Clear Channel Communications has announced a tender offer to buy back a pile of its debt – at deeply discounted prices. The tender covers six issues of notes.
The tender announced late Friday is to buy back up to $200 million of the company’s outstanding debt, but far more than that in original face value. The senior notes involved have coupons ranging from 4.4% to 10.75% and come due from 2011 through 2016. The issues furthest out, due 2014 and 2016, are restricted to a maximum of $50 million each. But they also carry the lowest tender offers.
For the bonds nearest due, the 6.25% issue due 2011, Clear Channel is offering $500 per $1,000 face value, plus an extra $30 for tenders submitted by the “early tender premium” deadline of August 13. The tender for the issues furthest out are at much deeper discounts to face value. The lowest offer is for the 5.5% notes due 2014, at $270 per $1,000 face value, plus the $30 premium, for a total of $300.
RBR/TVBR observation: How successful will this tender be? It all depends on who holds those notes.
We know that several vulture funds bought up a lot of Clear Channel debt and are hoping to force the company into Chapter 11 so they can pick up its assets on the cheap. But, if enough of Clear Channel’s debt is held by financial players who just want to make a buck and move on (or even take their losses and move on), then Clear Channel could find willing sellers.
If Clear Channel succeeds in buying back at least $400 million of its debt for $200 million cash, and maybe considerably more, that will reduce its total indebtedness and give it that much more breathing room to avoid Chapter 11.