An update on iHeart Media/Clear Channel Outdoor debt issues.  The Wall Street Journal is reporting that iHeart has a May trial date set to block a group of lenders from declaring a default on more than $3 billion in loans. In the meantime, both sides have agreed to abide by a restraining order until the trial begins.

Interestingly, the argument surrounds a transfer of shares that the lenders say are worth $1.241 billion and is not permitted under the terms of the loan agreements. The lenders are arguing that iHeart gave away the shares as part of a package securing their debt, when the company transferred them from its Clear Channel Outdoor subsidiary to an unrestricted subsidiary called Broader Media LLC and received nothing in return. The action violates the terms of their debt agreement with iHeart, the lending group says.

IHeart disputes that it violated its agreement. The company says that the transfer of shares to Broader Media LLC was a permitted investment.

A ruling in favor of the lenders would permit the group to proceed with the events of default and trigger cross defaults on billions the iHeart debt. The company would have 60 days to undo the stock transfer or reach some other agreement with lenders before that happens.

You can read an internal memo Clear Channel Chairman Bob Pittman and CFO Rich Bressler sent to all Clear Channel Staffers on the matter here.

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