One tender a go, one not

After repeatedly extending tender offers to buy back two bond issues simultaneous with closing its stock buyout, Clear Channel has now dropped one of the bond tenders. It has extended until July 30th the tender offer for the 8% AMFM Notes, but terminated the tender for the 7.65% CCU Notes.

Although the offers to buy back the bonds had been made in conjunction with the $23.8 billion deal to have a group led by Thomas H. Lee Partners and Bain Capital buy out Clear Channel’s public shareholders, the bond buybacks were not required. “Each of the tender offers is conditioned upon the consummation of our merger. The completion of the merger and the related debt financings are not subject to, or conditioned upon, the completion of the tender offers,” Clear Channel stated in several SEC filings.

The AMFM Note tender is now scheduled to expire on June 30th. This may, indeed, be the last extension, since that’s also the anticipated closing date for the stock buyout. That is dependent on shareholder approval at a special meeting called for July 24th. After numerous delays and lots of legal battling, the deal is finally in the home stretch.

Meanwhile, the holders who tendered more than 98% of the outstanding CCU Notes, will be having them “promptly returned,” said Clear Channel. Not that paper is likely to have changed hands in this day and age, but the electronic tenders will be un-tendered with a “thank you, but we’ve changed our mind.”

RBR/TVBR observation: As usual, this all comes down to money. Clear Channel wanted to lower its overall cost of debt by cashing out the two bond issues. But, as we all know, the cost of capital has been going up lately. So, Clear Channel is now going to buy back the $644 million of 8% AMFM Notes, which would have matured November 1st of this year anyway. But it will pass on cashing out the $750 million in 7.65% CCU Notes, which won’t come due until 2010.

The total debt of the new Clear Channel will not be impacted by the change of heart. A company spokesperson told RBR/TVBR that since the company will be rolling over the $750 million in CCU Notes, it will forego drawing $750 million under a new term loan.

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