iHeartMedia 2009 Annual Report Download - page 121

The Series B Notes indenture restricts CCOH’s ability to incur additional indebtedness and pay dividends based on an incurrence test.
In order to incur additional indebtedness, CCOH’s debt to adjusted EBITDA ratios (as defined by the indenture) must be lower than
6.5:1 and 3.25:1 for total debt and senior debt, respectively. Similarly in order for CCOH to pay dividends from the proceeds of
indebtedness or the proceeds from asset sales, its debt to adjusted EBITDA ratios (as defined by the indenture) must be lower than
6.0:1 and 3.0:1 for total debt and senior debt, respectively. If these ratios are not met, CCOH has certain exceptions that allow it to
incur additional indebtedness and pay dividends, such as a $500.0 million exception for the payment of dividends. CCOH was in
compliance with these covenants as of December 31, 2009.
A portion of the proceeds of the Notes were used to (i) pay the fees and expenses of the Notes offering, (ii) fund $50.0 million of the
Liquidity Amount (the $50.0 million liquidity amount of the non-guarantor subsidiaries was satisfied) and (iii) applied $2.0 billion of
the cash proceeds (which amount is equal to the aggregate principal amount of the Series B Notes) to repay an equal amount of
indebtedness under Clear Channel’s senior secured credit facilities. In accordance with the senior secured credit facilities, the $2.0
billion cash proceeds were applied ratably to the Term Loan A, Term Loan B, both delayed draw term loan facilities, and within each
such class, such prepayment was applied to remaining scheduled installments of principal. The Company recorded a loss of $29.3
million in “Other income (expense) – net” related to deferred loan costs associated with the retired senior secured debt.
The balance of the proceeds is available to CCOI for general corporate purposes. In this regard, all of the remaining proceeds could be
used to pay dividends from CCOI to CCOH. In turn, CCOH could declare a dividend to its shareholders, of which Clear Channel
would receive its proportionate share. Payment of such dividends would not be prohibited by the terms of the Notes or any of the loan
agreements or credit facilities of CCOI or CCOH.
D
ebt Repurchases, Tender Offers, Maturities and Other
During 2009 and 2008, CC Finco, LLC, and CC Finco II, LLC, both wholly-owned subsidiaries of the Company, repurchased certain
of Clear Channel’s outstanding senior notes through open market repurchases, privately negotiated transactions and tenders as shown
in the table below. Notes repurchased and held by CC Finco, LLC and CC Finco II, LLC are eliminated in consolidation.
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• enter into certain transactions with affiliates;
• merge or consolidate with another person, or sell or otherwise dispose of all or substantially all of its assets;
• sell certain assets, including capital stock of its subsidiaries;
• designate its subsidiaries as unrestricted subsidiaries;
• pay dividends, redeem or repurchase capital stock or make other restricted payments; and
• purchase or otherwise effectively cancel or retire any of the Series B Notes if after doing so the ratio of (a) the outstanding
aggregate principal amount of the Series A Notes to (b) the outstanding aggregate principal amount of the Series B Notes
shall be greater than 0.250. This stipulation ensures, among other things, that as long as the Series A Notes are outstanding,
the Series B Notes are outstanding.
(In thousands)
Year Ended December 31,
2009
Post-Merger
2008
Post-Merger
CC Finco, LLC
Principal amount of debt repurchase
d
$ 801,302 $ 102,241
Purchase accounting adjustments (146,314) (24,367)
Deferred loan costs and other
(1,468)
—
Gain recorded in “Other income (expense)
–
ne
t
” (368,591) (53,449)
Cash paid for repurchases of long-term debt $ 284,929 $ 24,425
CC Finco II, LLC
Principal amount of debt repurchased $ 433,125 $ —
Deferred loan costs and other (813)
—
Gain recorded in “Other income (expense)
–
ne
t
” (373,775)
—
Cash paid for repurchases of long-term debt $ 58,537 $
—
(1)
(2)
(3)
(2)