• Investors Sue Clear Channel Over $1B Claim

    News broke yesterday on the continuing iHeartMedia bankruptcy and its impact on Clear Channel Outdoor.

    A minority investor in Clear Channel Outdoor Holdings Inc. brought suit against the company’s board, majority owners and private equity sponsors in Delaware’s Chancery Court late Monday, seeking class damages for alleged failures to seek payment on a $1 billion debt of bankrupt parent iHeartCommunications Inc.

    Insider had reported in May that Clear Channel took an 80% write down of the $1 billion obligation at 12/31/17 to reflect the fact that much of the balance would not be collectible due to iHeart’s bankruptcy.

    The putative class complaint, is led by GAMCO Asset Management Inc. who holds 10% of Clear Channel’s publicly traded shares.  This is not the first time that GAMCO, run by Mario Gabelli, has taken exception with Clear Channel and their treatment of iHeart Media.  Insider has posted previous articles as GAMCO has voiced their displeasure.

    Insider’s Take – It is highly unlikely that Clear Channel will see any of the $1 billion loan returned from their parent company.  We also will not be surprised to see additional lawsuits filed focused on iHearts willingness to drain cash from its subsidiary while it protected itself from defaulting on its considerable debt obligations.

     

     


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