Clear Channel Outdoor Holdings announced that its international subsidiary Clear Channel International B.V. plans to issue $350 million in Senior Secured Notes due 2025 (the “Notes”) in a private placement. The notes will be secured by some international assets but will not have a claim against the company’s North American assets and will not be guaranteed by Clear Channel Outdoor.
The company will use approximately $54.9 million of the net proceeds of the Notes to repay a promissory note of Clear Channel International, and for general corporate purposes, including to fund Clear Channel International’s operating expenses and capital expenditures.
Moody’s has assigned a B2 rating to the notes. B2 debt is speculative and subject to high credit risk although default and loss is not near. Moody’s says the transaction will increase Clear Channel Outdoor’s cash to $885 million but leverage will increase from 10.2 to 10.9 with even higher leverage expected when the second quarter financials are released giving the full impact of covid.
Insider’s take: Good and bad in this issue. Good in that it builds Clear Channel Outdoor’s liquidity and reduces the chance of a default. Bad in that it adds more debt onto an unsustainable situation. Insider thinks the company’s debt is twice what is sustainable. Insider sees no way out for Clear Channel Outdoor but asset sales. Clear Channel Outdoor ended the day down 1% while Lamar and Outfront were up 2% and the S&P 500 was flat.