S&P Cuts Clear Channel Credit Rating
June 9, 2009 at 5:07 AM (PT)
The credit rating of CLEAR CHANNEL COMMUNICATIONS and CC MEDIA, its private equity-controlled holding company, were cut on MONDAY by STANDARD & POOR’S, amid uncertainty about the group’s ability to avoid defaulting on its $20bn of debt, reports THE FINANCIAL TIMES. If senior secured lenders refused a proposed debt exchange, "we are concerned that it could violate financial covenants and would be unable to absorb a potential interest rate increase that could accompany an amendment, forcing it into bankruptcy," the agency warned.
However as ALL ACCESS reported YESTERDAY (NET NEWS 6/8), WILLIAM ECCLESHARE, the newly appointed head of the group’s international outdoor advertising division, told the FT that its owners remain confident.
"BAIN CAPITAL and THOMAS H LEE, who took control of the company last year after a tussle with banks in the midst of the credit crunch, could see negative cashflows from their investment this year, S&P warned, citing cyclical and secular pressures on its core businesses.
"S&P estimated that balance sheet debt rose to 14 times earnings before interest, tax, depreciation and amortisation (ebitda) for the 12 months to 2009, and said CLEAR CHANNEL could violate covenants in its loan agreements 'in late 2009' if operating trends did not improve."