iHeartMedia 2011 Annual Report Download - page 90

CLEAR CHANNEL CAPITAL I, LLC AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
In addition, the indenture governing the Series A Notes provides that if CCWH (i) makes an optional redemption of the Series B
Notes or purchases or makes an offer to purchase the Series B Notes at or above 100% of the principal amount thereof, then CCWH
shall apply a pro rata amount to make an optional redemption or purchase a pro rata amount of the Series A Notes or (ii) makes an
asset sale offer under the indenture governing the Series B Notes, then CCWH shall apply a pro rata amount to make an offer to
purchase a pro rata amount of Series A Notes.
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 indentures) 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, 2011.
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 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, 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 Clear Channel
would receive its 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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• purchase or otherwise effectively cancel or retire any of the Series A 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
g
reater than 0.250.
• incur or
g
uarantee additional debt or issue certain
p
referred 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
g
uarantors of the subsidiar
y
senior 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, includin
g
ca
p
ital stock of its subsidiaries;
• desi
g
nate its subsidiaries as unrestricted subsidiaries;
•
p
a
y
dividends, redeem or re
p
urchase ca
p
ital stock or make other restricted
p
a
y
ments; 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 outstandin
g
, the Series B Notes are outstandin
g
.