For Clear Channel Outdoor, the End is Nigh as Parent Struggles with $22 Bil. Debt
It might be the beginning of the end for Clear Channel Outdoor. CCO put out a statement before the long weekend saying it was "actively pursuing alternatives" regarding its debt situation. CCO owes its parent, Clear Channel Communications (confusing, yes?) $2.5 billion. It tried to borrow $3 billion three weeks ago in to pay off the note but couldn't get a deal done.
If you think CCO has problems, look at what is happening at parent CCM -- that company has $22 billion in total debt. CCM owns a majority stake in CCO, so one's debt is the other's. Some see a Q4 default as CCM will have trouble making payments. Now, the company's creditors are circling like vultures. FMQB:
... the lenders who financed the private equity acquisition of the company said they would block the move because they would rather wait on it in hopes that Clear Channel violates its lending agreements. That way the lenders can take control of its assets at a discount and then sell them.CCO is selling ad space at rock bottom prices to generate as much cash as possible, according to the AP:
Caris analyst David Miller ... told clients in a note Tuesday that "our checks indicate that business has not necessarily improved" and the company has resorted to "deep-sixing" ad rates in its core business to grab a larger share of the market.Here's CCO's SEC statement in full:
Clear Channel Outdoor Holdings, Inc. ("CCOH") announced today that it is actively pursuing alternatives to address the maturity of the intercompany note payable by it to its parent company Clear Channel Communications, Inc. The alternatives may include an offering of new senior or senior subordinated notes for cash or an exchange of new senior or subordinated notes for outstanding indebtedness, with the intention of any such transaction being to refinance the intercompany note.