iHeart Offers Mediation To Angry Creditors Ahead Of May 16th Court Date
May 3, 2016 at 3:59 AM (PT)
In early APRIL (NET NEWS 4/6), ALL ACCESS reported that 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.
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.
The Company announced that it has entered into mediation with certain of the Holders to try to resolve the dispute and to explore possible alternatives to the terms of the Company’s existing senior secured indebtedness.
With the MAY 16th trial approaching, iHEARTMEDIA has now filed an 8-K form with the SECURITIES AND EXCHANGE COMMISSION explaining its attempt at mediation with those creditors.
iHEART writes, "The TEXAS Litigation relates to the contribution (the 'Contribution') on DECEMBER 3rd, 2015 of 100,000,000 shares of Class B common stock of CLEAR CHANNEL OUTDOOR HOLDINGS, INC. (the 'Shares'), from CLEAR CHANNEL HOLDINGS, INC., one of the Company’s wholly-owned subsidiaries that is a 'restricted subsidiary' under the Company’s various debt documents, to BROADER MEDIA, LLC, one of the Company’s wholly-owned subsidiaries that is an 'unrestricted subsidiary' under the Company’s various debt documents. Certain of the Holders have alleged that the Contribution violated certain covenants in certain of the Company’s priority guarantee note indentures and issued notices of default on MARCH 7th, 2016 (the 'Notices of Default')."
The 8-K adds, "As a condition to obtaining the temporary restraining order from the TEXAS Court, the Company agreed not to sell, transfer, encumber, pledge, hypothecate or otherwise dispose of any interest in, or proceeds of, the Shares until such time as a hearing may be held for a temporary injunction. On APRIL 4th and 5th, 2016, the TEXAS Court held a hearing on the Company’s application for a temporary injunction. On APRIL 6th, 2016, the TEXAS Court ordered, on the agreement of the appearing parties, to extend the temporary restraining order until the conclusion of a trial on the merits, which the TEXAS Court scheduled to begin on MAY 16th, 2016."
What's new is that, "On MAY 2nd, 2016, the Company announced that it has entered into mediation with certain of the Holders to try to resolve the dispute and to explore possible alternatives to the terms of the Company’s existing senior secured indebtedness. The mediation is scheduled to end on MAY 16th, 2016 or the earlier resolution of the issues."
Read the full filing here.