Clear Channel Communications, the parent company of SFX Entertainment that announced certain "change of control payments" on Sept. 22, says that the calling in of high interest bonds is routine housekeeping and was aimed at lowering the media giant's interest payments.
A Clear Channel spokesperson explained that, "When we closed the merger we had the option to call in the bonds in what's called the 'change of control option.' We called in those bonds that SFX had issued to finance acquisitions."
Typically completed within 60 days, the change of control option is being handled for Clear Channel by the Bank of New York. The bank will call in SFX debt comprising "higher interest bonds."
"It's a good sign from an investors standpoint," the Clear Channel spokesperson said. "It's a bit of housekeeping and we're basically lowering our interest payments. These bonds were purchased at 9 1/8 percent; we can get a much better rate going to the debt bond markets as Clear Channel.
As reported earlier, a company statement indicates that the change of control move involves an "aggregate principal amount of $115,000.00 for SFX's 9 1/8 percent senior subordinated notes due 2008 ($350,000,000), and in the aggregate principal amount of $725,000.00 for its 9 1/8 percent senior subordinated notes due 2008 ($200,000,000)." SFX was acquired by Clear Channel on Aug. 1. Clear Channel has also purchased radio broadcaster AMFM, netting the company a total of 874 radio and 19 television stations in the United States, with equity interests in over 240 radio stations around the world. In its other significant business, Clear Channel operates more than 700,000 outdoor advertising displays,including billboards, street furniture and transit panels.
After an aggressive acquisitions campaign in sports and entertainment, SFX Entertainment established an early lead in marketing “live experiential” events. SFX develops and manages touring Broadway shows, and sells Broadway subscription series and individual productions in 55 markets. An integrated franchise that promotes and produces a broad variety of live entertainment events locally, regionally and nationally, SFX has 122 venues overall, and owns or operates venues in 31 of the top 50 domestic markets.
-- By Murdoch McBride