iHeartMedia Files Suit to Contest Default Notice
iHeartMedia filed suit in federal court preemptively on Monday to obtain a ruling that it was allowed to move some stock shares in December.
After the filing, the company received default notices tied to the transfer of shares at its subsidiary Clear Channel Outdoor Holdings.
The broadcaster gave an unrestricted subsidiary, Broader Media, $516 million of common stock in Clear Channel Outdoor in December, we reported. The action was meant to help sell a bond to help iHeart pay off some of its $20.6 billion debt.
iHeart believes the move was permitted “and fully complied with, our financing agreements.”
But some bondholders said covenants were violated by the transfer.
The creditors filing represent at least 25% of outstanding principal for four of iHeart’s priority guarantee notes, reported Bloomberg.
The company filed the lawsuit in Texas seeking a declaratory judgment that it’s not in default.
iHeart said in a statement: “The strong performance of our operating business provides us with the flexibility to manage our capital structure in a prudent manner. In full compliance with our debt covenants, we continue to evaluate opportunities to strengthen our balance sheet. We believe our recent contribution of Clear Channel Outdoor Holdings, Inc. stock to our subsidiary Broader Media, LLC constituted a permitted investment under, and fully complied with, our financing agreements. We strongly believe the notices of default issued by the lender group based on the contribution are invalid.”
The broadcaster has nearly $10 billion in debt that comes due in the next three years. It has $193 million in notes that mature in 2016, $230 million under a revolving credit line that’s due in 2017, more than $1 billion in obligations maturing in 2018 and $8.3 billion in bonds and term loans due in 2019, according to data compiled by Bloomberg.