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Clear Channel debt mixed after $2B loan-for-bond swap settles; terms

Debt backing Clear Channel Communications is mixed today as the loan-for-bond swap settles and the new fixed-coupon guaranteed priority notes start trading after distribution under Rule 144A. The new paper – a $2 billion issue of 9% secured notes due 2019 with 2.5-years of call protection – is pegged at 92.5/93 in the secondary market, versus quotes earlier today at 93.5/93.75 in the Street, and a par-for-par swap for various term debt, the bulk of which had been trading in the low 80s prior to news of the transaction, sources said.

In the loan market, the TLB due 2016 (L+365) is quoted at 83.75/84.5 this morning, which off highs touched on the news of the exchange and the amendment, but up from 82.625/83.125 prior to launch of the exchange.

The company’s 9% secured notes due 2021, meanwhile, are trading one point higher, at 91, trade data show. This paper is pari passu to the exchange notes, dates to 2011 issuance as 10-year (non-call five) structure, and thus now carries 3.5 years of call protection.

As reported earlier this week, Clear Channel lenders approved the broadcaster’s loan-amendment request, which allows the company to exchange up to $5 billion of its loans for bonds, among other provisions that provide it with flexibility to address its capital structure. The company said that it received over $8 billion of commitments for the loan-for-bond exchange.

As noted earlier, accounts that participate in the exchange will be allocated positions in the bonds on a pro rata basis. The exchange notes include MFN protection against future issues of exchange notes that come on more attractive terms, sources noted.

Citigroup, Morgan Stanley, and Goldman Sachs arranged the amendment, while Morgan Stanley was left lead on the loan-for-bond exchange, with Citi and Goldman, sources added. The amendment allows for up to $5 billion of loan-for-bond exchanges, inclusive of the $2 billion deal that launched on Oct. 12.

Other elements of the amendment are as follows, according the SEC filings and market sources:

  • Provide the company with the ability to repurchase its term debt at sub-par prices via a Dutch auction process once it refinances its TLA or extends the maturity of the facility beyond the January 2016 maturity of its other term loans.
  • Allow the company to repay the TLA on a non-pro-rata basis with its term loans maturing in 2016.
  • Combine its TLB and delayed-draw term loans into one tranche.
  • Allow for the repurchase of junior debt maturing inside of 2016 with up to $200 million of cash on hand.
  • Preserve revolver capacity in the instance the company repays all revolver borrowings.
  • Conform the debt-incurrence covenant at Clear Channel Outdoor to match that of the 7.625% subordinated notes.

Clear Channel had about $11.29 billion of term debt outstanding as of June 30, of which $1.07 billion was under the TLA, which matures in July 2014. The remainder of the term debt matures in January 2016.

There was no fee on offer to approve the amendment, which required majority consent. As the amendment launched to market, Clear Channel outlined that it already has roughly 46% on board via holdings of sponsors Bain Capital and Thomas H. Lee Partners, as well as accounts managed by Angelo Gordon, Apollo Global Management, Canyon Capital Advisors, and Oaktree Capital Management.

Clear Channel is a global media and entertainment company specializing in radio, digital, outdoor, mobile, live events, and on-demand entertainment and information services for local communities and providing opportunities for advertisers. Corporate ratings are CCC+/Caa2. Terms on the new exchange-notes follow: – Matt Fuller/Kerry Kantin

Issuer Clear Channel Communications
Ratings CCC+/Caa1
Amount $2 billion
Issue priority guaranteed (secured) notes (144A)
Coupon 9%
Price 100
Yield 9%
Spread T+780
FRN eq. L+770
Maturity Dec. 15, 2019
Call nc2.5 @ par+50% coupon
Trade Oct. 19, 2012
Settle Oct. 25, 2012 (t+4)
Books MS/CITI/GS
Px talk n/a
Notes w/ 2.5-year equity clawback for up to 40% of issue @109.

 

 

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