Clear Channel Loans To Be Sold At Discount
June 18, 2008 at 5:19 AM (PT)
Plans to sell the loans for the leveraged buy-out of CLEAR CHANNEL COMMUNICATIONS beginning with $3bn at 90-91 cents on the dollar show banks are still having to offer discounts to unload risky debt from the credit boom, reports THE FINANCIAL TIMES.
On TUESDAY, CITIGROUP, DEUTSCHE BANK and a consortium of banks that funded the $17.9bn LBO held a meeting to begin marketing about $3bn in loans to investors. A person familiar with the deal said that they offered the debt at 90-91 cents on the dollar. The loan package totals $14bn, but the banks are expected to sell the remainder piecemeal so as not to flood the market.
Unlike some deals when banks broke ranks to sell down debt, the CLEAR CHANNEL lenders, which also include MORGAN STANLEY, CREDIT SUISSE, ROYAL BANK OF SCOTLAND and WACHOVIA, have agreed to sell the loans down as a group, the person said.
The buy-out of CLEAR CHANNEL was agreed in 2006 when credit was still readily and cheaply available. Last month, banks, the private equity firms BAIN CAPITAL and THOMAS H. LEE and the company renegotiated the deal to $36 a share, or $17.9bn, 8% below the original price. Agreement on a revised deal came after the company and the private equity firms took the lending banks to court to press them to make good on the deal.