iHeartMedia 2000 Annual Report Download - page 62

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beginning January 5, 2000.
AMFM Merger
On August 30, 2000, the Company closed its merger with AMFM Inc. (“AMFM”) Pursuant to the terms
of the merger agreement, each share of AMFM common stock was exchanged for 0.94 shares of the
Company’ s common stock. Approximately 205.4 million shares of the Company’ s common stock were
issued in the AMFM merger, valuin g the merger, based on the average market price of the Company’ s
common stock at the signing of the merger agreement, at $15.9 billion plus the assumption of AMFM’ s
outstanding debt of $3.5 billion. Additionally, the Company assumed options and common stock
warrants with a fair value of $1.2 billion, which are convertible, subject to applicable vesting, into
approximately 25.5 million shares of the Company’ s common stock. The Company refinanced $540.0
million of AMFM’ s long-term debt at the closing of the merger using its credit facility. The AMFM
merger was accounted for as a purchase with resulting goodwill of approximately $7.1 billion, which is
being amortized over 25 years on a straight-line basis. This purchase price allocation is preliminary
pending completion of appraisals and other fair value analysis of assets and liabilities. The results of
operations of AMFM have been included in the financial statements of the Company beginning August
30, 2000.
In connection with the AMFM merger and governmental directives, the Company divested 39 radio
stations for $1.2 billion, resulting in a gain on sale of $805.2 million and an increase in income tax
expense of $306.0 million. The Company deferred a portion of this tax expense based on its replacing the
stations sold with qualified assets. Of the $1.2 billion proceeds, $839.7 million was placed in restricted
trusts for the purchase of replacement properties. In addition, restricted cash of $439.9 million was
acquired from AMFM related to the divestiture of AMFM radio stations in connection with the merger.
The following table details the reconciliation of divestiture and acquisition activity in the restricted trust
accounts:
(In thousands)
Restricted cash resulting from Clear Channel divestitures $ 839,717
Restricted cash purchased in AMFM merger 439,896
Restricted cash used in acquisitions (670,228)
Interest, net of fees 18,756
Restricted cash balance at December 31, 2000 628,141
Less current portion 308,691
Long-term restricted cash $ 319,450
On February 21, 2001, the restricted trusts expired and the $308.7 million not expended on replacement
radio assets was refunded to the Company.
SFX Merger
On August 1, 2000, the Company consummated its merger with SFX Entertainment, Inc. (“SFX”)
Pursuant to the terms of the merger agreement, each share of SFX Class A common stock was exchanged
for 0.6 shares of the Company’ s common stock and each share of SFX Class B common stock was
exchanged for one share of the Company’ s common stock. Approximately, 39.2 million shares of the
Company’ s common stock were issued in the SFX merger. Based on the average market price of the
Company’ s common stock at the signing of the merger agreement, the merger was valued at $2.9 billion
plus the assumption of SFX’ s outstanding debt of $1.5 billion. Additionally, the Company assumed all
stock options and common stock warrants with a fair value of $211.8 million, which are exercisable for
approximately 5.6 million shares of the Company’ s common stock. The Company refinanced $815.8