The $2.5 billion note and agreements with Clear Channel Communications impose restrictions on our ability to finance operations and capital needs, make acquisitions or engage in other business activities and requires prepayment from substantially all proc for Clear_Channel_Outdoor

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Clear Channel Outdoor Holdings (CCO)

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CCO » Topics » The $2.5 billion note and agreements with Clear Channel Communications impose restrictions on our ability to finance operations and capital needs, make acquisitions or engage in other business activities and requires prepayment from substantially all proc

This excerpt taken from the CCO 8-K filed Dec 18, 2009.

Our agreements with Clear Channel Communications impose restrictions on our ability to finance operations and capital needs, make acquisitions or engage in other business activities.

The Master Agreement (as defined herein) with Clear Channel Communications includes restrictive covenants that, among other things, restrict our ability to:

issue any shares of capital stock or securities convertible into capital stock;

incur additional indebtedness;

make certain acquisitions and investments;

repurchase our stock;

dispose of certain assets; and

merge or consolidate.

The existence of these restrictions limits our ability to finance operations and capital needs, make acquisitions or engage in other business activities, including our ability to grow and increase our revenue or respond to competitive changes. The following is a discussion of our sources of capital:

We do not have any material committed external sources of capital independent from Clear Channel Communications.

Under our Master Agreement with Clear Channel Communications, we are limited in our borrowing from third parties to no more than $400.0 million unless we receive the prior consent of Clear Channel Communications. Clear Channel Communications has consented to the issuance of the notes. In addition, the Company is subject to certain covenants under the Master Agreement, including a prohibition on taking actions that could reasonably result in Clear Channel Communications being in breach of or in default under its senior secured credit facilities, which could limit our ability to incur debt in the future. As a result of current borrowings and commitments we were limited to approximately $139.4 million in additional external borrowings, other than borrowings consented to in advance by Clear Channel Communications, as of September 30, 2009.

As a restricted subsidiary that is a non-loan party under Clear Channel Communications’ senior secured credit facilities, we are limited in our borrowing from third parties to no more than $900.0 million (excluding certain indebtedness used to refinance the CCU Intercompany Note). While the $2.0 billion principal amount of the Series B Notes offered hereby is excluded from this limitation, the issuance of the Series A Notes will reduce availability under this limitation by $500.0 million. In addition, our ability to borrow from third parties may be further limited if other restricted subsidiaries that are non-loan parties under Clear Channel Communications’ senior secured credit facilities borrow funds that count against this limitation.

Clear Channel Communications’ senior secured credit facilities contain a covenant that restricts Clear Channel Communications’ ability to amend, modify or change any term of the Cash Management Notes and certain other agreements between Clear Channel Communications and us in any manner that is materially adverse to the interests of the lenders under such facilities. The covenant expressly provides that extensions of the maturity of the Cash Management Notes and these agreements and any changes in the interest rate on the Cash Management Notes and other intercompany notes between Clear Channel Communications and us that are approved by the board of directors of Clear Channel Communications will be deemed not materially adverse to the interests of the lenders. In connection with the Transactions, Clear Channel Communications and the Company will extend the maturity and change the interest rate on the Cash Management Notes as described in more detail under “Description of Other Indebtedness.”

Certain of our international subsidiaries have borrowed $30.0 million against a $150.0 million sub-limit included in Clear Channel Communications’ $2.0 billion revolving credit facility, and may make additional borrowings to the extent Clear Channel Communications is not already borrowing against this capacity and is in compliance with its covenants under the revolving credit facility. On February 6, 2009, Clear Channel Communications borrowed the remaining $120.0 million available under the $150.0 million sub-limit.

As part of the day-to-day cash management services provided by Clear Channel Communications, we maintain accounts that represent net amounts due to or from Clear Channel Communications, which is recorded as “Due from/to Clear Channel Communications” on the consolidated balance sheet. The accounts represent the net of the balances on our revolving promissory note issued by us to Clear Channel Communications and the revolving promissory note issued by Clear Channel Communications to us, each in the face amount of $1.0 billion, or if more or less than such amount, the aggregate unpaid principal amount of all advances. Clear Channel Communications is not required to provide us with funds to finance our working capital or other cash requirements. Our claim in relation to cash transferred from our concentration account is on an unsecured basis and is limited to the balance of the “Due from Clear Channel Communications” account, which amount was $529.0 million as of September 30, 2009. After giving pro forma effect to the Prior Term Note Prepayment, the balance of the “Due from Clear Channel Communications” account would have been $29.0 million at September 30, 2009. The balance in such account is currently expected to continue to increase and could exceed $1.0 billion in the next several years. If Clear Channel Communications were to become insolvent, the notes would not be accelerated, and we would be an unsecured creditor of Clear Channel Communications with respect to any amounts owed to us under the CCU Cash Management Note. In such event, we would be treated the same as other unsecured creditors of Clear Channel Communications and, if we were not entitled to the cash previously transferred to Clear Channel Communications, or could not obtain such cash on a timely basis, we could experience a liquidity shortfall.

The notes will require the Company to maintain at least $100.0 million in cash or other liquid assets or have cash available to be borrowed under committed credit facilities, consisting of (i) $50.0 million at the issuer and guarantor entities (principally our domestic business) and (ii) $50.0 million at the non-guarantor subsidiaries (principally our international business) (together the “Liquidity Amount”) in each case under the sole control of the relevant entity. The existing cash management arrangements with Clear Channel Communications will continue, including the funding of daily disbursements relating to domestic operating activities of the Company. However, in the event that Clear Channel Communications fails to advance any funds to or for the account of the Company to pay daily operating disbursements of domestic operations, and as a result, we are unable to maintain the Liquidity Amount, we could make a demand for repayment on the CCU Cash Management Note (to the extent of any balance thereon) to replenish the Liquidity Amount. If we fail to maintain the Liquidity Amount for more than five business days, an event of default will occur under the indenture governing the notes. In the event of a bankruptcy, liquidation, dissolution, reorganization, or similar proceeding of Clear Channel Communications, for the period thereafter that is the shorter of such proceeding and 60 days, the Liquidity Amount will be reduced to $50.0 million, with a $25.0 million requirement at the issuer and guarantor entities and a $25.0 million requirement at the non-guarantor subsidiaries. There can be no assurance that Clear Channel Communications will have sufficient liquidity to fund its obligations to us.

These excerpts taken from the CCO 8-K filed Dec 11, 2009.

The $2.5 billion note and agreements with Clear Channel Communications impose restrictions on our ability to finance operations and capital needs, make acquisitions or engage in other business activities and require prepayment from substantially all proceeds from debt or equity raised by us.

The $2.5 billion note and Master Agreement with Clear Channel Communications include restrictive covenants that, among other things, restrict our ability to:

•

issue any shares of capital stock or securities convertible into capital stock;

•

incur additional indebtedness;

•

pay dividends and make distributions;

•

make certain acquisitions and investments;

•

repurchase our stock;

•

create liens;

•

enter into transactions with affiliates;

•

enter into sale-leaseback transactions;

•

dispose of all or substantially all of our assets; and

•

merge or consolidate.

In addition, the note with Clear Channel Communications requires us to prepay it in full upon a change of control (as defined in the note), and, upon our issuances of equity and incurrences of indebtedness, subject to certain exceptions, to prepay the note in the amount of net proceeds received from such events. Our failure to comply with the terms and covenants in our indebtedness could lead to a default under the terms of those documents, which would entitle Clear Channel Communications or other holders to accelerate the indebtedness and declare all amounts owed due and payable.

•

We are limited in our borrowing from third parties to no more than $400.0 million (including borrowings under the $150.0 million sub-limit of Clear Channel Communications’ $2.0 billion revolving credit facility). As a result of current borrowings and commitments, we were limited to approximately $206.8 million in additional external borrowings as of December 31, 2008.

•

Certain of our International subsidiaries may borrow against a $150.0 million sub-limit included in Clear Channel Communications’ $2.0 billion revolving credit facility, to the extent Clear Channel Communications has not already borrowed against this capacity and is in compliance with its covenants under the credit facility. On February 6, 2009, Clear Channel Communications borrowed the remaining availability under its $2.0 billion revolving credit facility, including the remaining availability under the $150.0 million sub-limit.

•

As part of the day-to-day cash management services provided by Clear Channel Communications, we maintain accounts that represent net amounts due to or from Clear Channel Communications, which is recorded as “Due from/to Clear Channel Communications” on the consolidated balance sheet. The accounts represent the net of the balances on our revolving promissory note issued by us to Clear Channel Communications and the revolving promissory note issued by Clear Channel Communications to us, each in the face amount of $1.0 billion, or if more or less than such amount, the aggregate unpaid principal amount of all advances. Clear Channel Communications is not required to provide us with funds to finance our working capital or other cash requirements. Our claim in relation to cash transferred from our concentration account is on an unsecured basis and is limited to the balance of the “Due from Clear Channel Communications” account. If Clear Channel Communications were to become insolvent, we would be an unsecured creditor of Clear Channel Communications with respect to the revolving promissory note issued by Clear Channel Communications to us. At December 31, 2008, the asset recorded in “Due from Clear Channel Communications” on the consolidated balance sheet was $431.6 million.

•

Currently, we do not have any committed external sources of capital independent from Clear Channel Communications.

Our agreements with Clear Channel Communications impose restrictions on our ability to finance operations and capital needs, make acquisitions or engage in other business activities.

The Master Agreement (as defined herein) with Clear Channel Communications includes restrictive covenants that, among other things, restrict our ability to:

•

issue any shares of capital stock or securities convertible into capital stock;

•

incur additional indebtedness;

•

make certain acquisitions and investments;

•

repurchase our stock;

•

dispose of certain assets; and

•

merge or consolidate.

•

We do not have any material committed external sources of capital independent from Clear Channel Communications.

•

Under our Master Agreement with Clear Channel Communications and the CCU Intercompany Note, we are limited in our borrowing from third parties to no more than $400.0 million. In connection with the offering, the Company and Clear Channel Communications will amend the Master Agreement and amend and restate the CCU Intercompany Note to exclude from such $400.0 million limitation the issuance of the notes and future issuances of debt securities with maturities no earlier than the notes that are used to repay the CCU Intercompany Note. As a result of current borrowings and commitments we were limited to approximately $139.4 million in additional external borrowings as of September 30, 2009.

•

Clear Channel Communications’ senior secured credit facilities contain a covenant that restricts Clear Channel Communications’ ability to amend, modify or change any term of the CCU Intercompany Note, the other intercompany notes and certain other agreements between Clear Channel Communications and us in any manner that is materially adverse to the interests of the lenders under such facilities. The covenant expressly provides that extensions of the maturity of the CCU Intercompany Note, the other intercompany notes and these agreements and any changes in the interest rate on the CCU Intercompany Note and other intercompany notes between Clear Channel Communications and us that are approved by the board of directors of Clear Channel Communications will be deemed not materially adverse to the interests of the lenders. In connection with the offering, the Master Agreement and the CCU Intercompany Note will be amended to permit the issuance of the notes offered hereby and future refinancings of the CCU Intercompany Note and to extend the maturity and change the interest rate on the CCU Intercompany Note and other intercompany notes as described in more detail under “Description of Other Indebtedness.” The Company does not believe that the amendments proposed to be effected in connection with the offering are prohibited by the covenant.

•

Certain of our international subsidiaries have borrowed $30 million against a $150.0 million sub-limit included in Clear Channel Communications’ $2.0 billion revolving credit facility, and may make additional borrowings to the extent Clear Channel Communications is not already borrowing against this capacity and is in compliance with its covenants under the revolving credit facility. On February 6, 2009, Clear Channel Communications borrowed the remaining $120.0 million available under the $150.0 million sub-limit.

•

As part of the day-to-day cash management services provided by Clear Channel Communications, we maintain accounts that represent net amounts due to or from Clear Channel Communications, which is recorded as “Due from/to Clear Channel Communications” on the consolidated balance sheet. The accounts represent the net of the balances on our revolving promissory note issued by us to Clear Channel Communications and the revolving promissory note issued by Clear Channel Communications to us, each in the face amount of $1.0 billion, or if more or less than such amount, the aggregate unpaid principal amount of all advances. Clear Channel Communications is not required to provide us with funds to finance our working capital or other cash requirements. Our claim in relation to cash transferred from our concentration account is on an unsecured basis and is limited to the balance of the “Due from Clear Channel Communications” account, which amount was $529.0 million as of September 30, 2009. The balance in such account is currently expected to continue to increase and could exceed $1.0 billion in the next several years. If Clear Channel Communications were to become insolvent, the notes would not be accelerated and we would be an unsecured creditor of Clear Channel Communications with respect to any amounts owed to us under the cash management note. In such event, we would be treated the same as other unsecured creditors of Clear Channel Communications and, if we were not entitled to the cash previously transferred to Clear Channel Communications, or could not obtain such cash on a timely basis, we could experience a liquidity shortfall.

•

The notes will require the Company to maintain at least $100 million in cash or other liquid assets or have cash available to be borrowed under committed credit facilities, consisting of (i) $50.0 million at the issuer and guarantor entities (other than CCOI) (principally our domestic business) and (ii) $50.0 million at the non-guarantor subsidiaries (principally our international business) (together the “Liquidity Amount”) in each case under the sole control of the relevant entity. As part of the offering, Clear Channel Communications will repay $50.0 million in principal amount of the Due from Clear Channel Communications to fund the initial shortfall in the Liquidity Amount. The existing cash management arrangements with Clear Channel Communications will continue, including the funding of daily disbursements relating to domestic operating activities of the Company. However, in the event that Clear Channel Communications fails to advance any funds to or for the account of the Company to pay daily operating disbursements of domestic operations, and as a result, we are unable to maintain the Liquidity Amount, we could make a demand for repayment on the Due from Clear Channel Communications note (to the extent of any balance thereon) to replenish the Liquidity Amount. If we fail to maintain the Liquidity Amount for more than five business days, an event of default will occur under the indenture governing the notes. In the event of a bankruptcy, liquidation, dissolution, reorganization, or similar proceeding of Clear Channel Communications, for the period thereafter that is the shorter of such proceeding and 60 days, the Liquidity Amount will be reduced to $50.0 million, with a $25.0 million requirement at the issuer and guarantor entities (other than CCOI) and a $25.0 million requirement at the non-guarantor subsidiaries. There can be no assurance that Clear Channel Communications will have sufficient liquidity to fund its obligations to us.

This excerpt taken from the CCO 10-K filed Mar 2, 2009.

The $2.5 billion note and Master Agreement with Clear Channel Communications include restrictive covenants that, among other things, restrict our ability to:

•

issue any shares of capital stock or securities convertible into capital stock;

•

incur additional indebtedness;

•

pay dividends and make distributions;

•

make certain acquisitions and investments;

•

repurchase our stock;

•

create liens;

•

enter into transactions with affiliates;

•

enter into sale-leaseback transactions;

•

dispose of all or substantially all of our assets; and

•

merge or consolidate.

•

As part of the day-to-day cash management services provided by Clear Channel Communications, we maintain accounts that represent net amounts due to or from Clear Channel Communications, which is recorded as “Due from/to Clear Channel Communications” on the consolidated balance sheet. The accounts represent the net of the balances on our revolving promissory note issued by us to Clear Channel Communications and the revolving promissory note issued by Clear Channel Communications to us, each in the face amount of $1.0 billion, or if more or less than such amount, the aggregate unpaid principal amount of all advances. Clear Channel Communications is not required to provide us with funds to finance our working capital or other cash requirements. Our claim in relation to cash transferred from our concentration account is on an unsecured basis and is limited to the balance of the “Due from Clear Channel Communications” account. If Clear Channel Communications were to become insolvent, we would be an unsecured creditor of Clear Channel Communications with respect to the revolving promissory note issued by Clear Channel Communications to us. At December 31, 2008, the asset recorded in “Due from Clear Channel Communications” on the consolidated balance sheet was $431.6 million.

•

Currently, we do not have any committed external sources of capital independent from Clear Channel Communications.

This excerpt taken from the CCO 10-K filed Feb 14, 2008.

The $2.5 billion note and agreements with Clear Channel Communications impose restrictions on our ability to finance operations and capital needs, make acquisitions or engage in other business activities and requires prepayment from substantially all proceeds from debt or equity raised by us.

The $2.5 billion note and Master Agreement with Clear Channel Communications include restrictive covenants that, among other things, restrict our ability to:

•

issue any shares of capital stock or securities convertible into capital stock;

•

incur additional debt;

•

pay dividends and make distributions;

•

make certain acquisitions and investments;

•

repurchase our stock;

•

create liens;

•

enter into transactions with affiliates;

•

enter into sale-leaseback transactions;

•

dispose of all or substantially all of our assets; and

•

merge or consolidate.

The existence of these restrictions could limit our ability to grow and increase our revenue or respond to competitive changes.

In addition, the note with Clear Channel Communications requires us to prepay it in full upon a change of control (as defined in the note), and, upon our issuances of equity and incurrences of debt, subject to certain exceptions, to prepay the note in the amount of net proceeds received from such events. Our failure to comply with the terms and covenants in our indebtedness could lead to a default under the terms of those documents, which would entitle Clear Channel Communications or other holders to accelerate the indebtedness and declare all amounts owed due and payable.

EXCERPTS ON THIS PAGE:

8-K	Dec 18, 2009

8-K (2 sections)	Dec 11, 2009

10-K	Mar 2, 2009

10-K	Feb 14, 2008

Clear Channel Outdoor Holdings (CCO)

CCO » Topics » The $2.5 billion note and agreements with Clear Channel Communications impose restrictions on our ability to finance operations and capital needs, make acquisitions or engage in other business activities and requires prepayment from substantially all proc

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