• by Erik Sass  @eriksass1, October 12, 2012

Still carrying a pile of debt from one of the most leveraged deals in media history, Clear Channel Communications is seeking to swap up to $2 billion of its existing debt for new debt. The amended debt covenant should impose less onerous conditions on the company.
 
CCC says it will issue new, priority guarantee notes with a 9% rate due in 2019 to eligible lenders, provided they accept amendments to the cash flow credit facilities. The amendments would allow $5 billion exchange offers of term loans for new debt securities, which would give the company more flexibility in repayment, including bringing on new lenders.

The amendments would also allow CCC to repurchase junior debt maturing before January 2016 with up to $200 million cash, and preserve its revolving credit facility, provided it pays off the current balance. Finally, the amendments would lift some restrictions on Clear Channel Outdoor Holdings’ ability to take on debt.
 
The deal would effectively reduce the amount of CCC debt due in 2016 from $12 billion to $10 billion, by deferring $2 billion to the new 2019 repayment deadline. The company would still have to repay $1.5 billion in 2014.

Following the announcement, Standard & Poor’s Ratings Services assigned its “CCC+” rating for the communications giant, reflecting a negative outlook, based on the company’s highly leveraged position.
 
CCC assumed a total of $17.9 billion in debt in the deal engineered by Bain Capital Partners and Thomas H. Lee Capital Partners to take the company private in 2008, which came at the high water mark of the international credit bubble. Some financial analysts who follow the media business have expressed doubt that the company will be able to make scheduled debt payments, particularly the $10 billion due in 2016.