• Clear Channel Comments on Capital Market Activity

    Clear Channel execs commented yesterday on the company’s recent capital market activity and prospects.  Let’s start with the capital market transactions as provided in their August 13th press release:

    • Issuance of 100 million shares of common stock at $3.50 per share, with the net proceeds from the sale to be used to redeem approximately $333.5 million of the CCWH 9.25% Senior Subordinated Notes due 2024 on August 22, 2019
    • Anticipated closing of the issuance of $1,250 million of 5.125% Senior Secured Notes due 2027 (the “New Senior Secured Notes”) on August 23, 2019
    • Anticipated closing of a $2,000 million, seven-year Term Loan B Facility at LIBOR plus 350 basis points and a $175 million Cash Flow Revolver on August 23, 2019
    • Proceeds from the issuance of the New Senior Secured Notes and new Term Loan B Facility to be used to fully redeem the CCWH 6.5% Senior Notes due 2022 and the CCIBV 8.75% Senior Notes due 2020 on September 4, 2019
    • Anticipated closing a new $125 million ABL Facility on August 23, 2019

    William Eccleshare, Worldwide CEO, provided the following comments:

    “The Company’s successful capital markets activities over the last several weeks have led to an improved balance sheet, stronger cash flow generation and a significantly extended maturity profile… We have reduced our net leverage and cash interest payments as a result of these transactions. The Company’s improving balance sheet provides important strategic flexibility as we look to both continue de-levering over time and invest in attractive, high-return growth opportunities. We believe our global footprint and strategic investments in digitalization, automation and data analytics, together with a stronger balance sheet, provide us with a solid foundation for the future within our strong industry.”  

    CFO, Brian Coleman, added his comments on their market activity:

    “Our equity raise has resulted in credit upgrades that have enabled us to efficiently refinance all of our senior debt on a secured basis at a lower cost and with extended maturities….. Our pro forma net leverage ratio will be reduced to 7.9x. Cash interest payments are expected to decrease $63.0 million per year due to the refinancing activities, and our next nearest material debt maturity will be in 2024. In addition, the recent transactions will enable the Company to be free cash flow positive on a pro-forma basis, and to be on a path to de-lever organically over time, without the need for further equity capital.” 

    Insider’s Take – We had previously provided our thoughts on the equity raise.  Shortly after the equity announcement, CCO announced they would be looking to restructure their existing debt, and quickly.  Insider heard through a banking contact that the debt is oversubscribed.  With leverage just below 8x and reduced interest payments, CCO continues to gain momentum.  Seems the market liked what they heard as the market value of their shares were on the rise Tuesday.  They still have an international hangover particularly with uncertainty in their China investment.  Keep watching their stock price as the market weighs in on how they feel about Company prospects.  Clear Channel Outdoor ended the day up 5.8% versus +1.5% for the S&P 500, +0.47% for Lamar and +0.51% for Outfront.


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