Update: Bain And THL Deny Seeking Help From Banks

Who's Telling The Truth?

Disputing an earlier N.Y. POST report, banking sources told THE NEW YORK TIMES' DEALBOOK that BAIN CAPITAL and THL PARTNERS have not approached the banks to prevent CLEAR CHANNEL from defaulting. What's more, there is no new effort to restructure the company's debt.

"THE NEW YORK POST story about CLEAR CHANNEL today is dead wrong, and we told them so," a spokesman for the private equity group told DEALBOOK. "It’s a blatant misrepresentation of events to report that THL and BAIN CAPITAL have reached out to the banks for financing assistance on CLEAR CHANNEL." 

The NewYork Post story about Clear Channel today is dead wrong, and we told them so

Debtwire: Clear Channel Term Loan Rallies, Covenant Breach In Fy09 Unlikely

According to report on DEBTWIRE (10/6), "CLEAR CHANNEL is not expected to breach its 9.5x secured leverage covenant in the near term, despite its struggles achieving top-line growth, said a source close to the company and a source close to the company’s lenders.

"While still hobbled by a USD 20.5bn capital structure inked in a different era, the combination of cost-cutting, add-backs and cure rights are expected to enable CLEAR CHANNEL to get through the end of the year without requiring a covenant waiver, said the lender source.

"The covenant call is more than wishful thinking. FTI CONSULTING, the financial advisor to a steering committee of CLEAR CHANNEL’s lenders, made a presentation last FRIDAY based on guidance provided by the company, said multiple sources familiar with the situation.

"In its base case scenario, FTI said the company would approach its 9.5x secured leverage covenant by the 3Q10, but avoid a breach and improve thereafter. In the worst case scenario, FTI projected the covenant could be breached, but not until 1Q10. FTI did not provide EBITDA estimates in the presentation."

This directly contradicts the THE POST, which reported  that "after a bruising fight two years ago to force the banks to live up to their commitment to fund the ill-fated buyout, those same banks now are telling the PE firms to take a hike, two sources close to the situation said. That means CLEAR CHANNEL may now default by year-end or early next year, one of the sources said."

BAIN CAPITAL and THOMAS H LEE Partners were part of a leveraged $27 billion buyout of CLEAR CHANNEL in the summer of 2008. When the buyout deal was first proposed in 2006, the private-equity firms were operating in a much different credit market. Money was still easy to get. However, by the time the deal closed, everything had changed -- and credit was difficult to obtain. The banks that underwrote the deal -- CITIGROUP, CREDIT SUISSE, DEUTSCHE BANK, MORGAN STANLEY, RBS and WACHOVIA -- wanted the PE firms to walk away from the buyout so they did not have to issue loans that would be difficult to sell.

CLEAR CHANNEL has tried to restructure its debt twice, with the most recent attempt by its OUTDOOR unit to launch a $3 billion debt offering, which failed to attract investor interest. CC also proposed that it exchange some of the loans of larger investors for more secure CLEAR CHANNEL OUTDOOR debt. That did not succeed, either.

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