iHeartMedia – Seeks Court Approval for Acquisition of Stuff Media for $55 million, Administrative Expense Treatment of Purchase Price

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September 24, 2018 – iHeartMedia filed a motion requesting (i) Court authority for its acquisition of Stuff Media LLC pursuant to a Membership Interest Purchase Agreement, dated August 29, 2018, amongst, inter alia, the Debtors and Stuff Media LLC (the “Purchase Agreement”) and (ii) that the Court grant administrative expense status to all amounts due under the Purchase Agreement [Docket No. 1498]. The Debtors explain, “To remain a leader in the diversified media and entertainment business, the Debtors routinely and proactively position themselves for new, innovative market opportunities that complement their existing lines of business. In the spring of 2018, the Debtors recognized an opportunity to purchase a podcasting business, Stuff Media LLC (the ‘Company’). The purchase of such podcasting business is important to the Debtors’ participation in the fast-growing podcasting market…Over the past several months, the Debtors and the current owners of the Company’s membership interests (the ‘Sellers’) engaged in arm’s-length negotiations to arrive at fair consideration for the Company. In exchange for all the membership interests of the Company, the Debtors will pay the Sellers (a) $36.0 million, subject to certain adjustments, at the closing (the ‘Closing Payment’), and (b) $19.0 million on the date that is 13 months after the date of the closing (the ‘Installment Payment’ and together with the Closing Payment, the ‘Total Consideration’).  Entering into the agreement to acquire the Company presents the Debtors with an important opportunity to capitalize on potential future growth in the podcasting market….Under the terms of the Purchase Agreement, the Debtors have agreed to purchase the Company for $55,000,000, subject to certain adjustments.” The Debtors had previously filed a substantially identical version of this motion with portions redacted [Docket No. 1450]. Further to an informal request from the U.S. Trustee, the Debtors refiled this motion, unredacting several portions which had previously been redacted. 

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