Though iHeartMedia just came off a victory in a Texas court over stock moves, one of its subsidiary shareholders has filed suit over that.
Gamco Asset Management owns nearly 10% of the stock in Clear Channel Outdoor Holdings not held by iHeartMedia. Founded by investor Mario Gabelli, Gamco says in a suit filed in Delaware Chancery Court that iHeart should not be allowed to move revenues from CCOH to repay debt for the parent company, Bloomberg reports.
An agreement that routes daily CCOH revenues to iHeart leaves the outdoor subsidiary with a “virtually uncollectible receivable” from its parent company of $640 million, Gamco states in the filing.
iHeart considers the allegations in the suit to be baseless and without merit. In a statement, spokeswoman Wendy Goldberg tells RBR+TVBR: “The Clear Channel Outdoor Holdings, Inc. Board of Directors takes seriously its responsibilities and duties to the company and to all CCOH stockholders. The board established a special committee of independent directors in 2013 for the specific purpose of monitoring the intercompany note between CCOH and iHeartCommunications, Inc. We are confident that the board and the special committee have properly discharged their responsibilities and duties to the company and to all CCOH stockholders and will continue to do so.”
Gamco actually backed iHeart in the Texas case in which some senior lenders said a stock move was not allowed and violated iHeart’s debt covenants. The court ruled the stock move was allowed and clarified that iHeart is not in default, we reported.
Gamco says it appears iHeart is preparing for bankruptcy which would “freeze” its ability to repay” the money it owes CCOH, reports Bloomberg. “IHeart is abusing its position as CCOH’s controlling stockholder in an attempt to stave off its own financial demise and avoid forcing the private equity defendants to infuse iHeart with new equity capital,” states Gamco in the suit.
Gamco seeks a swift trial and has also named board members Bain Capital and TH Lee as defendants.