iHeartMedia 2010 Annual Report Download - page 51

The obligations of any foreign subsidiaries that are borrowers under the revolving credit facility are also guaranteed by certain o
f
their material wholly-owned restricted subsidiaries, and secured by substantially all assets of all such borrowers and guarantors,
subject to permitted liens and other exceptions.
Certain Covenants and Events of Default
The senior secured credit facilities require us to comply on a quarterly basis with a financial covenant limiting the ratio of
consolidated secured debt, net of cash and cash equivalents, to consolidated EBITDA for the preceding four quarters. Our secured
debt consists of the senior secured credit facilities, the receivables-based credit facility and certain other secured subsidiary debt. Our
consolidated EBITDA for the preceding four quarters of $1.8 billion is calculated as operating income (loss) before depreciation,
amortization, impairment charges and other operating income (expense) – net, plus non-cash compensation, and is further adjusted for
certain items, including: (i) an increase for expected cost savings (limited to $100.0 million in any twelve month period) of $34.9
million; (ii) an increase of $11.1 million for cash received from nonconsolidated affiliates; (iii) an increase of $47.6 million for non-
cash items; (iv) an increase of $55.9 million related to expenses incurred associated with our cost savings program; and (v) an
increase of $29.4 million for various other items. The maximum ratio under this financial covenant is currently set at 9.5:1 and
becomes more restrictive over time beginning in the second quarter of 2013. At December 31, 2010, our ratio was 6.7:1.
In addition, the senior secured credit facilities include negative covenants that, subject to significant exceptions, limit our ability
and the ability of our restricted subsidiaries to, among other things:
Our senior secured credit facilities include certain customary representations and warranties, affirmative covenants and events of
default, including payment defaults, breach of representations and warranties, covenant defaults, cross-defaults to certain
indebtedness, certain events of bankruptcy, certain events under ERISA, material judgments, the invalidity of material provisions of
the senior secured credit facilities documentation, the failure of collateral under the security documents for the senior secured credit
facilities, the failure of the senior secured credit facilities to be senior debt under the subordination provisions of certain of our
subordinated debt and a change of control. If an event of default occurs, the lenders under the senior secured credit facilities will be
entitled to take various actions, including the acceleration of all amounts due under the senior secured credit facilities and all actions
permitted to be taken by a secured creditor.
R
eceivables Based Credit Facility
As of December 31, 2010, we had a total of $384.2 million outstanding under our receivables based credit facility.
The receivables based credit facility provides revolving credit of $783.5 million, subject to a borrowing base. The borrowing
base at any time equals 85% of our and certain of our subsidiaries’ eligible accounts receivable. The receivables based credit facility
includes a letter of credit sub-facility and a swingline loan sub-facility. The maturity of the receivables based credit facility is July
2014.
All borrowings under the receivables based credit facility are subject to the absence of any default, the accuracy of representations
and warranties and compliance with the borrowing base. In addition, borrowings under the receivables based credit facility, excluding
the initial borrowing, are subject to compliance with a minimum fixed charge coverage ratio of 1.0:1.0 if at any time excess
availability under the receivables based credit facility is less than $50 million, or if aggregate excess availability under the receivables
based credit facility and revolving credit facility is less than 10% of the borrowing base.
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• a lien on the accounts receivable and related assets securing our receivables based credit facility that is junior to the lien
securin
g
our obli
g
ations under such credit facilit
y
.
• incur additional indebtedness;
• create liens on assets;
• en
g
a
g
e in mer
g
ers, consolidations, li
q
uidations and dissolutions;
• sell assets;
•
p
a
y
dividends and distributions or re
p
urchase our ca
p
ital stock;
• make investments, loans, or advances;
•
p
re
p
a
y
certain
j
unior indebtedness;
• en
g
a
g
e in certain transactions with affiliates;
• amend material a
g
reements
g
overnin
g
certain
j
unior indebtedness; and
• chan
g
e our lines of business.