Report: Senior Lenders Reject CC Debt Proposal
May 22, 2009 at 3:40 AM (PT)
A debt-swap proposal by CLEAR CHANNEL was rejected by two senior lenders, further heightening the woes of the operator of radio stations and outdoor advertising space, THE NEW YORK POST said citing sources.
At least two lenders rejected a proposal by private equity firms THOMAS H. LEE PARTNERS and BAIN CAPITAL, which acquired CLEAR CHANNEL last JULY in a $17.9 billion takeover, for a debt exchange, sources told the paper.
Senior lenders were offered in part an exchange of some of the their $15 billion in debt for $2.5 billion that is owed to the company from its outdoor-advertising business, the paper said.
"CLEAR CHANNEL's owners believe the company has some flexibility around its loan agreements, and in a worst-case scenario THL and BAIN can pump more money into the company to avoid bankruptcy," wrote THE POST. "One CLEAR CHANNEL senior lender said that under its agreement, debt could not be greater than 9.5 times the company's cash flow. While that ratio stands at 7.1, the worry is that with earnings and cash flow falling fast, the ratio could swell to more than eight times cash flow in the second quarter and blow past the 9.5 threshold by the end of the year."