Are Clear Channel Lenders Rooting For Default?
June 4, 2009 at 5:41 AM (PT)
Some of the largest lenders to the private equity groups that led the $23.8 billion buy-out of CLEAR CHANNEL COMMUNICATIONS intend to turn down a proposed debt exchange, hoping to drive the radio and outdoor advertising company towards default, reports THE FINANCIAL TIMES. "The company, taken private in a leveraged deal that came to symbolise the excesses of the buy-out boom, has proposed a swap of some parent company debt for debt in CLEAR CHANNEL OUTDOOR HOLDINGS, its listed billboard division, regarded as a crown jewel despite the current steep advertising downturn.
"However, some of its largest senior creditors say they would rather wait, in the hope the company will violate its lending agreements, enabling them to force a default and to take control of its equity at a steep discount.
"Negotiations continue and the company is not yet violating its covenants. Default could be averted by an agreement with lenders or a reversal of the advertising slump that has affected radio and outdoor advertising businesses particularly severely.
"The debt exchange efforts pit BAIN CAPITAL and THOMAS H LEE PARTNERS, the private equity owners, against lenders including APOLLO MANAGEMENT, BLACKSTONE’S GSO, CENTERBRIDGE PARTNERS, OAKTREE CAPITAL and WALL STREET firms that provided the deal’s original financing. BAIN and TH LEE own about $2.5 billion of senior debt and will throw their weight behind the proposed exchange."