Report: Clear Channel eying restructuring


Thursday’s New York Post claimed Clear Channel Communications is in early talks with lenders about a restructuring of its massive debt, with even a pre-packaged Chapter 11 filing being talked about. RBR/TVBR got no response when we asked Clear Channel for comment. Not surprising, since the Post didn’t get any comment either.

Unnamed sources cited in the Post story indicated that the restructuring talks are at an early stage, so don’t look for anything to happen soon. The biggest portion of the total $23 billion debt owed by Clear Channel and parent CC Media Holdings is $16 billion owed to its senior lenders. The Post story said those big banks do not appear interested in forcing a bankruptcy filing. Also, the story said, CC Media’s primary owners, Bain Capital and Thomas H. Lee Partners, also hold Clear Channel debt and would not want to foreclose.

CC Media Holdings reported last week that Q1 revenues fell 23% from a year earlier, with radio down 22% and outdoor down 25%. Even so, the company still reported operating income before depreciation, amortization and non-cash compensation expense (OIBDAN) of $174.2 million. That was down 56%, but still considerable cash to help the company stay current on its interest payments.

This is hardly the first time that Clear Channel has gotten press scrutiny of its financial condition. The New York Times wrote last month that the company was in danger of defaulting on its loan covenants. Also, an article on MSN Money had included the company in its list of top 10 companies in danger of bankruptcy.

RBR/TVBR observation: Talk about a bankruptcy filing seems a bit premature to us. Clear Channel drew down all of its revolving credit line to give it financial flexibility to get through 2009. Certainly the company would be interested in restructuring some of its debt if it can strike decent terms with the current holders, but the situation shouldn’t reach the critical stage unless the economic downturn just drags on and on through 2010.