• Clear Channel Amends Credit Agreement

    Here is a portion of yesterday’s press release from Clear Channel Outdoor. 

    SAN ANTONIO, June 15, 2020 /PRNewswire/ — Clear Channel Outdoor Holdings, Inc. (CCO) (the “Company”) today announced that it has entered into an amendment (the “Amendment”) to the Company’s credit agreement, dated as of August 23, 2019 (the “Credit Agreement”), with several of its lenders.

    The Amendment is expected to support the Company’s efforts to manage through the uncertainties caused by the unprecedented COVID-19 situation, while maintaining compliance with the terms of the Company’s revolving credit facility (the “Revolving Credit Facility”) as described in the Credit Agreement. The Company sought the Amendment in response to the uncertain macroeconomic environment due to the challenging industry conditions that have decreased advertising demand and marketing spend around the globe.

    The Amendment suspends the springing financial covenant of the Revolving Credit Facility, which requires that the Company’s first lien net leverage ratio not exceed 7.60:1, from the third quarter of 2020 through the second quarter of 2021. The Amendment also delays the timing of the financial covenant stepdown of the first lien net leverage ratio to 7.10:1, originally set to occur in the second quarter of 2021, until the first quarter of 2022.

    During the suspension period, Clear Channel Outdoor is required to maintain minimum liquidity of $150 million, including cash on hand and availability under the Company’s receivables-based credit facility and Revolving Credit Facility. The Company has also agreed not to make voluntary restricted payments with certain exceptions during the same suspension period. More detailed information can be found in the Company’s 8-K filing today.

    Insider’s Take: All of the publicly traded companies have had to make moves to deal with reduced revenues and cash flow due to the pandemic.  CCO back in April announced the sale of their Chinese subsidiary, Clear Media.  At that time they announced a number of cost cutting moves, including deferring capex, and reducing operating expenses including a reduction in executive compensation.  In May, CCO announced first quarter results with an increase in U.S. revenue being offset by reductions in international revenues.  The amendment of their credit agreement provides CCO with some short term flexibility on their financial covenants until the impact of their cost cutting moves and recovery of revenue post-Covid begins to appear in their financials.  The Company’s next material debt maturity is not until 2024 when $1.9 billion in 9.25% Senior Notes are due.

    Clear Channel stock finished the day up 2% while the S&P 500 was up 1%, Lamar was up 3% and OUTFRONT was up 4%.

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    1. I really appreciate your Insider’s Take. I helps me make sense of a lot of info and data in some of these articles . Thanks!

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