Wednesday, March 9, 2016

For iHM, Time Is Running Out

Radio, billboard and digital broadcast giant iHeartMedia Inc. is taking some of its lenders to court.

Creditors of iHeartMedia, which is saddled with $20.6 billion in debt, accused the company Monday of violating its lending agreements when shares of subsidiary Clear Channel Outdoor Holdings Inc. were transferred to another unit in December. iHeartMedia responded by filing a lawsuit Monday in Bexar County state district court challenging the validity of the default notices, according to

The company is seeking a temporary restraining order and a permanent injunction to stop future possible default notices that could accelerate other scheduled debt payments. If a technical default isn’t resolve within 60 days, the company’s bonds will go into a full default, triggering other onerous financing terms.

“We intend to take any other actions necessary to protect iHeartMedia and remain willing to engage in constructive discussions with any of our various groups of lenders to position iHeartMedia for long-term growth,” iHeartMedia said in a statement Tuesday announcing the lawsuit.

Creditors representing about 25 percent of the outstanding principal of four of the company’s priority guarantee notes filed the notice Monday. The bondholders said covenants were violated by the transfer of $516 million in common shares of Clear Channel Outdoor Holdings Inc. to the Broader Media unit Dec. 3.

iHeartMedia objected to the lenders’ allegations and sought a court ruling saying it hasn’t defaulted on its loans, according to the lawsuit.

Companywide debt rose to $20.87 billion as of Dec. 31, up from $20.33 billion the year before. Much of the debt stems from 2008 when two Boston-based private equity firms, Bain Capital Partners LLC and THL Partners purchased 70 percent of the company, then called Clear Channel Communications. Almost a third of iHeartMedia remains publicly traded.

IHeartMedia owns 858 radio stations in 150 U.S. markets and 90 percent of billboard giant Clear Channel Outdoor Holdings.

After the 2008 acquisition by the Boston private-equity firms, iHeartMedia’s top executives have been based in New York. Clear Channel Outdoor Holdings is operated by executives in Arizona.

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