iHeartMedia 2010 Annual Report Download - page 54

The indenture governing the Series A Notes contains covenants that limit CCOH and its restricted subsidiaries ability to, among
other things:
The indenture governing the Series A Notes does not include limitations on dividends, distributions, investments or asset sales.
The indenture governing the Series B Notes contains covenants that limit CCOH and its restricted subsidiaries ability to, among
other things:
The Series A Notes indenture and Series B Notes indenture restrict CCOH’s ability to incur additional indebtedness but permit
CCOH to incur additional indebtedness based on an incurrence test. In order to incur additional indebtedness under this test, CCOH’s
debt to adjusted EBITDA ratios (as defined by the indentures) must be lower than 6.5:1 and 3.25:1 for total debt and senior debt,
respectively. The indentures contain certain other exceptions that allow CCOH to incur additional indebtedness. The Series B Notes
indenture also permits CCOH to pay dividends from the proceeds of indebtedness or the proceeds from asset sales if its debt to adjusted
EBITDA ratios (as defined by the indenture) are lower than 6.0:1 and 3.0:1 for total debt and senior debt, respectively. The Series A
Notes indenture does not limit CCOH’s ability to pay dividends. The Series B Notes indenture contains certain exceptions that allow
CCOH to incur additional indebtedness and pay dividends, including a $500.0 million exception for the payment of dividends. CCOH
was in compliance with these covenants as of December 31, 2010.
A portion of the proceeds of the subsidiary senior notes offering were used to (i) pay the fees and expenses of the 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) apply
$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 our 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, and both delayed draw term loan facilities, and within each such
class, such prepayment was applied to remaining scheduled installments of principal.
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 we would receive
our proportionate share. Payment of such dividends would not be prohibited by the terms of the subsidiary senior notes or any of the
loan agreements or credit facilities of CCOI or CCOH.
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• incur or guarantee additional debt to persons other than us and our subsidiaries (other than CCOH) or issue certain preferred
stock;
• create liens on its restricted subsidiaries assets to secure such debt;
• create restrictions on the payment of dividends or other amounts to CCOH from its restricted subsidiaries that are not
guarantors of the notes;
• 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; and
• sell certain assets, including capital stock of its subsidiaries, to persons other than us and our subsidiaries (other than CCOH).
• incur or guarantee additional debt or issue certain preferred stock;
• redeem, re
p
urchase or retire CCOH’s subordinated debt;
• make certain investments;
• create liens on its or its restricted subsidiaries’ assets to secure debt;
• create restrictions on the payment of dividends or other amounts to it from its restricted subsidiaries that are not guarantors of
the subsidiar
y
senior notes;
• 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 outstandin
g
.