Clear Channel unit may up bond offering


Clear Channel Outdoor (CCO) says in an SEC filing that it may increase its proposed $750 million offering of senior notes. All of the proceeds are going to pay down debt owed to parent Clear Channel Communications (CCU), which stands to improve its balance sheet.

Just how much bigger the issue of senior notes due 2017 might become was not spelled out. Several other media companies have found a strong Wall Street appetite for high yield bond issues in recent months.

The SEC filing also disclosed that some CCU debt holders are still trying to figure out how to force the company into a default situation and try to grab assets on the cheap. “In connection with the previously announced transaction, counsel for certain lenders delivered a letter asserting that the previously announced transaction and the intended use of proceeds was an event of default under the CCU Credit Agreement. CCU has evaluated the assertions made in the letter and believes the assertions made by those lenders were without merit and, in any event, are not relevant in the context of the restructured transactions. It is possible, however, that lenders under the CCU Credit Agreement could raise similar or new claims under the CCU Credit Agreement. We believe any such objections would be without merit and would contest them vigorously,” the filing said.

Just how the transaction is alleged to violate the CCU debt covenants is not explained. The transaction to have CCO borrow new cash to repay some of what it owes CCU is designed to improve the debt ratios at CCU and make a default less likely.

RBR-TVBR observation: The good bond market is bad news for the vultures. The funds that bet on being able to force Clear Channel into Chapter 11 are seeing that become less and less likely.