Hedge Fund Questions Cash Transfers At Clear Channel
March 7, 2012 at 3:50 AM (PT)
CLEAR CHANNEL COMMUNICATIONS has come under fire from a hedge fund investor in CLEAR CHANNEL OUTDOOR HOLDINGS, INC. for the move of $656 million from the billboard subsidiary to the parent company. The WALL STREET JOURNAL reports that JHL CAPITAL GROUP alleges that the moves were improper and, in a letter to CLEAR CHANNEL OUTDOOR sent NOVEMBER 29th but disclosed now, warns that the division's board members may have breached their duty to shareholders in moving the money. The transfers were fully disclosed when they were made.
The transfers were made under a longstanding corporate services agreement, but JHL said that allowing the transfers now that the parent company, controlled by BAIN CAPITAL PARTNERS and THOMAS H. LEE CAPITAL PARTNERS, is in financial difficulty. The JOURNAL reports that a "person familiar with JHL CAPITAL's thinking" said that the interest rate being paid to the billboard company is below market and the amount being transferred is growing; JHL believes that at least some cash should be paid to CC OUTDOOR shareholders.
CLEAR CHANNEL's response to the JOURNAL said that the transfers pay for expenses like human resources and that additional amounts remain as obligations by the parent company to CLEAR CHANNEL OUTDOOR.