Insider has previously reported on Clear Channel Outdoor’s parent company iHeartMedia and their attempts to resolve a dispute with one of their lending groups. iHeart has a May trial date set to try and block a group of lenders from declaring a default on more than $3 billion in loans.

The Wall Street Journal reports this week that in documents published on Monday, that iHeart announced they had begun mediation with the lender and bondholder group “to try to resolve the dispute and to explore possible alternatives to the terms of the Company’s existing senior secured indebtedness.” The parties have been operating under the terms of a temporary restraining order and a standstill agreement ahead of the May trial.

The lender group had provided notice to iHeart that iHeart’s transfer of stock shares from their Clear Channel Outdoor Holdings to an unrestricted subsidiary, Broader Media LLC, created an event of default under the loan agreement. The lenders argue in court documents that iHeart “gave away” the shares, which were part of the package securing their debt.

If the issue goes to trial and a judge rules in favor of the lenders, iHeart would have 60 days to undo the stock transfer or reach some other agreement with the lenders. However, if the default goes unresolved after the two months, it would trigger cross defaults on billions of dollars worth of iHeart’s debt.

IHeart indicates that they will pursue mediation until an agreement is reached or the trial begins.

Insider Take: The dispute over $3 billion in loans is only a portion of the $20.6 billion in indebtedness owed by iHeart from an acquisition in 2006 led by Bain Capital Partners LLC and Thomas H. Lee Partners LP.  Stay tuned as a solution to their debt woes will be anything but simple.

Paid Advertisement