Cumulus & iHeartMedia Both File Debt Related Lawsuits
Both Cumulus Media and iHeartMedia have filed lawsuits related to their efforts to reduce their debt loads.
Reuters reports that Cumulus filed suit on Monday against J.P. Morgan Chase for “breaching a 2013 credit agreement and unreasonably withholding consent to certain components” of their refinancing. Cumulus announced last week that it is seeking a debt for equity swap in order to retire $610 million in debt while creating a new line of credit. J.P. Morgan Chase is being accused of threatening the deal from being closed by its January 27 deadline.
iHeartMedia has issued a statement over its decision to not repay the $57.1 million of the 5.50% Senior Notes due December 15, 2016. As part of that decision, iHeart has filed suit in Texas “seeking a declaration that the $57.1 million of 2016 Legacy Notes remains outstanding and that the Company is not currently obligated to grant any of its debtholders the “springing lien” on any of its assets”.
iHeartMedia, Inc. today announced a decision to not repay the $57.1 million of the 5.50% Senior Notes due December 15, 2016 (“2016 Legacy Notes”) held by affiliate Clear Channel Holdings, Inc. (“CCH”) when the notes mature on December 15, 2016. The decision, made by a Special Committee of independent directors, is part of the Company’s ongoing efforts to proactively address its capital structure, while maximizing the value of its assets.
While the $192.9 million of 2016 Legacy Notes held by other holders will be paid in full at maturity, the $57.1 million balance held by affiliate CCH will remain outstanding. Because the 2016 Legacy Notes owned by CCH will continue to remain outstanding, the Company will continue to have at least $500 million of legacy notes outstanding on December 15, 2016 and will therefore not be obligated to grant certain additional security interests in favor of certain of its debtholders under a so-called “springing lien” set forth in relevant debt agreements.
In addition, the Company and certain affiliates yesterday filed lawsuits in the State District Court in Bexar County, Texas, seeking a declaration that the $57.1 million of 2016 Legacy Notes remains outstanding and that the Company is not currently obligated to grant any of its debtholders the “springing lien” on any of its assets.
As the Company continues to work towards a comprehensive plan to achieve an optimal capital structure, it intends to take any other actions necessary to protect iHeartMedia and position the Company for long-term growth and success.