iHeartMedia 2006 Annual Report Download - page 46

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46
Debt Covenants
The significant covenants on our $1.75 billion five-year, multi-currency revolving credit facility relate to
leverage and interest coverage contained and defined in the credit agreement. The leverage ratio covenant requires us to
maintain a ratio of consolidated funded indebtedness to operating cash flow (as defined by the credit agreement) of less
than 5.25x. The interest coverage covenant requires us to maintain a minimum ratio of operating cash flow (as defined
by the credit agreement) to interest expense of 2.50x. In the event that we do not meet these covenants, we are
considered to be in default on the credit facility at which time the credit facility may become immediately due. At
December 31, 2006, our leverage and interest coverage ratios were 3.4x and 4.7x, respectively. This credit facility
contains a cross default provision that would be triggered if we were to default on any other indebtedness greater than
$200.0 million.
Our other indebtedness does not contain provisions that would make it a default if we were to default on our
credit facility.
The fees we pay on our $1.75 billion, five-year multi-currency revolving credit facility depend on our long-
term debt ratings. Based on our current ratings level of BBB-/Baa3, our fees on borrowings are a 45.0 basis point spread
to LIBOR and are 17.5 basis points on the total $1.75 billion facility. In the event our ratings improve, the fee on
borrowings and facility fee decline gradually to 20.0 basis points and 9.0 basis points, respectively, at ratings of A/A3 or
better. In the event that our ratings decline, the fee on borrowings and facility fee increase gradually to 120.0 basis
points and 30.0 basis points, respectively, at ratings of BB/Ba2 or lower.
We believe there are no other agreements that contain provisions that trigger an event of default upon a change
in long-term debt ratings that would have a material impact to our financial statements.
Additionally, our 8% senior notes due 2008, which were originally issued by AMFM Operating Inc., a wholly-
owned subsidiary of Clear Channel, contain certain restrictive covenants that limit the ability of AMFM Operating Inc.
to incur additional indebtedness, enter into certain transactions with affiliates, pay dividends, consolidate, or effect
certain asset sales.
At December 31, 2006, we were in compliance with all debt covenants.
Uses of Capital
Dividends
Our Board of Directors declared quarterly cash dividends as follows:
(In millions, except per share data)
Declaration
Date
Amount
per
Common
Share
Record Date
Payment Date
Total
Payment
October 26, 2005 0.1875 December 31, 2005 January 15, 2006 $100.9
February 14, 2006 0.1875 March 31, 2006 April 15, 2006 95.5
April 26, 2006 0.1875 June 30, 2006 July 15, 2006 94.0
July 25, 2006 0.1875 September 30, 2006 October 15, 2006 92.4
October 25, 2006 0.1875 December 31, 2006 January 15, 2007 92.6
Additionally, our Board of Directors declared a quarterly cash dividend of 18.75 cents per share of our
Common Stock on February, 21 2007 to be paid April 15, 2007 to shareholders of record on March 31, 2007.
Derivative Instruments
Our wholly owned subsidiary, Clear Channel Investments, Inc., terminated its secured forward exchange
contract with respect to 8.3 million shares of its investment in XM Satellite Radio Holdings, Inc. on August 2, 2006 by
paying the counterparty approximately $83.1 million. The accreted value of the debt was $92.9 million and the fair
value of the collar was an asset of $6.0 million resulting in a net gain of approximately $3.8 million.