Clear Channel Still Juggles Debt

Still laboring under $20.7 billion of debt -- most of it assumed in the deal to take the company private, engineered by Bain Capital and Thomas H. Lee Partners in 2008 -- Clear Channel Communications is furiously juggling financial obligations with yet another debt offering, which will be used to pay off debts coming due in the near term.

In announcing the new private debt offering, Clear Channel said it is looking to sell $750 million of new priority guarantee notes due in 2022, secured by a lien against the company’s capital stock and property as well as accounts receivable and related assets.

The company will use the proceeds to prepay $741 million in outstanding loans assumed under two previous debt facilities, which are set to come due in January 2016.

This is just the latest in a series of moves by the company to restructure its debts.



In February 2013, it announced that it would use $575 million from a new debt offering to cover payments on old loans coming due in July of this year. In May 2013, the company negotiated new terms with lenders to push back maturities on another $5 billion from 2016 to 2019. In November, it extended the repayment deadline for two chunks of debt totaling $1.8 billion from 2016 to 2019 and 2021, raising its interest payments by $55 million per year over that period.

And in April of this year, the company sold $850 million in new debt, allowing it to reschedule repayments looming later this year and next year to 2018 -- but had to accept a 10% interest rate on those notes, twice the rate on the old debt.  

Indeed, with each new deal the company buys more time in the near term, but at the price of higher interest payments in the long term.

In the first six months of 2014, the company’s total interest expenses rose to $871.7 million, up 9.9% from $793 million in the same period of 2013, which in turn was up 4.3% from $759.9 million in the first half of 2012. The most recent figure considerably exceeded the $798.4 million in cash and cash equivalents on hand at the end of the first half of 2014. Clear Channel also forecast another $791 of interest payments in the second half of the year.

However, the company does appear to be succeeding in addressing its most pressing concern, the debt repayments scheduled for January 2016, which it has reduced from $3.2 billion in late 2013 to around $1.1 billion after latest deal.

1 comment about "Clear Channel Still Juggles Debt".
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  1. Anna Daisy from Brillians, October 14, 2014 at 9:14 a.m.

    In some occasions refinancing is the best thing a person/a company can do concerning a debt. If everything was done correctly, refinancing can save one or another financial situation. And for Clear Channel it’s very good that now they can invest in the business and grow. It’s nice to hear that some companies find wise decisions and survive despite a huge debt. Unfortunately, today’s economy makes a lot of people and firms to borrow money or apply to companies like cash advance lender to make ends meet. As for me, taking out a loan was always a doubtful medicine from financial diseases but sometimes all you can do is to get in debt. I know many people who had principles concerning that but times have changed and almost everyone uses financial services these days.

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