Clear Channel Communications Inc. (CCMO:US), which has more than $20 billion of debt, is looking to extend loans to push out debt maturities, according to KDP Investment Advisors Inc.
The radio and outdoor advertising company is asking lenders to push the maturity of $5 billion of its $8.2 billion of loans to 2019 from 2016 in exchange for higher rates. The extended debt will pay interest at 675 basis points more than the London interbank offered rate, compared with the current margin of 365 basis points more than Libor.
Clear Channel, which has $10.1 billion in borrowings coming due (CCMO:US) in 2016, is also seeking an exchange on bonds maturing in 2016 into new notes yielding 12 percent in cash and 2 percent in so called payment-in-kind notes. The transactions will cost the company more than $170 million in additional annual interest expenses, according to a report today from debt researcher CreditSights Inc.
“The 2016 maturity wall posed the biggest risk to the company,” Spencer Godfrey, a KDP analyst, wrote in a note today. “While this risk has been reduced considerably it comes at a high cost. We worry that the company is running low on affordable options to continue to refinance and push out maturities, and that at some point the music will stop.”
David Grabert, a spokesman for the Clear Channel Outdoor unit, didn’t immediately respond to a telephone call seeking comment.
Clear Channel is graded (CCMO:US) CCC+ at Standard & Poor’s, a rating that is vulnerable to non payment and dependent on favorable business conditions, according to the rating firm.
The company had $1.55 billion in interest expense (2968900Q:US) last year, up from $1.47 billion in 2011, according to data compiled by Bloomberg.
To contact the reporter on this story: Sridhar Natarajan in New York at email@example.com
To contact the editor responsible for this story: Faris Khan at firstname.lastname@example.org