Bloomberg reports iHeartMedia debtholder Bluejay Securities, an affiliate of Elliott Management Corp., is one of the debtholders challenging iHeart’s transfer of 100,000 shares of Clear Channel Outdoor to Broader Media. iHeart alleges, according to Bloomerg, that Bluejay would “reap a financial windfall” if creditors can push iHeart into default because it bought short-term credit default swaps.
iHeartMedia lawyers argued in court that the credit default swap purchases “helps to explain why Bluejay Securities and other noteholder defendants issued baseless notices of default.”
According to Bloomberg Scott Fletcher, a lawyer for Franklin Advisors, one of the fund managers threatening to issue defaults, said the debtholders are trying to protect their ability to get their money back. “iHeart could not make limitless transfers of its assets so that nothing would remain to repay iHeart’s debt, As the funds interpret their loan covenants, none of the handful of specific exceptions covers the stock transfer to the subsidiary.”
A trial is set to begin on May 16.
Read the full Bloomberg story HERE
