Insider noted two recent announcements from Clear Channel Outdoor.
Extension of voter rights – Insider wrote back in May 2020 of CCO’s adoption of a one year shareholder rights plan. A shareholder rights plan is also called a poison pill. Shareholder rights plans were devised in the early 1980s as a way to prevent potential takeover bidders from negotiating a price for sale of shares directly with shareholders, and instead forcing the bidder to negotiate with the board.
The Board approved last week an 11-month extension to the Rights Plan to protect the interests of all Company shareholders. In approving the extension, the Board considered the heightened potential for one or more persons or groups to gain undue influence over or control of the Company through open market accumulation, seek to acquire control of the Company without paying an appropriate control premium, or employ other coercive tactics in light of, among other things, the substantial ongoing impact of the COVID-19 pandemic on the Company’s global business.
Insider’s Take: Though the Clear Channel Board may not be opposed to new investors or a sale of assets, they do want to make sure the discussion comes through them and not through an end around. The extension of the shareholder rights plan will provide some cover until the stock value hopefully appreciates, post-Covid.
Proposed Senior Note Offering – Clear Channel also announced, yesterday, that it will offer, subject to market and customary conditions, $1.05 Billion aggregate principal amount of Senior Notes due 2029 in a private offering that is exempt from registration under the Securities Act of 1933, as amended. The Company intends to use the proceeds from the Notes to (i) cause Clear Channel Worldwide Holdings, Inc., a subsidiary of the Company, to redeem all of the outstanding $961,525,000 aggregate principal amount of its 9.25% Senior Notes due 2024, and (ii) pay related transaction fees and expenses.
Insider’s take: The debt CCO plans to redeem represents approximately 17% of their total debt and definitely their most expensive with a 9.25% coupon rate. The market rate for the new debt was announced at the end of yesterday’s business day at 7.5% which could create free cash flow to Clear Channel in the range of $17 million annually. When they get it placed it will be a nice win for the Company.
Investors thought well of CCO’s actions as the Company’s stock price is currently trading at $2.34, up over 8% yesterday.
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