iHeartMedia 2002 Annual Report Download - page 89

Debt Covenants
The most significant covenants in the Company’s debt are leverage and interest coverage ratio covenants contained in the credit facilities. The
leverage ratio covenant requires the Company to maintain a ratio of total debt to EBITDA (both defined by the credit facilities) of less than
5.50x through June 30, 2003 and less than 5.00x from July 1, 2003 through the maturity of the facilities. The interest coverage covenant
requires the Company to maintain a minimum ratio of EBITDA (as defined by the credit facilities) to interest expense of 2.00x. In the event
that the Company does not meet these covenants, it is considered to be in default on the credit facilities at which time the credit facilities may
become immediately due. The Company’s bank credit facilities have cross-default provisions among the bank facilities only. No other debt
agreements of the Company have cross-default or cross-acceleration provisions.
Additionally, the AMFM Operating Inc. long-term bonds contain certain restrictive covenants that limit the ability of AMFM Operating Inc., a
wholly-owned subsidiary of the Company, to incur additional indebtedness, enter into certain transactions with affiliates, pay dividends,
consolidate, or effect certain asset sales. The AMFM Operating Inc. long-term bonds have cross-default and cross-acceleration provisions
among the AMFM Operating Inc. long-term bonds only.
At December 31, 2002, the Company was in compliance with all debt covenants. The Company expects to be in compliance during 2003.
Liquid Yield Option Notes
The Company assumed 4.75% Liquid Yield Option Notes (“LYONs”) due 2018 with a fair value of $225.4 million as a part of the merger with
Jacor on May 4, 1999. Each LYON has a principal amount at maturity of $1,000 and is convertible, at the option of the holder, at any time on
or prior to maturity, into the Company’s common stock at a conversion rate of 7.227 shares per LYON. The LYONs had a balance, net of
redemptions, conversions to common stock, amortization of premium, and accretion of interest, at December 31, 2002, of $252.1 million,
which includes a purchase accounting premium of $42.1 million, and approximate fair value of $212.5 million. At December 31, 2002,
approximately 3.1 million shares of common stock were reserved for the conversion of the LYONs.
The LYONs were not redeemable by the Company prior to February 9, 2003. Thereafter, the LYONs are redeemable for cash at any time at the
option of the Company in whole or in part, at redemption prices equal to the issue price plus accrued original issue discount to the date of
redemption.
The LYONs can be purchased by the Company, at the option of the holder, on February 9, 2003; February 9, 2008; and February 9, 2013; for a
purchase price of $494.52, $625.35 and $790.79, respectively, representing a 4.75% yield per annum to the holder on such date. The Company,
at its option, may elect to pay the purchase price on any such purchase date in cash or common stock, or any combination thereof. At
February 9, 2003, 9,683 LYONs were put to the Company for an aggregate price of $4.8 million.
Future maturities of long-term debt at December 31, 2002 are as follows:
(In thousands)
82
2003 $1,396,532
2004 12,649
2005 3,599,257
2006 753,534
2007 576,719
Thereafter 2,439,931
Total $8,778,622