CCO Clear Channel Outdoor Holdings Inc

IHeartMedia Inc. secured a victory Tuesday against a group of lenders that had tried to declare an event of default on billions of dollars of the radio giant's debt.

A judge in the State District Court of Bexar County, Texas, ruled a stock transfer made by the company, formerly known as Clear Channel, last year was a permitted investment under the terms of its loan agreements, the company said Tuesday

IHeartMedia had brought the Texas lawsuit in March, which put the brakes on claims by a group of lenders, holding more than $3 billion in debt, that an equity transfer violated the terms of their indentures and triggered a default.

With the court victory in hand, iHeart said it would continue "to evaluate opportunities" to strengthen its balance sheet and "looks forward to constructive discussions with our lenders" as we continue to position iHeartMedia for long-term growth."

The group of lenders and bondholders that declared the event of default—which includes a number of private-equity funds like Benefit Street Partners LLC and Canyon Capital Advisors LLC as well as investment firm giant Franklin Resources Inc.—didn't immediately comment Tuesday.

Negotiations between the parties had been ongoing since December when the lenders first wrote to iHeart about the transaction, but broke down in March, resulting in the alleged events of default and lawsuit.

At issue in the Texas litigation was whether the transfer of shares that the lenders say are worth $1.241 billion is permitted under the terms of the loan agreements.

The lenders argued in court documents that iHeart "gave away" the shares, which were part of the package securing their debt, when the company transferred them from its Clear Channel Outdoor subsidiary to an unrestricted subsidiary called Broader Media LLC and received nothing in return.

IHeart disputed that it violated the indenture. The company says that the transfer of shares to Broader Media LLC was a permitted investment that "fully complied with our financing agreement."

The ruling in Texas comes as iHeartMedia begins to grapple with ways to address its massive debt load that totals $20.6 billion, including $8.3 billion maturing in 2019. The debt load largely stems from a 2006 leveraged buyout led by Bain Capital Partners LLC and Thomas H. Lee Partners LP.

IHeartMedia, known as Clear Channel until 2014, owns more than 850 radio stations and billboards used for outdoor advertising.

Write to Stephanie Gleason at stephanie.gleason@wsj.com

(END) Dow Jones Newswires

May 24, 2016 14:05 ET (18:05 GMT)

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