Clear Channel CFO Brian Coleman talked this week at the Deutsche Bank 2019 Leveraged Finance Conference on steps he’s taken to fix Clear Channel Outdoor’s balance sheet, the company’s problems in China and whether Los Angeles will permit more digital billboards.
On fixing the balance sheet.
Out of the box it was important to take a big step in the repair of the company’s balance sheet…it actually started pre-separation with the extension of the subordinated notes and the pre-wiring of those notes to flip to senior if we refinanced the senior debt. And then over the summer we did quite a bit of work with the rest of the debt…we issued some equity, we got a ratings upgrade and it enabled us to tap the term loan B market. We issued some bonds. We got a new cashflow revolver, we re-did the ABL. And a lot of that was done at a lower cost…It pushed out maturities providing operating runway, it reduced cash interest expense by over $60 million…It provided strategic flexibility to the company. Now we’re in a position to compete for accretive contracts that build shareholder value. It provides downside protection in a recessionary environment. That really set up the runway to focus on operations.
On the company’s business segments
We think of the business in four silos. You have the US business, the European business, the Latin American business and then you have our investment in China – Clear Media. There isn’t a lot of sales or operating synergies between those silos…I’m not sure there’s a necessity to keep those businesses that way. If we were to sell one of the silos it wouldn’t impair the remaining silos. That’s not always the case once you get inside the silos…Selling off pieces of the US could negatively impact the remaining assets. Within Europe there’s a similar network between certain countries…Latin America not so much…in China it comes down to where does the company want to be in the future…that work is still going on.
Is JCDecaux a possible buyer of assets given their recent indication of interest in growing?
It was late 80’s early 90’s and JCDecaux was saying similar things about our international assets…It doesn’t surprise me.
On China
It’s almost a perfect storm…it is a bit exacerbated because of the space that we are in. We have a very solid bus shelter business. We are a major provider in a lot of tier 1 and tier 2 cities. But it is a traditional medium. It is not a digital medium. They are long term contracts…We had a number of things working against us as advertisers pulled back…We had a concentration to some high tech and ecommerce type firms and those were the advertisers that pulled back the most…Chinese management has begun the process of talking to a broader group of advertisers…We’re optimistic over the long run about business in China.
On more digital boards in Los Angeles
I think we are coming down to a solution that’s a nice balance public, private, takedowns…What does that mean for Clear Channel. Unfortunately it doesn’t mean that we’re turning on all the 80 boards that went dark or that we’ve wrapped. But I think it does mean there will be a process by which digital will be introduced to that part of Los Angeles. And we’ll be a player in that…I am hopeful this will be a 2020 thing…
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