iHeartMedia 2011 Annual Report Download - page 89

CLEAR CHANNEL CAPITAL I, LLC AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
On July 16, 2010, Clear Channel 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, Clear
Channel will be contractually obligated to make a payment to bondholders of $57.4 million on August 1, 2013.
Clear Channel Senior Notes
As of December 31, 2011, Clear Channel’s senior notes (the “senior notes”) represented approximately $2.0 billion of aggregate
principal amount of indebtedness outstanding.
The senior notes were the obligations of Clear Channel prior to the merger. The senior notes are senior, unsecured obligations that are
effectively subordinated to Clear Channel’s secured indebtedness to the extent of the value of Clear Channel’s assets securing such
indebtedness and are not guaranteed by any of Clear Channel’s subsidiaries and, as a result, are structurally subordinated to all
indebtedness and other liabilities of Clear Channel’s subsidiaries. The senior notes rank equally in right of payment with all of Clear
Channel’s existing and future senior indebtedness and senior in right of payment to all existing and future subordinated indebtedness.
The senior notes are not guaranteed by Clear Channel’s subsidiaries.
Subsidiary Senior Notes
As of December 31, 2011, the Company 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” and, collectively with the Series A Notes, the
“subsidiary senior notes”). The subsidiary senior notes were issued by Clear Channel Worldwide Holdings, Inc. (“CCWH”) and are
guaranteed by CCOH, Clear Channel Outdoor, Inc. (“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 CCWH 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 CCWH 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 Clear Channel, 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 Clear Channel 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.
The indenture governing the Series A Notes contains covenants that limit CCOH and its restricted subsidiaries ability to, among other
things:
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• incur or guarantee additional debt to persons other than Clear Channel and its subsidiaries (other than CCOH) or
issue certain
p
referred 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
g
uarantors of the notes;
• enter into certain transactions with affiliates;
• mer
g
e or consolidate with another
p
erson, or sell or otherwise dis
p
ose of all or substantiall
y
all of its assets;
• sell certain assets, including capital stock of its subsidiaries, to persons other than Clear Channel and its subsidiaries
(other than CCOH); and