(Adds bankruptcy details, background)
March 15 (Reuters) - IHeartMedia Inc filed for Chapter 11 bankruptcy on Thursday as the largest U.S. radio station owner struggles with $20 billion of debt and falling revenue at its 858 radio stations.
The company, which filed for bankruptcy along with some of its units, said it reached an agreement with holders of more than $10 billion of its outstanding debt for a balance sheet restructuring, which will reduce its debt by more than $10 billion.
Cash on hand and cash generated from ongoing operations will be sufficient to fund the business during the bankruptcy process, said iHeartMedia, which owns Z100 in New York and Real 103.5 KISS FM in Chicago.
"The agreement ... is a significant accomplishment, as it allows us to definitively address the more than $20 billion in debt that has burdened our capital structure," Chief Executive Bob Pittman said.
The filing comes after John Malone's Liberty Media Corp proposed on Feb. 26 a deal to buy a 40 percent stake in a restructured iHeartMedia for $1.16 billion, uniting the company with Liberty's Sirius XM Holdings Inc satellite radio service. Clear Channel Outdoor Holdings Inc, a subsidiary of iHeartMedia, and its units did not commence Chapter 11 proceedings.
IHeartMedia skipped a $106 million interest payment on Feb. 1, triggering a 30-day grace period during which the company has tried to hammer out a deal with it bondholders.
Shares of iHeartMedia lost three-quarters of their value in the second half of 2015 and have never recovered. On Monday, the pink sheet stock closed at 48 cents.
IHeartMedia traces its roots to the 1972 purchase of KEEZ-FM in San Antonio, Texas, where the company is currently headquartered. It also produces syndicated radio programs that feature "American Idol" host Ryan Seacrest and political personalities Rush Limbaugh and Sean Hannity.
The company had 14,300 employees at the end of 2016, according to its most recent annual report.
The bankruptcy proceedings were filed in a Texas court. (Reporting by Tom Hals in Wilmington, Delaware and Mekhla Raina in Bengaluru; Editing by Gopakumar Warrier)