iHeartMedia 2012 Annual Report Download - page 97

CLEAR CHANNEL CAPITAL I, LLC AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
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7.0:1. The indentures contain certain other exceptions that allow CCOH to incur additional indebtedness. The Series B CCWH
Subordinated 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) is lower than 7.0:1. The Series A CCWH Senior Subordinated
Notes indenture does not limit CCOH’s ability to pay dividends. The Series B CCWH Subordinated Notes indenture contains certain
exceptions that allow CCOH to pay dividends, including (i) $525.0 million of dividends made pursuant to general restricted payment
baskets and (ii) dividends made using proceeds received upon a demand by CCOH of amounts outstanding under the revolving
promissory note issued by Clear Channel to CCOH.
With the proceeds of the CCWH Subordinated Notes (net of the initial purchasers’ discount of $33.0 million), CCWH loaned an
aggregate amount equal to $2,167.0 million to CCOI. CCOI paid all other fees and expenses of the offering using cash on hand and,
with the proceeds of the loans, made a special cash dividend to CCOH, which in turn made a special cash dividend on March 15, 2012
in an amount equal to $6.0832 per share to its Class A and Class B stockholders of record at the close of business on March 12, 2012,
including Clear Channel Holdings, Inc. (“CC Holdings”) and CC Finco, LLC (“CC Finco”), both wholly-owned subsidiaries of the
Company. Of the $2,170.4 million special cash dividend paid by CCOH, an aggregate of $1,925.7 million was distributed to
CC Holdings and CC Finco, with the remaining $244.7 million distributed to other stockholders. As a result, the Company recorded a
reduction of $244.7 million in “Noncontrolling interest” on the consolidated balance sheet.
Refinancing Transactions
During the first quarter of 2011, Clear Channel amended its senior secured credit facilities and its receivables based credit facility and
issued $1.0 billion aggregate principal amount of Priority Guarantee Notes due 2021 (the “Initial Priority Guarantee Notes due 2021”).
The Company capitalized $39.5 million in fees and expenses associated with the offering of the Initial Priority Guarantee Notes due
2021 and is amortizing them through interest expense over the life of the Initial Priority Guarantee Notes due 2021.
Clear Channel used the proceeds of the Initial Priority Guarantee Notes due 2021 offering to prepay $500.0 million of the
indebtedness outstanding under its senior secured credit facilities. The $500.0 million prepayment was allocated on a ratable basis
between outstanding term loans and revolving credit commitments under Clear Channel’s revolving credit facility. The prepayment
resulted in the accelerated expensing of $5.7 million of loan fees recorded in “Loss on extinguishment of debt”.
Clear Channel obtained, concurrent with the offering of the Initial Priority Guarantee Notes due 2021, amendments to its credit
agreements with respect to its senior secured credit facilities and its receivables based credit facility (revolving credit commitments
under the receivables based facility were reduced from $783.5 million to $625.0 million), which were required as a condition to
complete the offering. The amendments, among other things, permit Clear Channel to request future extensions of the maturities of its
senior secured credit facilities, provide Clear Channel with greater flexibility in the use of its accordion capacity, provide Clear
Channel with greater flexibility to incur new debt, provided that the proceeds from such new debt are used to pay down senior secured
credit facility indebtedness, and provide greater flexibility for CCOH and its subsidiaries to incur new debt, provided that the net
proceeds distributed to Clear Channel from the issuance of such new debt are used to pay down senior secured credit facility
indebtedness.
In June 2011, Clear Channel issued an additional $750.0 million in aggregate principal amount of its Priority Guarantee Notes due
2021 (the “Additional Priority Guarantee Notes due 2021”) at an issue price of 93.845% of the principal amount of the Additional
Priority Guarantee Notes due 2021. Interest on the Additional Priority Guarantee Notes due 2021 accrued from February 23, 2011, and
accrued interest was paid by the purchaser at the time of delivery of the Additional Priority Guarantee Notes due 2021 on June 14,
2011. The Initial Priority Guarantee Notes due 2021 and the Additional Priority Guarantee Notes due 2021 have identical terms and
are treated as a single class. Of the $703.8 million of proceeds from the issuance of the Additional Priority Guarantee Notes due 2021
($750.0 million aggregate principal amount net of $46.2 million of discount), Clear Channel used $500.0 million for general corporate
purposes (to replenish cash on hand that Clear Channel previously used to pay senior notes at maturity on March 15, 2011 and
May 15, 2011) and used the remaining $203.8 million to repay at maturity a portion of Clear Channel’s 5% senior notes that matured
in March 2012.
The Company capitalized an additional $7.1 million in fees and expenses associated with the offering of the Additional Priority
Guarantee Notes due 2021 and is amortizing them through interest expense over the life of the Additional Priority Guarantee Notes
due 2021.
In March 2012, CCWH issued $275.0 million aggregate principal amount of the Series A CCWH Subordinated Notes and
$1,925.0 million aggregate principal amount of the Series B CCWH Subordinated Notes and in connection therewith, CCOH
distributed the CCOH Dividend of $6.0832 per share to its stockholders of record. Using CCOH Dividend proceeds distributed to the