iHeartMedia 2012 Annual Report Download - page 24

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Significant equity investors control us and may have conflicts of interest with us in the future
Private equity funds sponsored by or co-investors with Bain Capital and THL indirectly own a majority of our outstanding
capital stock and will exercise control over matters requiring approval of our shareholder and board of directors. The directors elected
by Bain Capital and THL will have significant authority to make decisions affecting us, including change of control transactions and
the incurrence of additional indebtedness.
In addition, Bain Capital and THL are lenders under our term loan credit facilities and our priority guarantee notes due 2019.
It is possible that their interests in some circumstances may conflict with our interests.
Additionally, Bain Capital and THL are in the business of making investments in companies and may acquire and hold
interests in businesses that compete directly or indirectly with us. One or more of the entities advised by or affiliated with Bain Capital
and/or THL may also pursue acquisition opportunities that may be complementary to our business and, as a result, those acquisition
opportunities may not be available to us. So long as entities advised by or affiliated with Bain Capital and THL directly or indirectly
own a significant amount of the voting power of our capital stock, even if such amount is less than 50%, Bain Capital and THL will
continue to be able to strongly influence or effectively control our decisions.
Risks Related to Our Indebtedness
We may not be able to generate sufficient cash to service all of our indebtedness and may be forced to take other actions to satisfy
our obligations under our indebtedness, which may not be successful
We have a substantial amount of indebtedness. At December 31, 2012, we had $20.7 billion of total indebtedness
outstanding, including: (1) $9.1 billion aggregate principal amount outstanding under our term loan credit facilities, which obligations
mature at various dates from 2014 through 2016; (2) $1.7 billion aggregate principal amount outstanding of our priority guarantee
notes, net of $41.4 million of unamortized discounts, which mature in March 2021; (3) $2.0 billion aggregate principal amount
outstanding of our priority guarantee notes, which mature in December 2019; (4) $25.5 million aggregate principal amount of other
secured debt; (5) $796.3 million and $829.8 million outstanding of our senior cash pay notes and senior toggle notes, respectively,
which mature in August 2016; (6) $1.3 billion aggregate principal amount outstanding of our senior notes, net of unamortized
purchase accounting discounts of $360.2 million, which mature at various dates from 2013 through 2027; (7) $2.7 billion aggregate
principal amount outstanding of subsidiary senior notes, net of unamortized discounts of $7.3 million, which mature in November
2022; (8) $2.2 billion aggregate principal amount outstanding of subsidiary senior subordinated notes, which mature in March 2020;
and (9) other long-term obligations of $5.6 million. This large amount of indebtedness could have negative consequences for us,
including, without limitation:
requiring us to dedicate a substantial portion of our cash flow to the payment of principal and interest on indebtedness,
thereby reducing cash available for other purposes, including to fund operations and capital expenditures, invest in new
technology and pursue other business opportunities;
limiting our liquidity and operational flexibility and limiting our ability to obtain additional financing for working
capital, capital expenditures, debt service requirements, acquisitions and general corporate or other purposes;
limiting our ability to adjust to changing economic, business and competitive conditions;
requiring us to defer planned capital expenditures, reduce discretionary spending, sell assets, restructure existing
indebtedness or defer acquisitions or other strategic opportunities;
limiting our ability to refinance any of our indebtedness or increasing the cost of any such financing in any downturn in
our operating performance or decline in general economic conditions;
making us more vulnerable to an increase in interest rates, a downturn in our operating performance or a decline in
general economic or industry conditions; and
making us more susceptible to negative changes in credit ratings, which could impact our ability to obtain financing in
the future and increase the cost of such financing.
If compliance with the debt obligations materially hinders our ability to operate our business and adapt to changing industry
conditions, we may lose market share, our revenue may decline and our operating results may suffer. The terms of our credit facilities
and the other indebtedness allow us, under certain conditions, to incur further indebtedness, including secured indebtedness, which
heightens the foregoing risks.
Our and our subsidiaries’ ability to make scheduled payments on our respective debt obligations depends on our financial
condition and operating performance, which is subject to prevailing economic and competitive conditions and to certain financial,