Clear Channel's Offer To Extend Existing Terms Loans Expires

Looking To Pay Down Debt

CLEAR CHANNEL COMMUNICATIONS announced TODAY (5/23) the expiration of its previously announced offer (NET NEWS 5/9) to amend CCU’s cash flow credit facility pursuant to which term loan B lenders and/or term loan C lenders agree to extend the maturity of a portion of their loans due 2016 through the creation of a new term loan D facility.

The move had been met with skepticism by MOODY'S INVESTOR SERVICE, which assigned a "Caa1" rating to CLEAR CHANNEL COMMUNICATIONS' proposed $1.5 billion term loan D.

Last week (NET NEWS 5/13), MOODY'S wrote, "The company [CLEAR CHANNEL] has announced an amendment to its current credit facilities to exchange $1.5 billion of its $8.2 billion in term loan B & C's which mature in JANUARY 2016, into a new term loan D that matures two and half years later in JULY 2018. The security and guarantee package is expected to be identical to the existing term loans. While the final price has not been determined as of this press release, the term loan D would pay L+600 instead of the L+365 on the existing B&C tranche. There would be no required amortization and in the case of any mandatory prepayments to the bank loans, any paydowns would be applied first to the 2016 bank facilities. The maintenance covenant of the existing terms loans will be extended out to the term loan D's maturity date where it will be set at 8.75x."

MOODY'S explained, "The exchange offer follows the company's issuance of PGN notes and a draw down on its ABL facility in FEBRUARY 2013 to repay its TLA facility that was scheduled to mature in 2014. The transaction would reduce the amount of term loans maturing in JANUARY 2016 from $8.2 billion to $6.7 billion. $1.6 billion of cash pay and toggle notes mature in AUGUST 2016 and an additional $250 million of legacy notes mature in DECEMBER 2016. While the transaction extends CLEAR CHANNEL's debt maturity profile, it is expected to increase interest expenses by about $35 million annually, although final pricing has not yet been determined."

CLEAR CHANNEL noted TODAY that it had "offered to extend up to $5.0 billion of term loans and also sought to amend its cash flow credit facility to permit CCU to make AHYDO catch-up payments with respect to certain of its indebtedness.

The offer expired at 5p ET time on MAY 22nd, 2013. The aggregate principal amount of loans submitted for extension was greater than $6.5 billion and consents were received in an aggregate amount in excess of the amount required to effect the other amendments."

The new extended term loans will have the same security and guarantee package as the outstanding term loans B and C and will mature in JANUARY 2019. Borrowings under the new extended term loans will bear interest at a rate equal to, at CCU’s option, adjusted LIBOR plus 6.75% or a base rate plus 5.75%.

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