 1963, and was a one hit wonder for the group. The Cinnamon Cinder was also a chain of Los Angeles teen nightclubs started by KRLA DJ Bob Eubanks, which soon spawned a TV show, The Cinnamon Cinder Show (1963-65).’
“‘Acts performed live and were usually backed by a resident band from one of the clubs ... North Hollywood's Pastel Six were one of the most popular, and they got their chance to record ‘The Cinnamon Cinder (It's A Very Nice Dance)’, written by Russ Regan. The show was also known as Bob Eubanks' Hollywood Dance Time.’
“The house bands often backed up such big name artists as Jackie DeShannon, Dick and Dede, The Ronettes, Little Stevie Wonder, The Coasters, The Rivingtons, and Chuck Berry,” said Wagner.
Tim Grobaty wrote of the Cinder for the Long Beach Press-Telegram back in 2008, covering among other things why it was such a success. “strict regulations,” he said, quoting from an even earlier Press-Telegram story on the Cinder from 1963.
Those rules? No alcoholic beverages were served, and people with alcohol on their breath were stopped at the door. No youngsters under 18 were permitted. Single men past the age of 25 were strongly discouraged from seeking entrance. Girls were not permitted in if they are wearing capris or shorts. Boys were barred if they wore T-shirts, sweatshirts, club or school jackets, Levi's or tennis shoes.
According to Grobaty, rules and regulations at the Long Beach traffic-circle location were enforced by the club's manager, Mickey Brown, who was a former LAPD officer. My hunch is that this kept the club safe, while still giving the kids the feeling of having their own place ... and of course, an outlet for them to see their favorite artists.
It lasted eight years, as Grobaty wrote, “the Cinder closed when its wholesomeness had, according to a Press-Telegram reporter, gone to seed.”
I’m trying to figure out how, with his work at KRLA, later work with the Beatles, television programs and more, how Eubanks had time to think!
From 6 a.m. December 24th through 6 p.m. December 25th, JazzKNOB.org will present its annual 36-hour Christmas programming, Sounds of the Season, highlighted by a reading of Twas the Night Before Christmas by the late, great Chuck Niles. This special reading will be presented six times throughout the holiday special: 6 a.m., noon and 6 p.m. on the 24th; midnight, 6 a.m. and noon on Christmas Day.
JazzKNOB.org is an online tribute to former all-jazz radio station KNOB, licensed at the time to Long Beach. It is now Spanish-language KLAX (97.9 FM).