On Wednesday, an appeals court in San Antonio agreed with a lower court ruling that an intercompany stock transfer was allowed under the terms of iHeartMedia’s loan agreements. Creditors were disputing whether the 2015 transfer was legal and may have even triggered a default. An iHeartmedia spokesperson told Radio Ink the company was pleased with the decision.
Fox Business reports that the battle is over whether the transfer of shares in Clear Channel Outdoor Holdings to a separate unrestricted unit violated the terms of the company’s priority guarantee notes. According to Fox Business, “creditors argued in court that iHeart ‘gave away’ the shares, which were part of the collateral package securing their debt, by shipping them to unrestricted subsidiary Broader Media LLC and receiving nothing in return. iHeart countered that nothing in the lending agreement barred such a transfer and sued the lenders pre-emptively in March 2016 for a court order preventing them from declaring a default and potentially forcing a bankruptcy.”
A Bexar County judge ruled in the company’s favor in May 2016.