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 Though Clear Channel Communications Inc. says it expects to remain in
good standing with the terms of its senior loans, debt research firm
CreditSights Ltd. suggests that the San Antonio broadcaster may
overreach debt limits this year.Bain Capital LLC and Thomas H. Lee Partners LP took Clear Channel private through a $24 billion leveraged buyout that closed in July. Analyst Jake Newman wrote that Clear Channel is believed to have repaid bonds that were due in mid-May. If the company and its private equity owners had expected to seek bankruptcy, he suggests, they would likely have skipped the payment so it would have more cash on hand for a Chapter 11 reorganization. As in the radio industry at large, however, Clear Channel's financial outlook has dimmed. Publicly traded peer Cox Radio Inc. (NYSE:CXR), itself the target of a privatization effort, saw its first-quarter revenues drop 22.8%. Even Cox Radio's Internet and other nontraditional radio revenues were down 13.3%. Cox Enterprises Inc.'s offer to buy minority shares in the radio group expires on Tuesday, although the Atlanta media company has extended the tender several times. Clear Channel's top line fell 23% to $1.2 billion in the first quarter of 2009. "The Company expects to be in compliance with the covenants under Clear Channel's senior secured credit facilities in 2009," Clear Channel stated in its report for the first quarter on May 11. CreditSights' Newman suggests that, as Clear Channel's revenues and Ebitda decline, it will surpass covenants that limit its secured leverage to 9.5 times Ebitda this year. The broadcaster's secured leverage ratio was 6.4 times Ebitda at the close of 2008, but had risen to a multiple of 7.1 by the end of March. Newman projects it will rise to 9.6 at the close of 2009. A Clear Channel spokeswoman could not immediately be reached on Tuesday. - Chris Nolter See related story about Clear Channel from Dealscape
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