iHeart Memo To Staff From Bob Pittman And Rich Bressler Attempts To Calm Bankruptcy Rumors
April 7, 2016 at 5:21 AM (PT)
YESTERDAY (NET NEWS 4/6), ALL ACCESS reported iHEARTMEDIA parent iHEARTCOMMUNICATIONS, INC. and the creditors group that it sued in a dispute over iHEART moving CLEAR CHANNEL OUTDOOR stock to a new subsidiary had agreed to extend the existing temporary restraining order against the creditors' Notice of Default until a trial in the case on MONDAY, MAY 16th.
TODAY, ALL ACCESS has obtained an internal memo from Chairman/CEO BOB PITTMAN and Pres./COO/CFO RICH BRESSLER sent to all staffers. In it, they write:
You’ve probably read or heard about some incorrect stories regarding our company and what a recent hearing in San Antonio means. There have even been some headlines that claim the outcome of this hearing could result in iHeartMedia’s bankruptcy -- but that is not at all what this hearing is about.
Here are the facts. This hearing is the result of the lawsuit we filed against a small group of lenders who disagreed with us on a question related to our overall strategy of making long-term positive changes to our capital structure. We filed the case to ask the court to confirm our right to move Clear Channel Outdoor shares from one of our subsidiaries to another -- the judge is not deciding the question of whether we have to pay the debt, she is deciding if the share contribution is permitted. We would like to move these shares because it provides us greater flexibility to manage our capital structure. But the judge’s ruling -- either way -- will not result in the company filing for bankruptcy, as some press reports suggested.
None of this will disrupt our operating business. In fact, the strong performance of our operating business, which is a reflection of all the great work you do every day, is what provides us with the flexibility to manage our capital structure in a prudent way -- and therefore we are able to continue to evaluate opportunities to strengthen our balance sheet.
We hope this clarifies the situation for you, and we’re sorry you’ve had to be subjected to such misinformation in the press.
iHEARTMEDIA previously addressed the matter YESTERDAY in a statement that reads, "We are pleased with the outcome and look forward to an expedited trial. As we have previously stated, we believe our contribution of CLEAR CHANNEL OUTDOOR HOLDINGS, INC. stock to our subsidiary BROADER MEDIA, LLC fully complied with our financing agreements. The strong performance of our operating business provides us with the flexibility to manage our capital structure in a prudent manner, and we will continue to evaluate opportunities to strengthen our balance sheet."
A group of 15 creditors, including D. E. SHAW, CANYON CAPITAL, FRANKLIN ADVISERS, and FRANKLIN MUTUAL, contend that the stock transfer constitutes a violation of debt covenants, and thus may accelerate the payment due date of up to $15 billion within 60 days of the notices. iHEART filed suit in TEXAS District Court in BEXAR COUNTY and obtained a temporary restraining order to put the brakes on the default notice until the court determines whether the stock move was permissible.