iHeartMedia 2010 Annual Report Download - page 53

The senior cash pay notes and senior toggle notes are senior unsecured debt and rank equal in right of payment with all of our
existing and future senior debt. Guarantors of obligations under the senior secured credit facilities and the receivables based credit
facility guarantee the senior cash pay notes and senior toggle notes with unconditional guarantees that are unsecured and equal in
right of payment to all existing and future senior debt of such guarantors, except that the guarantees are subordinated in right of
payment only to the guarantees of obligations under the senior secured credit facilities and the receivables based credit facility. In
addition, the senior cash pay notes and senior toggle notes and the guarantees are structurally senior to our senior notes and existing
and future debt to the extent that such debt is not guaranteed by the guarantors of the senior cash pay notes and senior toggle notes.
The senior cash pay notes and senior toggle notes and the guarantees are effectively subordinated to our existing and future secured
debt and that of the guarantors to the extent of the value of the assets securing such indebtedness and are structurally subordinated to
all obligations of subsidiaries that do not guarantee the senior cash pay notes and senior toggle notes.
On July 16, 2010, we made the election to pay interest on the senior toggle notes entirely in cash, effective for the interest period
commencing August 1, 2010. Assuming the cash interest election remains in effect for the remaining term of the notes, we will be
contractually obligated to make a payment to bondholders of $57.4 million on August 1, 2013. This amount is included in “Interest
payments on long-term debt” in the Contractual Obligations table of this MD&A.
Clear Channel Senior Notes
As of December 31, 2010, our senior notes and debentures represented approximately $2.9 billion of aggregate principal amount
of indebtedness outstanding (the “senior notes”).
The senior notes and debentures are senior, unsecured obligations that are effectively subordinated to our secured indebtedness
to the extent of the value of the assets securing such indebtedness and the guarantees of such indebtedness from our existing and
future material wholly-owned domestic restricted subsidiaries, subject to certain exceptions. The senior notes and debentures rank
equally in right of payment with all of our existing and future senior indebtedness and senior in right of payment to all existing and
future subordinated indebtedness. The senior notes and debentures are not guaranteed by our subsidiaries.
Subsidiary Senior Notes
As of December 31, 2010, we had outstanding $2.5 billion aggregate principal amount of subsidiary senior notes, which
consisted of $500.0 million aggregate principal amount of Series A Senior Notes due 2017 (the “Series A Notes”) and $2.0 billion
aggregate principal amount of Series B Senior Notes due 2017 (the “Series B Notes”). The subsidiary senior notes were issued by
CCWH and are guaranteed by CCOH, CCOI and certain of CCOH’s direct and indirect subsidiaries.
The subsidiary senior notes bear interest on a daily basis and contain customary provisions, including covenants requiring us to
maintain certain levels of credit availability and limitations on incurring additional debt.
The subsidiary senior notes are senior obligations that rank pari passu in right of payment to all unsubordinated indebtedness of
CCWH and the guarantees of the subsidiary senior notes rank pari passu in right of payment to all unsubordinated indebtedness of the
guarantors.
The indentures governing the subsidiary senior notes require us to maintain at least $100 million in cash or other liquid assets or
have cash available to be borrowed under committed credit facilities consisting of (i) $50.0 million at the issuer and guarantor entities
(principally the Americas outdoor segment) and (ii) $50.0 million at the non-guarantor subsidiaries (principally the International
outdoor segment) (together the “Liquidity Amount”), in each case under the sole control of the relevant entity. In the event of a
bankruptcy, liquidation, dissolution, reorganization, or similar proceeding of ours, for the period thereafter that is the shorter of such
proceeding and 60 days, the Liquidity Amount shall be reduced to $50.0 million, with a $25.0 million requirement at the issuer and
guarantor entities and a $25.0 million requirement at the non-guarantor subsidiaries.
In addition, interest on the subsidiary senior notes accrues daily and is payable into an account established by the trustee for the
benefit of the bondholders (the “Trustee Account”). Failure to make daily payment on any day does not constitute an event of default
so long as (a) no payment or other transfer by CCOH or any of its subsidiaries shall have been made on such day under the cash
management sweep with us and (b) on each semiannual interest payment date the aggregate amount of funds in the Trustee Account
is equal to at least the aggregate amount of accrued and unpaid interest on the subsidiary senior notes.
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