Report: CC Banks May Discount Bonds Up To 30%
September 4, 2008 at 5:36 AM (PT)
The banks that financed the CLEAR CHANNEL buyout may discount the $980 million of company bonds they will be offering next week at discounts of up to 30%, reports BLOOMBERG NEWS.
The offering of the 10.75% eight-year notes is expected to be announced and priced next week, but PIONEER INVESTMENT MANAGEMENT INC. SVP/Portfolio Manager ANDREW FELTUS told BLOOMBERG that the banks may have to take about 70 cents on the dollar because "you're talking about something that's over five-times leveraged. The banks are now stuck with it."
The banks, including DEUTSCHE BANK and MORGAN STANLEY, would take as much as a $294 million hit if the discount is offered, a scenario that echoes the concerns voiced by the banks when they delayed the closing of the deal by refusing to finance the buyout at the original $19.5 billion price, later settling at $17.9 billion.