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Item 1.01
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Entry Into Material Definitive Agreement
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On June 12, 2020, Clear Channel Outdoor Holdings, Inc. (the “Company”) and the other loan parties thereto, entered into an amendment (the “Amendment”) to the Company’s credit agreement, dated as of August 23, 2019 (as amended, restated, amended and restated, supplemented or otherwise modified, the “Credit Agreement”), with the several lenders from time to time party thereto and Deutsche Bank AG New York Branch, as Administrative Agent and Collateral Agent, which governs the Company’s revolving credit facility (the “Revolving Credit Facility”) and term loan.
The Credit Agreement contains a springing financial covenant, applicable to the Revolving Credit Facility, that applies (x) if the total net leverage ratio if greater than 6.50:1.00, when the balance of the Revolving Credit Facility is greater than $0 (subject to certain exclusions) or (y) if the total net leverage ratio is equal to or less than 6.50:1.00, when the balance of the Revolving Credit Facility exceeds 35% of the aggregate commitments under the Revolving Credit Facility (subject to certain exclusions). Prior to the Amendment, the springing financial covenant required compliance with a first lien net leverage ratio of 7.60 to 1.00, with a stepdown to 7.10 to 1.00 commencing with the last day of the fiscal quarter ending June 30, 2021. The Amendment suspends the springing financial covenant for the reporting periods ending September 30, 2020, December 31, 2020, March 31, 2021 and June 30, 2021 and delays the financial covenant stepdown to 7.10 to 1.00 until the March 31, 2022 reporting period. This suspension period will end early if a Specified Event (as defined below) occurs. “Specified Event” is defined as (i) certain repayments by the Company or its restricted subsidiaries of junior debt prior to maturity if the Company does not have Liquidity (as defined below) of $250.0 million following such repayment, (ii) the making of certain voluntary restricted payments, (iii) the Company making a REIT Election (as defined in the Credit Agreement) or (iv) the repayment of by the Company or its restricted subsidiaries of unsecured or junior lien indebtedness (including the 9.25% Senior Notes due 2024 and the CCIBV note issued in May 2020) using cash on hand or the proceeds of borrowings under the Revolving Credit Facility if the Company does not have Liquidity of $250.0 million following such repayment.
In addition, for all reporting periods through September 30, 2021, the Company will comply with a liquidity covenant that requires the Company to maintain minimum Liquidity of $150.0 million. The Amendment defines “Liquidity” as cash on hand and availability under the Company’s receivables-based credit facility and Revolving Credit Facility. The Amendment also provides for an equity cure in the event the Company fails to comply with the liquidity covenant as of the last day of any calendar month, pursuant to which the cash proceeds of any direct equity investment in the Company made during the period ending 10 business days following the failure to comply with the liquidity covenant will be included in the calculation of Liquidity for purposes of determining compliance with the liquidity covenant for that month, subject to certain conditions.
The remaining terms of the Credit Agreement, as amended by the Amendment, are substantially the same as the terms under the existing Credit Agreement, including with respect to events of default and loan acceleration.
The foregoing descriptions of the Amendment and the Credit Agreement do not purport to be complete, and are qualified in their entirety by reference to the full text of the Amendment, a copy of which is filed as Exhibit 10.1 to this Current Report on Form 8-K, and by reference to the full text of the Credit Agreement, a copy of which is filed as Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on August 23, 2019, each of which is incorporated herein by reference.