Published on Friday, 24 December 2010 11:16
CC Media Holdings, the parent company of Clear Channel Communications, which is the parent company of Clear Channel Radio, Premiere Radio Networks and Clear Channel Outdoors, among many other companies, released a statement today
letting the public know that it is looking for ways to restructure its heavy debt load. The word "bankruptcy" was cautiously and purposely not used. The statement did say everything but that word, though.
Clear Channel stated today that the corporation is "exploring a diverse array of alternatives in an effort to optimize their overall capital structure." The company plans on exploring a series of financing options that include debt offerings and credit facilities.
Debt restructuring possibilities could include "(i) the incurrence of new incremental credit facilities, (ii) amendments to CCU's existing credit facilities to, among other things, permit CCU and its subsidiaries, including Clear Channel Outdoor Holdings, Inc., to incur additional secured or unsecured indebtedness and permit extensions of the maturities of one or more of the revolving credit facilities and/or tranches of term loan facilities of CCU, (iii) an offering of new senior secured or unsecured debt of CCU or its affiliates and/or (iv) a debt-for-debt exchange with existing holders."
Bain Capital LLC and Thomas H. Lee Partners LP created CC Media in 2008 when they privatized Clear Channel Communications Inc. The two private-equity owners have been meeting with major creditors since last year, with the hopes of finding ways to avoid bankruptcy and get out form the deep debt hole of almost $19 billion the company is mired in. Earlier this year, the New York Post reported that some of the major creditors -- including Centerbridge and OakTree -- are unwilling to restructure the debt owed to them, and would rather repossess the company if it should default on the billions owed.
Clear Channel reportedly generates about $1.5 billion in cash flow annually, but must pay about $1 billion in interest on debt. Of the remaining cash flow, about half goes to capital expenditures, leaving little left over. In May of 2011, debt of $700 million is due. In July of 2014, $4.5 billion is due. The company has enough of a stockpile of cash to survive for a couple more years, but not to survive 2014. The debt restructuring concepts that were stated in the press release today are the changes that CC Media hopes will allow it to survive for a few more years at least.
Clear Channel Communications is the largest owner of radio stations in America. Locally, the company owns six radio stations and seven frequencies. The owned stations are WLIT-FM, WNUA-FM, WVAZ-FM, WKSC-FM, WGCI-FM, AND WGRB-AM. The company also owns the AM 1690 frequency, but leases it out to WVON-AM.