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Sunday, January 10, 2016

Fitch Ratings Says iHeartMedia's Long-Term Debt 'Unaffected' By Sale Of Outdoor Assets

With the sale of some Outdoor assets by iHEARTMEDIA to LAMAR ADVERTISING comes a reaction to the move by FITCH RATINGS, who writes, "iHEART COMMUNICATIONS, INC.'s (iHEART) 'CCC' Long-Term Issuer Default Ratings (IDR) and CLEAR CHANNEL WORLDWIDE HOLDINGS, INC.' (CCWW) 'B' Long-Term IDR are unaffected by CLEAR CHANNEL OUTDOOR AMERICAS' (CCOA) sale of five non-strategic outdoor markets to LAMAR ADVERTISING COMPANY (LAMAR) for $458.5 million."
FITCH provides background on the sale, noting, "CCWW is an indirect, wholly-owned subsidiary of CLEAR CHANNEL OUTDOOR HOLDINGS, INC. (CCOH) while CCOA is a wholly-owned operating segment of CCOH. CCOH is a 90%-owned subsidiary of iHEART and holds all of iHEART's outdoor assets. The Rating Outlook for CCWW remains Stable," adding, "the company did not disclose any specific use of proceeds but, given iHEART's current capital structure, FITCH expects that a portion of the proceeds may be used to indirectly fund a dividend to CCOH's stockholders, including iHEART. FITCH also expects iHEART to use any potential dividend proceeds for general corporate purposes, including repurchasing or making payments on its existing indebtedness."
Most expect more of CLEAR CHANNEL OUTDOOR to be spun off to raise capital to deal with iHEARTMEDIA's debt. FITCH is no exception, writing, "FITCH regards iHEART's current liquidity as limited. As of SEPT. 30th, 2015, iHEART had approximately $209.9 million in cash excluding $172.9 million in cash held at CCOH (neither balances account for CCI's debt issuance). Backup liquidity consists of the ABL facility that matures in DECEMBER 2017."
FITCH reports the debt held at iHEARTMEDIA was $15.9 billion and consisted of:
  • $6.3 billion secured term loans due 2019;
  • $190 million secured receivable based credit facility due 2017;
  • $6.3 billion secured PGNs, maturing 2019-2023;
  • $1.7 billion in senior unsecured 12% cash pay/2% PIK notes maturing in FEBRUARY 2021 (net of FinCo holdings of $432 million);
  • $730 million senior unsecured 10% notes due 2018 (net of FinCo holdings of $120 million);
  • $668 million senior unsecured legacy notes, with maturities of 2016-2027 (net of FinCo holdings of $57 million.)
Debt held at CCWW was $4.9 billion and consisted of:
  • $2.7 billion in senior unsecured 6.5% notes due 2022;
  • $2.2 billion in subordinated 7.625% notes due 2020.
Debt held at CCI consisted of:
  • $225 million of senior unsecured 8.75% notes due 2020