iHeartMedia 2012 Annual Report Download - page 93

CLEAR CHANNEL CAPITAL I, LLC AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
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secured by (i) a lien on (a) the capital stock of Clear Channel and (b) certain property and related assets that do not constitute
“principal property” (as defined in the indenture governing certain legacy notes of Clear Channel), in each case equal in priority to the
liens securing the obligations under Clear Channel’s senior secured credit facilities and the Priority Guarantee Notes due 2019, subject
to certain exceptions, and (ii) a lien on the accounts receivable and related assets securing Clear Channel’s receivables based credit
facility junior in priority to the lien securing Clear Channel’s obligations thereunder, subject to certain exceptions.
Clear Channel may redeem the Priority Guarantee Notes due 2021 at its option, in whole or part, at any time prior to March 1, 2016, at
a price equal to 100% of the principal amount of the Priority Guarantee Notes due 2021 redeemed, plus accrued and unpaid interest to
the redemption date and plus an applicable premium. Clear Channel may redeem the Priority Guarantee Notes due 2021, in whole or
in part, on or after March 1, 2016, at the redemption prices set forth in the indenture plus accrued and unpaid interest to the
redemption date. At any time on or before March 1, 2014, Clear Channel may elect to redeem up to 40% of the aggregate principal
amount of the Priority Guarantee Notes due 2021 at a redemption price equal to 109.0% of the principal amount thereof, plus accrued
and unpaid interest to the redemption date, with the net proceeds of one or more equity offerings.
The indenture governing the Priority Guarantee Notes due 2021 contains covenants that limit Clear Channel’s ability and the ability of
its restricted subsidiaries to, among other things: (i) pay dividends, redeem stock or make other distributions or investments; (ii) incur
additional debt or issue certain preferred stock; (iii) modify any of Clear Channel’s existing senior notes; (iv) transfer or sell assets;
(v) engage in certain transactions with affiliates; (vi) create restrictions on dividends or other payments by the restricted subsidiaries;
and (vii) merge, consolidate or sell substantially all of Clear Channel’s assets. The indenture contains covenants that limit the
Company’s and Clear Channel’s ability and the ability of its restricted subsidiaries to, among other things: (i) create liens on assets
and (ii) materially impair the value of the security interests taken with respect to the collateral for the benefit of the notes collateral
agent and the holders of the Priority Guarantee Notes due 2021. The indenture also provides for customary events of default.
Senior Cash Pay Notes and Senior Toggle Notes
As of December 31, 2012, Clear Channel had outstanding $796.3 million aggregate principal amount of 10.75% senior cash pay notes
due 2016 and $829.8 million aggregate principal amount of 11.00%/11.75% senior toggle notes due 2016.
The senior cash pay notes and senior toggle notes are unsecured and are guaranteed by the Company and each of Clear Channel’s
existing and future material wholly-owned domestic restricted subsidiaries, subject to certain exceptions. The senior toggle notes
mature on August 1, 2016 and may require a special redemption of up to $30.0 million on August 1, 2015. Clear Channel may elect
on each interest election date to pay all or 50% of such interest on the senior toggle notes in cash or by increasing the principal amount
of the senior toggle notes or by issuing new senior toggle notes (such increase or issuance, “PIK Interest”). Interest on the senior
toggle notes payable in cash will accrue at a rate of 11.00% per annum and PIK Interest will accrue at a rate of 11.75% per annum.
Prior to August 1, 2012, Clear Channel was able to redeem some or all of the senior cash pay notes and senior toggle notes at a price
equal to 100% of the principal amount of such notes plus accrued and unpaid interest thereon to the redemption date and an applicable
premium, as described in the indenture governing such notes. Since August 1, 2012, Clear Channel may redeem some or all of the
senior cash pay notes and senior toggle notes at any time at the redemption prices set forth in the indenture governing such notes. If
Clear Channel undergoes a change of control, sells certain its assets, or issues certain debt, it may be required to offer to purchase the
senior cash pay notes and senior toggle notes from holders.
The senior cash pay notes and senior toggle notes are senior unsecured debt and rank equal in right of payment with all of Clear
Channel’s existing and future senior debt. Guarantors of obligations under the senior secured credit facilities, the receivables based
credit facility, the Priority Guarantee Notes due 2021 and the Priority Guarantee Notes due 2019 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, the receivables based credit facility, the Priority Guarantee Notes due 2021 and the Priority Guarantee
Notes due 2019 to the extent of the value of the assets securing such indebtedness. In addition, the senior cash pay notes and senior
toggle notes and the guarantees are structurally senior to the Clear Channel 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 Clear Channel’s 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, 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