Company: IHETW
Filing Date: 2025-02-27
Form Type: 10-K
Source: 0001400891-25-000009
Chunk: 110

Company: iHeartMedia, Inc.
Filing Date: 2025-02-27
Form: 10-K
Item: Item 8
Chunk 110
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 We assessed the historical accuracy of management’s estimates and performed sensitivity analyses of significant assumptions to evaluate the changes in the fair value of the FCC licenses that would result from changes in the assumptions. Comprehensive Debt Exchange TransactionDescription of the MatterAs described in Note 1 and Note 6 to the consolidated financial statements, on December 20, 2024 the Company completed a comprehensive debt exchange offer and consent solicitation (“the Transaction”) whereby a portion of its existing 6.375% Senior Secured Notes due 2026, 5.250% Senior Secured Notes due 2027, 4.750% Senior Secured Notes due 2028, 8.375% Senior Notes due 2027, and its Senior Secured First Lien Term Loans due 2026 (collectively “Existing Notes”) were exchanged for new Senior Secured First Lien Notes, new Senior Secured Second Lien Notes, and new Senior Secured First Lien Term Loans (collectively “New Notes”). The exchange with certain debt holders who participated in the Transaction was accounted for as troubled debt restructuring (“TDR”), while the exchange with remaining debt holders who participated in the Transaction was accounted for as a modification under ASC 470, Debt. As a result of the Transaction, the Company recorded the income tax effects of the transaction as described in Note 8.  Auditing management’s accounting for the Transaction was challenging due to the discrete analysis of the terms of the exchange for each lender which necessitated the use of professionals with specialized knowledge to address various components of the transaction. In addition, evaluating the income tax effects of the Transaction was complex as it required the use of tax and valuation specialists to audit the calculations used in determining the associated tax benefit recorded.How We Addressed the Matter in Our AuditWe obtained an understanding, evaluated the design and tested the operating effectiveness of controls over the Company’s accounting for the Transaction, including management's review controls over the technical accounting aspects of the Transaction, the related calculations described above and the income tax effects of the Transaction.Our procedures included, among others, reading the underlying agreements and assessing the terms in relation to the relevant accounting principles, testing of the completeness and accuracy of the underlying data and testing the calculations supporting the TDR and debt modification accounting. Specifically, we recalculated the TDR assessments and the debt modification versus debt extinguishment assessments that were performed for each debt holder and evaluated the methodology in accordance with the relevant accounting principles We vouched cash paid in the Transaction and tested a sample of transaction costs for completeness