iHeartMedia – Announces “Final Key Piece” of Bankruptcy Process, Settlement Gives CCOH 14.4% Recovery on $1bn Claim

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December 8, 2018 – iHeartMedia, Clear Channel Outdoor Holdings, Inc. (“CCOH”), and GAMCO Asset Management, Inc. (“GAMCO”) filed an emergency motion for authorization of a settlement agreement [Docket No. 2143]. The motion states, “As of the time of filing of this Motion, CCOH, one of the Debtors’ largest creditors holding a claim in the amount of $1,031,721,306, which is in its own class under the Plan (Class 8), has not yet submitted a vote to accept or reject the Plan and CCOH’s voting and confirmation objection deadline has been extended pending the ongoing settlement discussions. In addition, the Plan contemplates that CCOH shall enter into multiple agreements in connection with the Separation (as defined herein), which agreements cannot be entered into without CCOH’s affirmative consent….The Settlement represents the final key piece to the Debtors’ Chapter 11 Cases and is the product of months of hard-fought, good-faith, arms’-length negotiations between the Debtors, the CCOH Special Committee (as defined herein), and GAMCO. The Plan, which now incorporates the Settlement, (a) obtains the support of CCOH and GAMCO for the Plan and the Separation, (b) provides CCOH with sufficient liquidity to operate as a stand-alone enterprise post-separation, and (c) settles outstanding issues among the Parties, including those related to the Plan and to the claims in the Delaware Action, bringing to a close what may have otherwise turned into expensive, protracted, and complex litigation that would have likely delayed the Debtors’ emergence from Chapter 11… The Settlement provides for the terms of the Separation, which is a necessary part of the Plan and has long been contemplated as part of the multi-year restructuring negotiations, and was included in the Restructuring Support Agreement. Moreover, the releases were a critical negotiated term of the Settlement and the Plan and without the releases, the Parties would not have been willing to enter into the Settlement Agreement, otherwise support the Plan, and move forward with confirmation.”
 
Key terms of the Settlement Agreement include:
 
  • CCOH Separation and Settlement Consideration:  CCOH Separation and Settlement Consideration:  A corporate separation of CCOH from iHeart Communications, Inc. or any other affiliated entity will occur, pursuant to which: (i) the cash sweep arrangement under the existing Corporate Services Agreement (‘CSA’) will terminate; (ii) any agreements or licenses requiring royalty payments to Debtors by CCOH for trademarks or other intellectual property will terminate; and (iii) a new transition services agreement (‘TSA’) will become effective and supersede and replace the existing CSA for administrative services currently and historically provided to CCOH by iHC. The Debtors agree to waive: (i) the set-off for the value of the intellectual property transferred, including royalties; and (ii) the repayment of the post-petition intercompany balance outstanding in favor of the Debtors as of December 31, 2018….The Debtors will make available to CCOH for a period of no more than three years following the effective date of the Plan (the ‘Effective Date’), an unsecured revolving line of credit in an aggregate amount not to exceed $170 million.
  • Claim Recovery: CCOH will recover 14.4% in cash on allowed claim of $1,031,721,306 pursuant to its proof of claim, which recovery will be without setoff or reduction. 
  • Releases: Mutual releases, including a release of all claims that have been asserted, could have been asserted, or could ever be asserted with respect to the Chapter 11 Cases and/or in the Delaware Action or in the Norfolk Action, whether directly, derivatively, or on a class-wide basis.

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