iHeartCommunications Gets Temporary Injunction In Battle With Noteholders Over Stock Transfer To Subsidiary
March 9, 2016 at 1:29 PM (PT)
After obtaining a temporary restraining order from the State District Court in BEXAR COUNTY, TX putting a hold on any attempt by senior creditors to accelerate the debt owed by the company, iHEARTCOMMUNICATIONS, INC. has filed a Form 8-K with the SEC explaining its current position.
Noting that the company filed suit before it received notices of default from holders of more than 25% of the outstanding principal amount of four of its Priority Guarantee Notes that alleged that the transfer of 100 million shares of CLEAR CHANNEL OUTDOOR HOLDINGS, INC. Class B stock to new subsidiary BROADER MEDIA, LLC breached covenants in the indentures for the notes and thus were a default that could trigger acceleration of the debt after 60 days, iHEART said that the restraining order rescinds the notice until the order expires in 14 days and restrains the lenders from issuing additional notices of default. The company agreed not to sell or transfer the shares until a hearing is held.
"We continue to believe that the Contribution did not cause a default under any of the Indentures or under the terms of any of our other indebtedness," iHEART told the SEC. "If, however, we are unable to obtain the permanent relief we are requesting from the Court or are otherwise unable to successfully contest the validity of the Notices and any subsequent acceleration of a material portion of our indebtedness, then we would need to pursue other available alternatives to address the claimed defaults."
And in a statement from subsidiary iHEARTMEDIA, INC., the company said, "As we previously stated, we believe the contribution constituted a permitted investment under, and fully complied with, our financing agreements. We are pleased with the outcome of today’s hearing and look forward to a favorable ruling on the merits of our case. The strong performance of our operating business provides us with the flexibility to manage our capital structure in a prudent manner, and, in full compliance with our debt covenants, we continue to evaluate opportunities to strengthen our balance sheet."