SAN ANTONIO, March 30, 2020 /PRNewswire/ -- Clear Channel
Outdoor Holdings, Inc. (NYSE: CCO) (the "Company"), one of the
world's largest outdoor advertising companies, today announced that
it has entered into an agreement to irrevocably tender to sell its
50.91% stake in Clear Media Limited ("Clear Media"), an indirect,
non-wholly owned subsidiary of the Company based in China, to Ever Harmonic Global Limited ("Ever
Harmonic"). The Company also provided an update regarding its
initiatives to increase liquidity and preserve financial
flexibility in response to the impact of COVID-19 and is
withdrawing its guidance for 2020, previously provided on
February 27, 2020.
Clear Media Limited Transaction
Under the terms of the Company's agreement with Ever Harmonic,
Ever Harmonic will acquire the Company's stake in Clear Media for
HK$7.12 per share, or approximately
US$253 million* in cash, as part of a
proposed voluntary conditional cash offer (the "Offer") made by and
on behalf of Ever Harmonic. Ever Harmonic is a special purpose
vehicle wholly owned by a consortium of investors comprising Mr.
Han Zi Jing (chief executive officer
and an executive director of Clear Media), Antfin (Hong Kong) Holding Limited, JCDecaux Innovate
Limited and China Wealth Growth Fund III L.P. This represents a
premium of approximately 86.88% over the average of the closing
prices of the Clear Media shares as quoted on the Hong Kong Stock
Exchange for the 30 consecutive trading days prior to the announced
strategic review of our investment in China on November 29,
2019. Today's announcement is a successful milestone
following the process previously disclosed on November 29, 2019 to maximize the value of the
Company's stake in Clear Media.
The Company has included revenue of US$209 million and Adjusted EBITDA of
US$54 million in its results for the
12 months ended December 31, 2019
attributed to Clear Media.
The Offer is conditional upon the satisfaction or waiver of the
conditions described in the announcement jointly made by Ever
Harmonic and Clear Media on the Hong Kong Stock Exchange today (the
"Rule 3.5 Announcement"). Based on the Hong Kong Takeovers Code,
the Offer document is required to be issued within 21 days of the
Rule 3.5 Announcement (unless the consent of the Hong Kong regulator to delay such issue is
obtained). Clear Channel KNR Neth Antilles N.V., an indirect wholly
owned subsidiary of the Company, has irrevocably undertaken to
accept the Offer in respect of its entire shareholding in Clear
Media within seven business days following the despatch of the
Offer document and payment for the sale will be made within seven
business days the date on which the Offer becomes unconditional in
all respects. Further details of the Offer are described in the
Rule 3.5 Announcement.
The Company intends to use the anticipated net proceeds of
approximately $220 million from this
transaction to improve its liquidity position and increase
financial flexibility, subject to any limitations set forth in its
debt agreements. Pro forma for the sale of the Company's investment
in Clear Media and the draw down on the revolving credit facility
of $150 million that occurred on
March 25, 2020, the amount of first
lien debt as of December 31, 2019
would have been reduced to $2,666
million and the first lien net leverage ratio (FLLR) would
have been 4.9x as of December 31,
2019, well below the FLLR requirement of 7.6x under the
terms of the Company's senior secured cash flow credit
facilities. See "Non-GAAP Financial Measures" below.
Credit Suisse is serving as financial advisor and Kirkland &
Ellis is serving as legal advisor to the Company for the Clear
Media transaction.
* Figures based on the foreign exchange rates of USD/HKD =
7.75482.
Financial and Liquidity Update
In light of the rapidly-evolving impact of COVID-19, the Company
is implementing and evaluating actions to strengthen its financial
position and support the continuity of its platform and
operations.
The Company believes the anticipated net proceeds from the sale
of Clear Media combined with the cash on hand, including the
$150 million recently drawn from the
Revolving Credit Facility, and the initiatives the Company is
actively pursuing will improve its liquidity position and provide
the Company with additional financial flexibility during the
economic downturn. These initiatives include but are not
limited to:
- Identifying opportunities to significantly reduce annual
capital expenditures.
-
- Discretionary growth capex can be largely deferred.
- Maintenance capex can be deferred to the extent possible.
- Exploring deferral options with respect to committed
capex.
- Continuing discussions with landlords to align fixed site lease
expenses with revenue during the economic downturn.
-
- Beginning to achieve success in both Europe and the U.S.
- Reducing employee compensation expense.
-
- Temporary salary reductions including 30% reductions for both
the Company's Worldwide CEO, William
Eccleshare and Americas CEO, Scott
Wells;
- Furloughs based on market conditions, hiring freezes and
variable compensation reductions.
- Aggressively cutting discretionary spending.
However, given the quickly evolving economic environment,
continuing downward pressure we are currently seeing in
Europe and beginning to see in the
U.S., and the uncertainty around how long the economic downturn and
its impact on our business will last, the Company is withdrawing
its guidance for 2020, previously provided on February 27, 2020. As a reminder, the Company's
next material debt maturity is 2024 when the Company's $1.9 billion in 9.25% Senior Notes are due.
Non-GAAP Financial Measures
The Company's first lien leverage ratio, pro forma for the sale
of our investment in Clear Media and the draw down on the revolving
credit facility of $150 million that
occurred on March 25, 2020, presented
in this press release is calculated by dividing the Company's pro
forma first lien debt, by the Company's EBITDA (as defined by the
New Senior Secured Credit Agreement) for the four quarters ended
December 31, 2019. The following
table presents the Company's pro forma first lien debt for the four
quarters ended December 31, 2019:
(In
millions)
|
Four Quarters
Ended
December 31,
2019
|
Term Loan
Facility
|
$
1,995.0
|
Clear Channel Outdoor
Holdings 5.125% Senior Notes Due 2027
|
1,250.0
|
Revolving Credit
Facility
|
150.0
|
Other debt
|
4.2
|
Less: Cash and cash
equivalents, pro forma
|
(733.6)
|
Pro forma first lien
debt
|
$
2,665.6
|
|
|
The following table reflects a reconciliation of EBITDA (as
defined by the New Senior Secured Credit Agreement) to operating
income and net cash provided by operating activities for the four
quarters ended December 31, 2019.
|
Four Quarters
Ended
|
(In
millions)
|
December 31,
2019
|
EBITDA (as defined by the New Senior
Secured Credit Agreement and pro forma for the sale of our
investment in Clear Media)
|
$
|
546.9
|
Less adjustments to
EBITDA (as defined by the New Senior Secured Credit
Agreement):
|
|
Charges, expenses or
reserves in respect of any restructuring, relocation, redundancy or
severance expense or one-time compensation charges
|
(13.0)
|
Other
items
|
2.5
|
Clear Media EBITDA
pro forma adjustment(1)
|
52.9
|
Less: Depreciation
and amortization, Impairment charges, Share-based compensation and
Interest income
|
(336.4)
|
Operating
income
|
252.9
|
Plus: Depreciation
and amortization, Impairment charges, Loss (gain) on disposal of
operating and
other assets, net and Share-based
compensation
|
328.5
|
Less: Interest
expense, net
|
(418.2)
|
Less: Interest
expense on Due from iHeartCommunications, net
|
(1.3)
|
Less: Current income
tax expense
|
(48.2)
|
Less: Other expense,
net
|
(15.4)
|
Adjustments to
reconcile consolidated net loss to net cash provided by operating
activities (including
Provision for doubtful accounts,
Amortization of deferred financing charges and note discounts,
net,
Foreign exchange transaction loss and
Other reconciling items, net)
|
13.6
|
Change in operating
assets and liabilities, net
|
102.6
|
Net cash provided
by operating activities
|
$
|
214.5
|
|
|
(1)
|
The Clear Media
EBITDA pro forma adjustment in the table above reflects
approximately $1 million of restructuring and other expenses that
is excluded from the Clear Media Adjusted EBITDA contribution of
$54 million included in the Company's results set forth
above.
|
About Clear Channel Outdoor Holdings, Inc.
Clear
Channel Outdoor Holdings, Inc. (NYSE: CCO) is one of the world's
largest outdoor advertising companies with a diverse portfolio of
approximately 460,000 print and digital displays in 32 countries
across Asia, Europe, Latin
America and North America,
reaching millions of people monthly. A growing digital platform
includes more than 15,000 digital displays in international markets
and more than 1,700 digital displays (excluding airports),
including more than 1,400 digital billboards, in the U.S.
Comprised of two business divisions – Clear Channel Outdoor
Americas (CCOA), the U.S. and Caribbean business division, and Clear Channel
International (CCI), covering markets in Asia, Europe
and Latin America – CCO employs
approximately 5,900 people globally. More information is available
at investor.clearchannel.com, clearchannelinternational.com and
clearchanneloutdoor.com.
Cautionary Statement Concerning Forward-Looking
Statements
Certain statements in this press release constitute
"forward-looking statements" within the meaning of the Private
Securities Litigation Reform Act of 1995. Such forward-looking
statements involve known and unknown risks, uncertainties and other
factors which may cause the actual results, performance or
achievements of Clear Channel Outdoor Holdings, Inc. to be
materially different from any future results, performance or
achievements expressed or implied by such forward-looking
statements. The words or phrases "guidance," "believe," "expect,"
"anticipate," "estimates," "forecast" and similar words or
expressions are intended to identify such forward-looking
statements. In addition, any statements that refer to expectations
or other characterizations of future events or circumstances, such
as statements about statements regarding the proposed transaction,
the anticipated use of the proceeds of the proposed transaction,
the anticipated leverage ratio impact, the expected timing of the
proposed transaction and the anticipated benefits of the proposed
transaction, our liquidity initiatives and future liquidity
and the impact of the COVID-19 pandemic on our business,
are forward-looking statements. These statements are not
guarantees of future performance and are subject to certain risks,
uncertainties and other factors, some of which are beyond our
control and are difficult to predict.
Various risks that could cause future results to differ from
those expressed by the forward-looking statements included in this
press release include, but are not limited to: weak or uncertain
global economic conditions and their impact on the level of
expenditures on advertising, including the effects of Brexit and
economic uncertainty in China; our
ability to service our debt obligations and to fund our operations
and capital expenditures; industry conditions, including
competition; our ability to obtain key municipal concessions for
our street furniture and transit products; fluctuations in
operating costs; technological changes and innovations; shifts in
population and other demographics; other general economic and
political conditions in the United
States and in other countries in which we currently do
business, including those resulting from recessions, political
events and acts or threats of terrorism or military conflicts;
changes in labor conditions and management; the impact of future
dispositions, acquisitions and other strategic transactions;
legislative or regulatory requirements; regulations and consumer
concerns regarding privacy and data protection; a breach of our
information security measures; restrictions on outdoor advertising
of certain products; fluctuations in exchange rates and currency
values; risks of doing business in foreign countries; the magnitude
of the impact of the COVID-19 pandemic on our operations
and on general economic conditions; third-party claims of
intellectual property infringement, misappropriation or other
violation against us; the risk that the Separation could result in
significant tax liability or other unfavorable tax consequences to
us and impair our ability to utilize our federal income tax net
operating loss carryforwards in future years; the risk that we may
be more susceptible to adverse events following the Separation; the
risk that we may be unable to replace the services
iHeartCommunications provided us in a timely manner or on
comparable terms; our dependence on our management team and other
key individuals; the risk that indemnities from iHeartMedia will
not be sufficient to insure us against the full amount of certain
liabilities; volatility of our stock price; the impact of our
substantial indebtedness, including the effect of our leverage on
our financial position and earnings; the ability of our
subsidiaries to dividend or distribute funds to us in order for us
to repay our debts; the restrictions contained in the agreements
governing our indebtedness and our Preferred Stock limiting our
flexibility in operating our business; the effect of analyst or
credit ratings downgrades; certain other factors set forth in our
other filings with the SEC; as well as factors related to the
proposed transaction, including but not limited to: the ability to
satisfy the conditions to closing of the transaction and complete
the transaction on the expected timing and terms and or at all;
higher than expected or unexpected costs associated with or
relating to the transaction; and the risk that expected benefits of
the transaction may not be achieved in a timely manner or at all.
There can be no assurance that the proposed transaction will in
fact be consummated in the manner described or at all. This list of
factors that may affect future performance and the accuracy of
forward-looking statements is illustrative and is not intended to
be exhaustive.
You are cautioned not to place undue reliance on these
forward-looking statements, which speak only as of the date stated,
or if no date is stated, as of the date of this press release.
Other key risks are described in the section entitled "Item 1A.
Risk Factors" of the Company's reports filed with the U.S.
Securities and Exchange Commission, including the Company's Annual
Report on Form 10-K for the year ended December 31,
2019. Except as otherwise stated in this press release, the Company
does not undertake any obligation to publicly update or revise any
forward-looking statements because of new information, future
events or otherwise.
View original content to download
multimedia:http://www.prnewswire.com/news-releases/clear-channel-outdoor-holdings-inc-to-sell-investment-in-clear-media-limited-for-us253-million-301032183.html
SOURCE Clear Channel Outdoor Holdings, Inc.