The verdict from state District Judge Cathleen Stryker permanently blocks bondholders unhappy over a recent transfer of assets within the radio, billboard and digital company from filing default notices against the company in connection with the transfer, reports The Express-News.
The legal dispute involved a Dec. 3, 2015 transfer of 100 million shares of iHeartMedia’s billboard subsidiary Clear Channel Outdoor Holdings Inc. to another subsidiary for the purpose of issuing new debt to buy back expiring debt. IHeartMedia had $20.75 billion in debt as of March 31. The Dec. 3 share transfer upset existing bondholders because, they said, the action moved collateral for their bonds out of their control.
The bondholders had threatened default notices against iHeartMedia earlier in the year, and several notices were filed March 7, but those were rescinded March 9 under a temporary restraining order pending the trial.
iHeartMedia contended during the trial, which occurred April 4-5 and May 16-20, that the rules for its earlier bond sales allowed the company to make the Dec. 3 transfer.
Here is a statement from iHM:
"Today, the State District Court in Bexar County, Texas ruled in our favor when it determined that our contribution of Clear Channel Outdoor Holdings, Inc. stock to our subsidiary Broader Media, LLC was a permitted investment under our financing agreements. 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 financing agreements, we will continue to evaluate opportunities to strengthen our balance sheet. We look forward to constructive discussions with our lenders as we continue to position iHeartMedia for long-term growth."
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