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iHeartMedia, Bondholders Agree to Mediation
RADIO ONLINE | Tuesday, May 3, 2016 |
iHeartMedia has entered into mediation with a group of creditors the company is suing over Notices of Default, the company said in an 8K filing with the SEC on Monday. Previously, iHeartCommunications Inc., a unit of iHeartMedia, and the group of creditors agreed to extend an existing temporary restraining order (TRO) issued last month against the creditors' Notice of Default until a trial is held, beginning Monday, May 16.
iHM will work until May 16 to try and resolve the dispute and to explore possible alternatives to the terms of the company's existing senior secured debt. iHM received Notices of Default (Notices) in March from the holders of at least 25% of the notes after the company moved Clear Channel Outdoor stock to a new subsidiary. Those Notices allege that iHM violated certain covenants under the indentures governing the Priority Guarantee Notes (Indentures).
As previously disclosed, on December 3, 2015, an 8K filing said that the company contributed 100 million shares of Class B common stock of Clear Channel Outdoor Holdings from Clear Channel Holdings to Broader Media LLC (both wholly-owned subsidiaries) that is an "unrestricted subsidiary" under the Indentures. iHM believes the Contribution was made in full compliance with all of the provisions of the Indentures and the Holders have no basis to issue the Notices.
The Notices assert that the alleged defaults will become an "Event of Default" under the Indentures following the expiration of 60 days. An Event of Default, if it were to occur, would entitle the Holders to accelerate the underlying debt and would trigger events of default under the company's other material debt. As such, iHM filed a lawsuit in the State District Court in Bexar County, TX, against the Holders and received a temporary restraining order from the court preventing the defendants from taking any actions.
A group of 15 creditors including D.E. Shaw, Canyon Capital, Franklin Advisers and Franklin Mutual contended 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.
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