Clear Channel Outdoor Faces New “Piggy Bank” Suit

A new lawsuit filing this week is again alleging iHeartMedia used Clear Channel Outdoor as the company's piggybank.

Mario Gabelli

The suit by board, majority owners, and private equity sponsors of Clear Channel Outdoor Holdings Inc. seeks class damages in Delaware’s Chancery Court for alleged failure to seek payment on a $1 billion debt of bankrupt parent iHeartCommunications Inc.

Led by shareholder Mario Gabelli's GAMCO Asset Management Inc., the puntative class complaint accuses directors of failing to meet their duty to the company or minority investors by passing up opportunities to compel payments on the same revolving note. In the latest suit, GAMCO argued that CCO harmed its minority shareholders as a class by failing to seek partial or full payment of the note — costing the class anywhere from $89.7 million to $108.2 million.

The suit alleged that a committee formed to monitor note balances could and should have taken action during an extended period when iHM and its affiliates had been teetering on the edge of Chapter 11.

CCO’s agreements with iHeartCommunications and indirect parent iHM allowed iHeartCommunications to sweep excess cash from CCO accounts into iHeartCommunications accounts daily.