Clear Channel Demands More Cost Control
June 6, 2008 at 1:45 PM (PT)
An internal corporate memo from CFO RANDALL MAYS to top executives, sent a couple weeks ago, demanded that management do everything they can to cut costs before the deal closes. The reason, as reported by THE WALL STREET JOURNAL, is that if enough shareholders demand cash from the transaction, the powers-that-be would have to roll over their shares into stub equity for a privatized CLEAR CHANNEL. Doing so would cut into the money the corporate hierarchy would make from the deal. Thus, the need to accumulate more cash on hand before closing
"There is a certain level of cash which we will need to have at closing in order to insure that no one has to do anything that is not of their choosing," MAYS wrote in the memo. "The board would prefer that rolling stock into stub equity remain an option rather than a requirement."
Needless to say, CLEAR CHANNEL personnel will need extremely solid reasons for accruing new expenses, as corporate accountants will be "extremely judicious in any capital spend of any type. We also are going to be very closely monitoring cash generation and balances."
This memo comes on the heels of a JANUARY memo from CCR CEO JOHN HOGAN, who ordered an end to non-essential spending. Whether this new dictate will solely freeze additional spending -- and not result in more layoffs and staff consolidation -- remains to be seen.
Read the entire memo here.