IHeartMedia Wins Legal Fight With Lenders
May 24 2016 - 1:20PM
Dow Jones News
IHeartMedia Inc. secured a victory Tuesday against a group of
lenders that had tried to declare an event of default on billions
of dollars of the radio giant's debt.
A judge in the State District Court of Bexar County, Texas,
ruled a stock transfer made by the company, formerly known as Clear
Channel, last year was a permitted investment under the terms of
its loan agreements, the company said Tuesday
IHeartMedia had brought the Texas lawsuit in March, which put
the brakes on claims by a group of lenders, holding more than $3
billion in debt, that an equity transfer violated the terms of
their indentures and triggered a default.
With the court victory in hand, iHeart said it would continue
"to evaluate opportunities" to strengthen its balance sheet and
"looks forward to constructive discussions with our lenders" as we
continue to position iHeartMedia for long-term growth."
The group of lenders and bondholders that declared the event of
default—which includes a number of private-equity funds like
Benefit Street Partners LLC and Canyon Capital Advisors LLC as well
as investment firm giant Franklin Resources Inc.—didn't immediately
comment Tuesday.
Negotiations between the parties had been ongoing since December
when the lenders first wrote to iHeart about the transaction, but
broke down in March, resulting in the alleged events of default and
lawsuit.
At issue in the Texas litigation was whether the transfer of
shares that the lenders say are worth $1.241 billion is permitted
under the terms of the loan agreements.
The lenders argued in court documents that iHeart "gave away"
the shares, which were part of the package securing their debt,
when the company transferred them from its Clear Channel Outdoor
subsidiary to an unrestricted subsidiary called Broader Media LLC
and received nothing in return.
IHeart disputed that it violated the indenture. The company says
that the transfer of shares to Broader Media LLC was a permitted
investment that "fully complied with our financing agreement."
The ruling in Texas comes as iHeartMedia begins to grapple with
ways to address its massive debt load that totals $20.6 billion,
including $8.3 billion maturing in 2019. The debt load largely
stems from a 2006 leveraged buyout led by Bain Capital Partners LLC
and Thomas H. Lee Partners LP.
IHeartMedia, known as Clear Channel until 2014, owns more than
850 radio stations and billboards used for outdoor advertising.
Write to Stephanie Gleason at stephanie.gleason@wsj.com
(END) Dow Jones Newswires
May 24, 2016 14:05 ET (18:05 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
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