On March 14, 2018, radio station giant iHeartMedia, Inc. filed for Chapter 11 bankruptcy to seek protection from its debt holders. This follows a year-long negotiation with its private equity owners and investors holding more than $10 billion of iHeart’s debt.
iHeart, the largest US radio station operator, has 850 stations with over 260 million people tuning in monthly. Its biggest competitor, Cumulus, operating hundreds of stations, also recently filed Chapter 11 bankruptcy. The radio giants have faced increased competition from rivals like Spotify and Pandora.
iHeart’s stock and bonds prices reflect its concerning financial situation. The day it filed for bankruptcy, its stock (IHRT) closed at $0.48 per share, which is $3.36 lower than its one-year high close price of $3.84 on March 30, 2017. That is a 700% price decrease in just under a year, and a much larger decrease from its five year high of $9.30 on September 22, 2014. The price of iHeart bonds have also been hit hard, with its junior bonds trading at less than 20 cents on the dollar on March 15, 2018.
The dismal price of iHeart’s stocks and bonds are not surprising. iHeart has not realized an annual net profit for ten years and its debt troubles and bankruptcy negotiations have been widely reported for quite awhile. In 2008, iHeart took on massive debt when a group of private equity companies purchased it in a leveraged buyout. As early as February 4, 2016, Bloomberg reported iHeart had been struggling with the huge debt load from the leveraged buyout.
Recovery Options for Investors Who Suffered Losses Due to iHeart Investment Recommendations
Investors who lost money because their broker or financial advisor recommended they invest in iHeart may have recovery options. Rules and regulations require brokers and advisors recommend only suitable investment products and strategies to their customers. Suitability is based on factors such as an investor’s age, investment objectives and experience, risk tolerance, and financial status and needs.
Brokers and advisors have a duty to be familiar with the risks of stocks and bonds of companies like iHeart before recommending them to investors. Stocks and bonds of companies with financial struggles are at high risk of significantly decreasing in value, making them unsuitable to investors who should have low risk investments. Such investments may also be difficult to trade due to less demand for them, making them unsuitable to investors desiring investments readily convertible to cash.
iHeart stocks or bonds may have been suitable for investors capable of handling highly risky investments. However, it would have been unsuitable for financial advisors to recommend many investors purchase iHeart stocks or bonds while iHeart’s financial troubles were known.
If you have suffered investment losses with iHeart stocks or bonds that you believe were unsuitably recommended to you by your financial professional, contact Marquardt Law Office LLC to speak with a securities attorney and receive a free evaluation of options to recover your losses.
Marquardt Law Office LLC is a securities law firm located in Chicago, IL that represents clients nationwide who have suffered losses due to misconduct such as fraud and negligence.