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UNDER
THE SECURITIES ACT OF 1933
Delaware | 4832 | 26-0241222 | ||
(State or other jurisdiction of | (Primary Standard Industrial | (I.R.S. Employer | ||
incorporation or organization) | Classification Code Number) | Identification Number) |
36th Floor
Attn.: David C. Chapin
Boston, MA 02110
(617) 951-7000
John P. Connaughton | Scott M. Sperling | |
Bain Capital Partners, LLC | Thomas H. Lee Partners, L.P. | |
111 Huntington Avenue | 100 Federal Street | |
Boston, MA 02199 | Boston, MA 02110 | |
(617) 516-2000 | (617) 227-1050 |
Copies to:
Andrew W. Levin | C.N. Franklin Reddick, Esq. | David C. Chapin, Esq. | ||
Executive Vice President, | Akin Gump Strauss Hauer & Feld LLP | Ropes & Gray LLP | ||
Chief Legal Officer and Secretary | 2029 Century Park East, Suite 2400 | One International Place | ||
Clear Channel Communications, Inc. | Los Angeles, CA 90067 | Boston, MA 02110 | ||
200 East Basse | (310) 229-1000 | (617) 951-7000 | ||
San Antonio, TX 78209 | ||||
(210) 822-2828 |
Large Accelerated Filer o | Accelerated Filer o | Non-Accelerated Filer þ | Smaller Reporting Company o |
Proposed | ||||||||||||||||||||||
Maximum | Proposed | |||||||||||||||||||||
Offering | Maximum | Amount Of | ||||||||||||||||||||
Title of Each Class of | Amount to Be | Price per | Aggregate | Registration | ||||||||||||||||||
Securities to Be Registered | Registered | Share | Offering Price | Fee | ||||||||||||||||||
Class A common stock, par value of $0.001 per share | 13,395,620 shares(1) | N/A | $ | 681,940,471 | (2) | $ | 0 | (3)(4) | ||||||||||||||
(1) | Represents the maximum number of shares of Class A common stock, par value $0.001 per share, of CC Media Holdings, Inc. (“Holdings”) to be issued upon the completion of the merger (as described in the accompanying proxy statement/prospectus) in respect of shares of common stock, par value $0.10 per share, of Clear Channel Communications, Inc. (“Clear Channel”) reduced by the 30,612,245 shares of Class A common stock that Holdings previously registered on its registration statement on Form S-4 as amended (File No. 333-143349) initially filed with the Securities and Exchange Commission on May 30, 2007 (the “Prior Registration Statement”). | |
(2) | Pursuant to rules 457(f) and 457(c) under the Securities Act of 1933, as amended (the “Securities Act”) and solely for the purpose of calculating the registration fee, the proposed maximum aggregate offering price is equal to (i) the product obtained by multiplying (A) $34.89 (the average of the high and low prices of Clear Channel common stock on May 27, 2008), by (B) 504,074,561 shares of Clear Channel common stock (estimated number of shares of Clear Channel common stock to be cancelled in the merger including 6,057,487 shares of Clear Channel common stock subject to options which would currently be convertible in the merger), minus $16,905,220,962 (the estimated amount of cash to be paid by the registrant to Clear Channel shareholders in the merger). | |
(3) | Determined in accordance with Section 6(b) of the Securities Act at a rate equal to $39.30 per $1,000,000 of the proposed maximum aggregate offering price. | |
(4) | Reflects a total fee of $26,800 payable hereunder offset in accordance with Rule 0-11(a)(2) of the Securities and Exchange Act of 1934, as amended by the fee previously paid in connection with the preliminary proxy statement on Schedule 14A filed on December 15, 2006 by Clear Channel. |
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Sincerely, | ||||
/s/ Mark P. Mays | ||||
Chief Executive Officer | ||||
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SAN ANTONIO, TEXAS 78209
TO BE HELD ON , 2008
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By Order of the Board of Directors | ||||
/s/ Andrew W. Levin | ||||
Andrew W. Levin | ||||
Executive Vice President, Chief Legal Officer, and Secretary | ||||
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Clear Channel Communications, Inc. | Innisfree M&A Incorporated | |
200 East Basse Road | 501 Madison Avenue | |
San Antonio, TX 78209 | 20th Floor | |
(210) 832-3315 | New York, NY 10022 | |
Attention: Investor Relations Department | (877) 456-3427 |
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Q: | What is the proposed transaction? | |
A: | The proposed transaction is the merger of Clear Channel with Merger Sub, a company formed by private equity funds sponsored by Bain Capital Partners, LLC and Thomas H. Lee Partners, L.P. In the merger, Merger Sub will merge with and into Clear Channel and Clear Channel will be the surviving corporation and will become an indirect wholly-owned subsidiary of Holdings. Depending upon the number of shares of Class A common stock of Holdings which shareholders and optionholders elect to receive in the merger as part of the Merger Consideration (as defined below) and assuming that no Additional Equity Consideration (as defined below) is issued, up to 30% of the outstanding capital stock and voting power of Holdings will be held by former Clear Channel shareholders and optionholders immediately following the merger as a result of Stock Elections (as defined below). | |
Q: | What will I receive for my shares of Clear Channel common stock in the merger? | |
A: | You may elect one of the following options for each share of Clear Channel common stock you hold on the record date: | |
Option 1(which we refer to as a “Cash Election”): $36.00 per share cash consideration, without interest (which we refer to as the “Cash Consideration”); or | ||
Option 2(which we refer to as a “Stock Election”): one share of Class A common stock of Holdings (which we refer to as the “Stock Consideration”). | ||
You may make a Cash Election or Stock Election (on a share-by-share basis) for each share of Clear Channel common stock you own as of the record date (including shares issuable on conversion of outstanding options), subject to the procedures, deadlines, prorations, Individual Cap and Additional Equity Consideration described below. | ||
A Stock Election is purely voluntary. You are not required to make a Stock Election. A Stock Election is an investment decision which involves significant risks.The Clear Channel board of directors makes no recommendation as to whether you should make a Stock Election and makes no recommendation regarding the Class A common stock of Holdings.For a discussion of risks associated with the ownership of Holdings Class A common stock see “Risk Factors” beginning on page 30 of this proxy statement/prospectus. |
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Other than with respect to 580,356 shares of Clear Channel common stock held by L. Lowry Mays and LLM Partners, Ltd. which will be held in escrow pursuant to the terms of an escrow agreement described in more detail below and exchanged for Class A common stock of Holdings, shares and options held by directors or employees of Clear Channel who have separately agreed to convert such shares or options into equity securities of Holdings in the merger will not affect the number of shares of Holdings Class A common stock available for issuance as stock consideration. | ||
In limited circumstances described in more detail below, shareholders electing to receive cash consideration for some or all of their shares, on a pro rata basis, will be issued shares of Holdings Class A common stock in exchange for some of their shares of Clear Channel common stock for which they make a Cash Election, up to a cap of 1/36th of the total number of shares of Clear Channel common stock for which such shareholder makes a Cash Election (rounded down to the nearest whole share). We refer to this as the “Additional Equity Consideration.” | ||
Q: | Can I make a Cash Election for a portion of my shares of Clear Channel common stock and a Stock Election for my remaining shares of Clear Channel common stock? | |
A: | You may make your election on a share-by-share basis. As a result, you can make a Cash Election or Stock Election for all or any portion of your shares of Clear Channel common stock. | |
Q: | The Board earlier approved a transaction involving the same parties at a higher price. Why did the board decide to accept the revised offer from the private equity group and not continue the proceedings in court? | |
A: | Under the terms of the merger agreement, as amended through the second amendment, Clear Channel had no contractual right to require the Sponsors (as defined below), Banks (as defined below), Merger Sub, Holdings or the Fincos to perform their respective obligations under the merger agreement or the equity or debt financing agreements. Clear Channel’s rights under the merger agreement were limited to a right to receive a $500 million termination fee in the event Clear Channel terminated the merger agreement for failure of Holdings and the Fincos to close when they were obligated to close under the merger agreement and Clear Channel was separately seeking damages against the Banks pursuant to the Texas Actions (as defined below). | |
Merger Sub was pursuing a breach of contract claim (including a claim for specific performance) against the Banks in the New York Action (as defined below) seeking to consummate the original merger transaction as was in place prior to Amendment No. 3, but there was no assurance that Merger Sub would have been able to cause a closing to occur even if it were successful in that action. | ||
Complex litigation such as the New York Action, the New York Counterclaim Action (as defined below) and the Texas Actions involve uncertainty and delay. While Clear Channel was confident in the merits of its claims, there was no assurance a court would have agreed with it or that, even if Clear Channel had been successful in the Texas Actions, that any judgment would not have been modified or reversed on appeal. Further, litigation is time consuming and inherently subject to delay and there was no assurance that the Texas Actions would have been concluded (or that all appeals would have been disposed of) on an accelerated basis, or the ultimate resolution of the litigation. | ||
The Board of Directors determined that a merger on terms offering a high degree of certainty of closing and representing a fair price to the shareholders was in the best interests of the shareholders when compared to the pursuit of litigation in which Clear Channel could not specifically enforce the closing of the prior transaction and Clear Channel’s damage claims were uncertain and subject to the delays inherent in litigation. | ||
Q: | Why is closing under the merger agreement as amended through the third amendment more certain than the closing under the merger agreement as amended through the second amendment? | |
The merger agreement, as amended through the third amendment, has a number of contractual features that make it more certain than the prior merger agreement: |
• | the parties have entered into a Settlement Agreement (as defined below) whereby they have each agreed to perform their respective obligations under the merger agreement, the debt financing agreements, equity commitments and the Escrow Agreement (as defined below). Pursuant to the Settlement Agreement, the parties stipulated to the entry of a court order in the New York Action directing the parties to perform their obligations under the Settlement Agreement, | ||
• | the required debt financing is provided through fully negotiated and executed financing agreements (as opposed to debt commitment letters), thus avoiding the potential for a new dispute of the same type that resulted in the failure of the closing of the prior transaction, |
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• | the merger agreement, financing agreements and equity commitment letters contain fewer closing conditions than was originally the case, | ||
• | none of the merger agreement, financing agreements or equity commitment letters contains a “material adverse change” or “MAC” condition, | ||
• | the Sponsors and the Banks have agreed to have their equity and debt commitment obligations fully funded into escrow pursuant to the Escrow Agreement, and | ||
• | each party (including Clear Channel) has the right to specifically enforce the merger agreement, the Settlement Agreement, the Escrow Agreement and the financing agreements. |
Q: | Why am I being asked to approve the transaction again? | |
A: | Clear Channel shareholders approved the prior merger agreement at a special meeting of shareholders held in September 2007. Since that time, the parties to the transaction have amended the terms of the merger agreement. As part of that amendment, the Cash Consideration has been reduced from $39.20 per share to $36.00 per share. The merger agreement, as amended, requires the approval of Clear Channel’s shareholders. | |
Q: | What will I receive for my options to purchase Clear Channel common stock in the merger? | |
A: | A holder of options (whether vested or unvested) to purchase Clear Channel common stock as of the record date may make a Stock Election or a Cash Election with respect to the number of shares of common stock issuable upon exercise of his or her options, less the number of shares having a value (based on the Cash Consideration) equal to the exercise price payable on such issuance and any required tax withholding. If a holder of options does not make a valid Stock Election, then each such outstanding option which remains outstanding and unexercised as of the effective time of the merger (except as otherwise agreed by the Fincos, Holdings, Clear Channel and the holder of such Clear Channel stock option), will automatically become fully vested and convert into the right to receive a cash payment, without interest and less any applicable withholding tax, equal to the product of (x) the excess, if any, of the Cash Consideration over the exercise price per share of such option and (y) the number of shares of Clear Channel common stock issuable upon the exercise of such Clear Channel stock option. | |
Q: | How will restricted shares of Clear Channel common stock be treated in the merger? | |
A: | In general, each restricted share of Clear Channel common stock that is outstanding as of the time of the merger, whether vested or unvested (except as otherwise agreed by the Fincos and a holder of Clear Channel restricted stock), will automatically become fully vested and will be treated the same as all other shares of Clear Channel common stock outstanding at the time of the merger. The Fincos and Merger Sub have informed Clear Channel that they anticipate converting approximately 636,667 unvested shares of Clear Channel restricted stock held by management and employees pursuant to a grant of restricted stock made in May 2007 into restricted shares of Holdings Class A common stock on a one for one basis. These shares of Holdings Class A common stock will continue to vest in accordance with the schedule set forth in the holder’s May 2007 award agreement. | |
Q: | What happens to the additional consideration that began accumulating on January 1, 2008? Will there be additional consideration under the terms of the amended merger agreement? | |
A: | The additional consideration that was contemplated by the prior merger agreement is no longer in effect and therefore will not be payable to Clear Channel shareholders. | |
The merger agreement provides for payment of “Additional Per Share Consideration” if the merger closes after November 1, 2008. If the merger is completed after November 1, 2008, but before December 1, 2008, you will receive Additional Per Share Consideration based upon the number of days elapsed since November 1, 2008 (including November 1, 2008), equal to $36.00 multiplied by 4.5% per annum, per share. If the merger is completed after December 1, 2008, the Additional Per Share Consideration will increase and you will receive Additional Per Share Consideration based on the number of days elapsed since December 1, 2008, equal to $36.00 multiplied by 6% per annum, per share (plus the Additional Per Share Consideration accrued during November 2008). See “The Merger Agreement — Treatment of Common Stock and Other Securities” beginning on page 142 of this proxy statement/prospectus. |
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Your election to receive Cash Consideration or Stock Consideration will not affect your right to receive the Additional Per Share Consideration if the merger does not close before November 1, 2008. The total amount of Cash Consideration, Stock Consideration, Additional Equity Consideration (if any) and Additional Per Share Consideration paid in the merger is referred to in this proxy statement/prospectus as the “Merger Consideration.” | ||
Q: | If I make a Stock Election, will I be issued fractional shares of Class A common stock of Holdings in the merger? | |
A: | No. If you make a Stock Election, you will not receive any fractional share in the merger. Instead, you will be paid cash for any fractional share you would have otherwise received as Stock Consideration based upon the Cash Consideration price of $36.00 per share, taking into account all shares of common stock and all options for which you elected Stock Consideration. | |
Q: | Is there an individual limit on the number of shares of Clear Channel common stock and options to purchase Clear Channel stock that may be exchanged for Class A common stock of Holdings by each Clear Channel shareholder or optionholder? | |
A: | Yes. No holder of Clear Channel common shares or options who makes a Stock Election, may receive more than 11,111,112 shares of Class A common stock of Holdings immediately following the merger, which we refer to as the “Individual Cap.” Any shares of common stock or options that are not converted into Stock Consideration due to the Individual Cap will be reallocated to other shareholders or optionholders who have made an election to receive Stock Consideration but have not reached the Individual Cap. Any shares that are not converted into Stock Consideration as a result of the Individual Cap will be converted into Cash Consideration, subject to Additional Equity Consideration, if applicable. Unless a beneficial holder of Clear Channel shares submits a request in writing to the Paying Agent prior to 5:00 p.m., New York City time, on , 2008, the fifth business day immediately preceding the date of the special meeting, to have the Individual Cap apply with respect to all Clear Channel shares beneficially owned by such holder and provides information necessary to verify such beneficial ownership, the Individual Cap will apply, in the case of shares represented by physical stock certificates, to each holder of record of those Clear Channel shares, and in the case of book-entry shares, to each account in which those Clear Channel shares are held on the books of the applicable brokerage firm or other similar institutions. | |
Q: | Is there an aggregate limit on the number of shares of Clear Channel common stock and options to purchase Clear Channel common stock that may be exchanged for Class A common stock of Holdings in the merger? | |
A: | Yes. The merger agreement provides that no more than 30% of the total shares of capital stock of Holdings are issuable in exchange for shares of Clear Channel common stock (including shares issuable upon conversion of outstanding options) pursuant to the Stock Elections. The issuance of any Additional Equity Consideration may result in the issuance of more than 30% of the total shares of capital stock of Holdings in exchange for shares of Clear Channel common stock (including shares issuable upon conversion of outstanding options). | |
Q: | What happens if Clear Channel shareholders or optionholders elect to exchange more than the maximum number of shares of common stock (including shares issuable upon conversion of outstanding options) that may be exchanged for shares of Class A common stock of Holdings? | |
A: | If Clear Channel shareholders and optionholders make Stock Elections covering more than the maximum number of shares of Clear Channel common stock that may be exchanged for Holdings shares of Class A common stock, then each shareholder and/or optionholder making a Stock Election (other than certain shareholders who have separately agreed with Holdings that their respective Stock Elections will be cutback only in the event that the amounts to be provided under the Equity Financing (as defined below) are reduced) will receive a proportionate allocation of shares of Class A common stock of Holdings based on the number of shares of common stock (including shares issuable upon conversion of outstanding options) for which such holder has made a Stock Election compared to the total number of shares of common stock (including shares issuable upon conversion of outstanding options) for which all holders have made Stock Elections. The proration procedures are designed to ensure that no more than 30% of the total capital stock of Holdings is allocated to shareholders and/or optionholders of Clear Channel pursuant to the Stock Elections. Any shares that will not be converted into Stock Consideration as a result of cutback or proration will be converted into Cash Consideration, subject to the issuance of Additional Equity Consideration, if applicable. | |
Q: | In what circumstance might I be issued Class A common stock of Holdings despite the fact that I elected to receive cash in exchange for my shares of Clear Channel stock in the merger? | |
A: | In certain circumstances, at the election of Holdings, the Cash Consideration may be reduced by the Additional Equity Consideration. The Additional Equity Consideration will reduce the amount of the Cash Consideration if the total funds that Holdings determines it needs to fund the merger, merger-related expenses, and Clear Channel’s cash requirements (such funds |
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referred to as “Uses of Funds”) is greater than the sources of funds available to Merger Sub from borrowings, equity contributions, Stock Consideration and Clear Channel’s available cash (such funds referred to as “Sources of Funds”). | ||
Q: | How will the amount of the Additional Equity Consideration be determined? | |
A: | In certain circumstances, at the election of Holdings, the Cash Consideration may be reduced by the Additional Equity Consideration. The Additional Equity Consideration is an amount equal to the lesser of: |
• | $1.00, or | ||
• | a fraction equal to: |
• | the positive difference between: |
• | the Uses of Funds, and | ||
• | the Sources of Funds, divided by, |
• | the total number of Public Shares that will receive the Cash Consideration. |
Consequently, if Holdings’ Uses of Funds exceeds its Sources of Funds, Holdings may reduce the Cash Consideration to be paid to holders of Clear Channel common stock by an amount not to exceed 1/36th of the amount of Cash Consideration that is otherwise converted into the right to receive the Cash Consideration and, in lieu thereof, issue shares of Holdings Class A common stock up to a cap of $1.00 for every share of Clear Channel common stock. If the Stock Election is fully subscribed, it is unlikely that any portion of the shares of Clear Channel stock for which a Cash Election is made will be exchanged for shares of Holdings’ Class A common stock, although Holdings retains the right to do so. | ||
Q: | Will the shares of Class A common stock of Holdings be listed on a national securities exchange? | |
A: | No. Shares of Holdings Class A common stock will not be listed on the New York Stock Exchange, which we refer to as the “NYSE,” or any other national securities exchange. It is anticipated that, following the merger, the shares of Holdings Class A common stock will be quoted on the Over-the-Counter Bulletin Board. Holdings has agreed to register the Class A common stock under the Securities Exchange Act of 1934, as amended, which we refer to as the “Exchange Act,” and to file periodic reports (including reports on Forms 10-K, 10-Q and 8-K) for at least two years following the merger. | |
Q: | What if I previously elected to receive the Stock Consideration prior to the special meeting of shareholders held on September 25, 2007? | |
A: | All of the stock elections made in connection with the special shareholders meeting held on September 25, 2007 have been cancelled and the stock certificates and letters of transmittal evidencing the shares of Clear Channel common stock submitted for exchange have been returned to the record holders thereof. If you again wish to elect to receive some or all Stock Consideration in exchange for some or all of your shares of Clear Channel common stock, you are required to make a new election in connection with all shares of Clear Channel common stock held by you. | |
Q: | How and when do I make a Stock Election or Cash Election? | |
A: | A form of election and a letter of transmittal will be mailed with this proxy statement/prospectus to all shareholders as of the record date. Additional copies of the form of election and the letter of transmittal may be obtained from Clear Channel’s proxy solicitor, Innisfree M&A Incorporated, which we refer to as “Innisfree,” by calling toll free at (877) 456-3427. Clear Channel will also make a copy of the form of election and letter of transmittal available on its website at www.clearchannel.com/Investors. You should carefully review and follow the instructions in the letter of transmittal, which will include information regarding how to return of the form of election, the letter of transmittal, and any shares for which you have made a Stock Election for holders of shares of common stock held in “street name” through a bank, broker or other custodian or nominee. The form of election and the letter of transmittal will need to be properly completed, signed and delivered prior to 5:00 p.m., New York City time, on , 2008, the fifth business day immediately preceding the date of the special meeting. |
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Q: | Can I revoke my form of election after I have submitted it to the paying agent? | |
A: | You may revoke your form of election and withdraw all or any portion of the shares submitted with your letter of transmittal and file a new form of election at any time prior to 5:00 p.m., New York City time, on , 2008, the fifth business day immediately preceding the date of the special meeting, by submitting a written notice of revocation to the paying agent or a new form of election, in each case, together with a notice of withdrawal. Revocations must specify the name in which your shares are registered on the stock transfer books of Clear Channel and such other information as the paying agent may request. If you wish to submit a new election, you must do so in accordance with the election procedures described in this proxy statement/prospectus and the form of election and include a letter of transmittal with any shares which were not previously submitted. If you instructed a broker to submit an election for your shares, you must follow your broker’s directions for changing those instructions. Whether you revoke your election by submitting a written notice of revocation or by submitting a new form of election and notice of withdrawal, the notice or new form of election must be received by the paying agent by the election deadline of 5:00 p.m., New York City time, on , 2008, the fifth business day immediately preceding the date of the special meeting, in order for the revocation to be valid. From and after such time, the elections will be irrevocable and you may no longer change or revoke your election or withdraw your shares. | |
Q: | What happens if I don’t make an election? | |
A: | If you do not make an election with respect to any of your shares of Clear Channel common stock or options to purchase Clear Channel common stock, you will be deemed to have made a Cash Election with respect to such shares. | |
Q: | What happens if I transfer my shares of Clear Channel common stock before the special meeting? | |
A: | The record date of the special meeting is earlier than the meeting date and earlier than the expected closing of the merger. If you transfer your shares of common stock after the record date, you will retain your right to vote the shares at the special meeting, but will have transferred your right to receive the Merger Consideration. | |
Q: | May I submit a form of election even if I do not vote to approve and adopt the merger agreement? | |
A: | Yes. You may submit a form of election even if you vote against the approval and adoption of the merger agreement or abstain or do not register any vote with respect to the approval and adoption of the merger agreement. However, all forms of election to be valid must be submitted prior to 5:00 p.m., New York City time, on , 2008, the fifth business day immediately preceding the date of the special meeting, together with a letter of transmittal and the certificates or book-entry shares representing the shares of Clear Channel common stock for which you make a Stock Election. | |
Q: | Am I entitled to exercise appraisal rights instead of receiving the Merger Consideration for my shares? | |
A: | Yes. If you hold Clear Channel common stock, you are entitled to appraisal rights under Texas law in connection with the merger if you meet certain conditions, which are described under the caption “Dissenters’ Rights of Appraisal” beginning on page 184 of this proxy statement/prospectus. | |
Q: | When do you expect the merger to be completed? | |
A: | We anticipate that the merger will be completed by September 30, 2008, assuming satisfaction or waiver of all of the conditions to the merger. However, because the merger is subject to certain conditions the exact timing and likelihood of the completion of the merger cannot be predicted. Except in limited circumstances or unless amended after the date hereof, the merger agreement is subject to termination by either party after December 31, 2008 if the merger has not been consummated by that date. | |
Q: | What happens if the merger is not consummated? | |
A: | If the approved merger is not completed for any reason, shareholders and optionholders will not receive any payment for their shares and/or options in connection with the merger. Clear Channel will remain an independent public company, shares of Clear Channel common stock will continue to be listed and traded on the NYSE and options will remain outstanding (subject to their terms). Any certificates for shares or options and any book-entry shares delivered together with the form of election and letter of transmittal will be returned at no cost to you. Under specified circumstances, Clear Channel may be required to pay the Fincos a termination fee of up to $500 million or pay the Fincos certain agreed-upon amounts up to $150 million in respect of expenses as described in this proxy statement/prospectus under the caption “The Merger Agreement — Termination Fees.” |
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Q: | Will I continue to receive quarterly dividends? | |
A: | No, you will not continue to receive dividends between now and the close of the merger. See “The Merger Agreement — Conduct of Clear Channel's Business Pending the Merger” on page 149 and “Description of Holdings’ Capital Stock — Dividends” beginning on page 174 of this proxy statement/prospectus for a discussion of the dividend policy following the close of the merger. |
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Q: | Where and when is the special meeting? | |
A: | The special meeting will be held at on , 2008, at , local time. | |
Q: | What matters will be voted on at the special meeting? | |
A: | You will be asked to consider and vote on the following proposals: |
• | to approve and adopt the merger agreement; and | ||
• | to approve the adjournment or postponement of the special meeting, if necessary or appropriate to solicit additional proxies if there are insufficient votes at the time of the special meeting to approve and adopt the merger agreement. |
Q: | How does Clear Channel’s board of directors recommend that I vote on the approval and adoption of the merger agreement? | |
A: | Clear Channel’s board of directors by unanimous vote recommends that you vote: |
• | “FOR” the approval and adoption of the merger agreement; and | ||
• | “FOR” the adjournment/postponement proposal. |
Q: | Who is entitled to vote at the special meeting? | |
A: | All holders of Clear Channel common stock as of the record date are entitled to vote at the special meeting, or any adjournments or postponements thereof. As of the record date there were shares of Clear Channel common stock outstanding and entitled to vote, held by approximately holders of record. Each holder of Clear Channel common stock is entitled to one vote for each share the shareholder held as of the record date. | |
Q: | What constitutes a quorum? | |
A: | The presence, in person or by proxy, of shareholders holding a majority of the outstanding shares of Clear Channel common stock on the record date is necessary to constitute a quorum at the special meeting. | |
Q: | What vote of Clear Channel’s shareholders is required to approve and adopt the merger agreement? | |
A: | For us to complete the merger, shareholders holding two-thirds of the outstanding shares of Clear Channel common stock on the record date must vote “FOR” the approval and adoption of the merger agreement, with each share having a single vote for these purposes. Only votes cast “FOR” the merger proposal constitute affirmative votes. Abstentions are counted for quorum purposes, but since they are not votes cast “FOR” the merger proposal, they will have the same effect as a vote “AGAINST” the merger proposal. Accordingly, failure to vote or an abstention will have the same effect as a vote “AGAINST” the approval and adoption of the merger agreement. | |
Q: | What vote of Clear Channel’s shareholders is required to approve the proposal to adjourn or postpone the special meeting, if necessary or appropriate, to solicit additional proxies? | |
A: | The proposal to adjourn or postpone the special meeting, if necessary or appropriate, to solicit additional proxies requires the affirmative vote of shareholders holding a majority of the outstanding shares of Clear Channel common stock present or represented by proxy at the special meeting and entitled to vote on the matter. Only votes cast “FOR” the adjournment/postponement proposal constitute affirmative votes. Abstentions are counted for quorum purposes, but since they are not votes cast “FOR” the adjournment/postponement proposal, they will have the same effect as a vote “AGAINST” the adjournment/postponement proposal. Broker non-votes are also counted for quorum purposes, but will not count as shares present and entitled to vote to adjourn or postpone the meeting. As a result, broker non-votes will have no effect on the vote to adjourn or postpone the special meeting. |
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Q: | How can I vote my shares in person at the special meeting? | |
A: | Shares held directly in your name as the shareholder of record may be voted by you in person at the special meeting. If you choose to do so, please bring the enclosed proxy card and proof of identification. Even if you plan to attend the special meeting, we recommend that you also submit your proxy as described below so that your vote will be counted if you later decide not to attend the special meeting. If you vote your shares in person at the special meeting any previously submitted proxies will be revoked. Shares held in “street name” may be voted in person by you at the special meeting only if you obtain a signed proxy from the shareholder of record giving you the right to vote the shares. Your vote is important. Accordingly, we urge you to sign and return the accompanying proxy card whether or not you plan to attend the special meeting. | |
If you plan to attend the special meeting, please note that space limitations make it necessary to limit attendance to shareholders and one guest. Admission to the special meeting will be on a first-come, first-served basis. Registration and seating will begin at . Each shareholder may be asked to present valid picture identification issued by a government agency, such as a driver’s license or passport. Shareholders holding stock in street name will need to bring a copy of a brokerage statement reflecting stock ownership as of the record date. Cameras (including cellular telephones with photographic capabilities), recording devices and other electronic devices will not be permitted at the special meeting. | ||
Q: | How can I vote my shares without attending the special meeting? | |
A: | Whether you hold shares of Clear Channel common stock directly as the shareholder of record or beneficially in street name, when you return your proxy card or voting instructions accompanying this proxy statement/prospectus, properly signed, the shares represented will be voted in accordance with your direction unless you subsequently revoke such proxy or vote in person at the special meeting, as described above. | |
Q: | If my shares are held in “street name” by my broker, will my broker vote my shares for me? | |
A: | Your broker will not vote your shares on your behalf unless you provide instructions to your broker on how to vote. You should follow the directions provided by your broker regarding how to instruct your broker to vote your shares. Without those instructions, your shares will not be voted, which will have the same effect as voting “AGAINST” the approval and adoption of the merger agreement. | |
Q: | What do I need to do now? | |
A: | We urge you to read this proxy statement/prospectus carefully, including its annexes and the information incorporated by reference, and to consider how the merger affects you. If you are a shareholder as of the record date, then you can ensure that your shares are voted at the special meeting by completing, signing, dating and returning each proxy card in the postage-paid envelope provided, or if you hold your shares through a broker or bank, by submitting your proxy by telephone or the Internet prior to the special meeting. | |
Q: | If I have previously submitted a proxy, is it still valid? | |
A: | No. If you have previously submitted a proxy card in response to Clear Channel’s prior solicitations, these proxy cards will not be valid at this meeting and will not be voted. If your shares are held in “street name,” you should check the voting instruction card provided by your broker to see which voting options are available and the procedures to be followed. If you hold shares through a broker or other nominee, you should follow the procedures provided by your broker or nominee.Please complete and submit a validly executed proxy card for the special meeting, even if you have previously delivered a proxy.If you have any questions or need assistance in voting your shares, please call our proxy solicitor, Innisfree M&A Incorporated, toll free at (877) 456-3427. | |
Q: | How do I revoke or change my vote? | |
A: | You can change your vote at any time before your proxy is voted at the special meeting. You may revoke your proxy by notifying Clear Channel in writing or by submitting a later-dated new proxy by mail to Clear Channel c/o Innisfree M&A Incorporated at 501 Madison Avenue, 20th Floor, New York, NY 10022. In addition, your proxy may be revoked by attending the special meeting and voting in person. However, simply attending the special meeting will not revoke your proxy. If you hold your shares in “street name” and have instructed a broker to vote your shares, the above-described options for changing your vote do not apply, and instead you must follow the instructions received from your broker to change your vote. |
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Q: | What does it mean if I get more than one proxy card or vote instruction card? | |
A: | If your shares are registered differently and are in more than one account, you will receive more than one card. Please sign, date and return all of the proxy cards you receive (or if you hold your shares of Clear Channel common stock through a broker or bank by telephone or the Internet prior to the special meeting) to ensure that all of your shares are voted. | |
Q: | What if I return my proxy card without specifying my voting choices? | |
A: | If your proxy card is signed and returned without specifying choices, the shares will be voted as recommended by the Board. | |
Q: | Who will bear the cost of this solicitation? | |
A: | The expenses of preparing, printing and mailing this proxy statement/prospectus and the proxies solicited hereby will be borne by Clear Channel. Additional solicitation may be made by telephone, facsimile or other contact by certain directors, officers, employees or agents of Clear Channel, none of whom will receive additional compensation therefor. Clear Channel will, upon request, reimburse brokerage houses and other custodians, nominees and fiduciaries for their reasonable expenses for forwarding material to the beneficial owners of shares held of record by others. The Fincos, directly or through one or more affiliates or representatives, may at their own cost, also, make additional solicitation by mail, telephone, facsimile or other contact in connection with the merger. | |
Q: | Will a proxy solicitor be used? | |
A: | Yes. Clear Channel has engaged Innisfree to assist in the solicitation of proxies for the special meeting and Clear Channel estimates that it will pay Innisfree a fee of approximately $50,000. Clear Channel has also agreed to reimburse Innisfree for reasonable administrative and out-of-pocket expenses incurred in connection with the proxy solicitation and indemnify Innisfree against certain losses, costs and expenses. The Sponsors may hire an independent proxy solicitor and will pay such solicitor the customary fees for the proxy solicitation services rendered. |
501 Madison Avenue
20th Floor
New York, NY 10022
Shareholders Call Toll-Free: (877) 456-3427
Banks and Brokers Call Collect: (212) 750-5833
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• | the financial performance of Clear Channel through the completion of the merger; |
• | the satisfaction of the closing conditions set forth in the merger agreement; |
• | the possibility that the parties will be unable to obtain the approval of Clear Channel’s shareholders; |
• | the possibility that the merger may involve unexpected costs; |
• | the occurrence of any event, change or other circumstance that could give rise to the termination of the merger agreement, including a termination under circumstances that could require Clear Channel to pay a termination fee in the amount of $200 million or $500 million; |
• | the outcome of any legal proceedings instituted against Holdings, Clear Channel and others in connection with the proposed merger; |
• | the impact of planned divestitures; |
• | the failure of the merger to close for any reason; |
• | the effect of the announcement of the merger on Clear Channel’s customer relationships, operating results and business generally; |
• | business uncertainty and contractual restrictions that may exist during the pendency of the merger; |
• | changes in interest rates; |
• | any significant delay in the expected completion of the merger; |
• | the amount of the costs, fees, expenses and charges related to the merger; |
• | diversion of management’s attention from ongoing business concerns; |
• | the need to allocate significant amounts of Clear Channel’s cash flow to make payments on Clear Channel’s indebtedness, which in turn could reduce Clear Channel’s financial flexibility and ability to fund other activities; |
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The Parties to the Merger (See “The Parties to the Merger” on page 72) | Holdings is a newly formed Delaware corporation and was organized by private equity funds sponsored by Bain Capital Partners, LLC and Thomas H. Lee Partners, L.P. solely for the purpose of entering into the merger agreement and consummating the transactions contemplated by the merger agreement. Holdings has not engaged in any business except activities incidental to its organization and in connection with the transactions contemplated by the merger agreement. As of the date of this proxy statement/prospectus, Holdings does not have any assets or liabilities other than as contemplated by the merger agreement, including contractual commitments it has made in connection therewith. | |
Clear Channel, incorporated in 1974, is a diversified media company with three reportable business segments: radio broadcasting, Americas outdoor advertising (consisting of operations in the United States, Canada and Latin America) and international outdoor advertising. Clear Channel owns 1,005 radio stations and a leading national radio network operating in the United States. In addition, Clear Channel has equity interests in various international radio broadcasting companies. Clear Channel also owns or operates approximately 209,000 national and approximately 687,000 international outdoor advertising display faces. Additionally, Clear Channel owns a full-service media representation firm that sells national spot advertising time for clients in the radio and television industries throughout the United States. Clear Channel is headquartered in San Antonio, Texas, with radio stations in major cities throughout the United States. | ||
Each Finco is a newly formed Delaware limited liability company. B Triple Crown Finco, LLC was formed by a private equity fund sponsored by Bain Capital Partners, LLC and T Triple Crown Finco, LLC was formed by a private equity fund sponsored by Thomas H. Lee Partners, L.P., in each case, solely for the purpose of entering into the merger agreement and effecting the merger and the transactions related to the merger. | ||
Merger Sub is a newly formed Delaware corporation and a wholly-owned subsidiary of Holdings. Merger Sub was organized solely for the purpose of entering into the merger agreement and consummating the transactions contemplated by the merger agreement. Merger Sub has not engaged in any business except activities incidental to its organization and in connection with the transactions contemplated by the merger agreement. As of the date of this proxy statement/prospectus, Merger Sub does not have any assets or liabilities other than as contemplated by the merger agreement, including contractual commitments it has made in connection therewith. |
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The Merger (See “The Merger Agreement” on page 140) | The merger agreement provides that Merger Sub will be merged with and into Clear Channel. Each outstanding share of the common stock, par value $0.10 per share, of Clear Channel will be converted into the right to receive either (1) the Cash Consideration, including, if applicable, any Additional Equity Consideration, or (2) the Stock Consideration, subject to adjustment if the election to receive the Stock Consideration is oversubscribed and cutback if a holder would otherwise receive more than 11,111,112 shares of Holdings Class A common stock. The shares of common stock of Clear Channel which may be converted into the right to receive the Stock Consideration or the Cash Consideration, which we refer to as the “Public Shares,” include restricted shares, but exclude shares held in the treasury of Clear Channel or owned by Merger Sub or Holdings immediately prior to the effective time of the merger, shares held by shareholders who do not vote in favor of the approval and adoption of the merger agreement and who properly demand and perfect appraisal rights in accordance with Texas law, if any, and equity securities which are subject to agreements between certain directors or employees of Clear Channel and the Fincos pursuant to which such shares and options are to be converted into equity securities of Holdings in the merger. | |
In addition, each holder of options to purchase Clear Channel common stock as of the record date shall have the right to make an election to convert all or any portion of such options into such number of shares of Clear Channel common stock, which we refer to as the “Net Electing Option Shares,” which would be issuable if such options were exercised net of a number of option shares having a value (based on the Cash Consideration) equal to the exercise price for such option shares and any required tax withholding. Each holder of Net Electing Option Shares will have the right to make a Stock Election for such Net Electing Option Shares (subject to the limitations described below). | ||
In addition, if the merger becomes effective after November 1, 2008, each holder of a Public Share and/or a Net Electing Option Share at the effective time of the merger (whether converted into the right to receive the Stock Consideration or the Cash Consideration) will also have the right to receive an amount in cash equal to the Additional Cash Consideration. | ||
Effects of the Merger (See “The Merger Agreement — Effects of the Merger; Structure” on page 141) | If the merger agreement is adopted by Clear Channel’s shareholders and the other conditions to closing are satisfied, Merger Sub will merge with and into Clear Channel. The separate corporate existence of Merger Sub will cease, and Clear Channel will continue as the surviving corporation. Upon completion of the merger, your Public Shares and/or Net Electing Option Shares will be converted into the right to receive the Cash Consideration (including, if applicable, any Additional Equity Consideration) or Stock Consideration, in accordance with your election, and subject to any applicable pro rata adjustments or cutbacks, unless you have properly exercised your appraisal rights in accordance with Texas law. The surviving corporation will become an indirect wholly owned subsidiary of Holdings and you will cease to have any ownership interest in the surviving corporation, any rights as its shareholder and you will no longer have any interest in Clear Channel’s future earnings or growth (other than through your ownership of shares of Holdings Class A common stock, if any). | |
Following completion of the merger, Clear Channel’s common stock will be delisted from the NYSE and will no longer be publicly traded and all Clear Channel stock options will cease to be outstanding. In addition, following completion of the merger, the registration of Clear Channel common stock and Clear Channel’s reporting obligations with respect to Clear Channel common stock under the Securities Exchange Act of 1934, as amended (the “Exchange Act”) will be terminated upon application to the Securities and Exchange |
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Commission (“SEC”). Holdings has agreed to register the Class A common stock under the Exchange Act and to file periodic reports for at least two years following the merger. | ||
Determination of the Board of Directors (See “The Merger — Reasons for the Merger — Determination of the Board of Directors” on page 100) | Board of Directors. Clear Channel’s board of directors by unanimous vote, recommends that you vote “FOR” the approval and adoption of the merger agreement. The board of directors (i) determined that the merger is in the best interests of Clear Channel and its unaffiliated shareholders, (ii) approved, adopted and declared advisable the merger agreement and the transactions contemplated by the merger agreement, (iii) recommended that the shareholders of Clear Channel vote in favor of the merger and directed that such matter be submitted for consideration of the shareholders of Clear Channel at the special meeting and (iv) authorized the execution, delivery and performance of the merger agreement and the transactions contemplated by the merger agreement.The board of directors’ recommendation is based on the Cash Consideration to be received by the shareholders in the merger. The board of directors makes no recommendation as to whether any shareholder should make a Stock Election and makes no recommendation regarding the Class A common stock of Holdings. | |
Determination of the Special Advisory Committee (See “The Merger — Reasons for the Merger — Determination of the Special Advisory Committee” on page 104) | Special Advisory Committee. The special advisory committee was a committee formed by the disinterested members of Clear Channel’s board of directors comprised of three disinterested and independent members of Clear Channel’s board of directors. The special advisory committee was formed for the purpose of (i) prior to execution of the original merger agreement, providing its assessment, after receiving the advice of its legal and financial advisors, as to the fairness of the terms of the original merger agreement, and (ii) following execution of the original merger agreement, in the event Clear Channel received a proposal from a third party seeking to acquire or purchase Clear Channel, which proposal satisfies certain conditions described on pages 152 through 154 of this proxy statement/prospectus, which we refer to as a “Competing Proposal,” providing its assessment, after receiving advice of its legal and financial advisors, as to the fairness and/or superiority of the terms of the Competing Proposal and the continuing fairness of the terms of the original merger agreement. The process for pursuing, and all negotiations with respect to, the merger agreement were not directed by the special advisory committee but rather were directed by the disinterested members of the board of directors as a group. The special advisory committee engaged its own legal and financial advisors in connection with its assessment of the fairness of the terms of the original merger agreement. On November 15, 2006, the special advisory committee unanimously determined that the terms of the original merger agreement were fair to Clear Channel’s unaffiliated shareholders. The special advisory committee was not requested by the disinterested members of the board of directors to separately assess Amendment No. 1 or Amendment No. 2, as neither constituted a Competing Proposal. The special advisory committee was dissolved prior to Amendment No. 3. The special advisory committee did not make any determination as to the fairness of the terms of the merger agreement, the Stock Consideration or the Cash Consideration, as amended by Amendment No. 1, Amendment No. 2 or Amendment No. 3. | |
Interests of Clear Channel’s Directors and Executive Officers in the Merger (See “The Merger — Interests of Clear Channel’s Directors and Executive Officers in the Merger” on page 107) | In considering the recommendation of the board of directors with respect to the merger agreement, you should be aware that some of Clear Channel’s directors and executive officers have interests in the merger that are different from, or in addition to, the interests of holders of Clear Channel common stock generally. These interests include the treatment of shares (including restricted shares) and options held by the directors and officers, as well as indemnification and |
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insurance arrangements with officers and directors, change-in-control severance benefits that may become payable to certain officers, employment agreements and an equity ownership in Holdings if the merger is consummated. As of May 28, 2008, directors and executive officers held unvested options with an aggregate value of $3,957,969 and restricted stock with an aggregate value of $22,681,332, each of which would fully vest in connection with the merger. In addition, Herbert W. Hill, Jr. and Andrew W. Levin could receive aggregate estimated potential cash severance benefits of $1,263,877 in the event that such executive officers are terminated without “cause” or resign for “good reason” between November 16, 2006 and the date which is one year following the effective time of the merger. These interests also include the terms of a letter agreement entered into by the Fincos and Messrs. L. Lowry Mays, Mark P. Mays, Randall T. Mays in connection with the merger agreement (as supplemented in connection with Amendment No. 2 and Amendment No. 3), which provides for, among other things, the conversion of equity securities of Clear Channel held by each of Messrs. L. Lowry Mays, Mark P. Mays and Randall T. Mays into equity securities of Holdings, the terms of a new equity incentive plan for Clear Channel’s employees and new employment agreements for each of Messrs. L. Lowry Mays, Mark P. Mays and Randall T. Mays, which will be effective upon consummation of the merger. These interests, to the extent material, are described below under “The Merger — Interests of Clear Channel’s Directors and Executive Officers in the Merger.” The board of directors was aware of these interests and considered them, among other matters, in approving the merger agreement and the merger. | ||
Opinion of Clear Channel’s Financial Advisor (See “Opinion of Clear Channel’s Financial Advisor” on page 127) | Goldman, Sachs & Co., which we refer to as “Goldman Sachs,” delivered its oral opinion to the Clear Channel board of directors, which was subsequently confirmed in its written opinion dated May 13, 2008, that, as of such date, and based upon and subject to the factors and assumptions set forth therein, the cash consideration of $36.00 per Public Share to be received by the holders of Public Shares pursuant to the merger agreement, was fair from a financial point of view to such holders. | |
The full text of the written opinion of Goldman Sachs, dated May 13, 2008, which sets forth the assumptions made, procedures followed, matters considered and limitations on the review undertaken in connection with the opinion, is attached as Annex G to this proxy statement/prospectus. We encourage you to read the Goldman Sachs opinion carefully in its entirety. Goldman Sachs provided its opinion for the information and assistance of the Clear Channel board of directors in connection with its consideration of the merger. Goldman Sachs’ opinion is not a recommendation as to how any holder of shares of Clear Channel common stock should vote or make any election with respect to the merger. Pursuant to an engagement letter between Clear Channel and Goldman Sachs, Clear Channel has agreed to pay Goldman Sachs a transaction fee of approximately $31 million, of which $15 million was paid upon the signing of the original merger agreement in November 2006 and approximately $16 million of which is payable upon consummation of the merger. See “Opinion of Clear Channel’s Financial Advisor” beginning on page 127. The board of directors was aware that a significant portion of the transaction fee was payable upon consummation of the merger and considered it, among other matters, in approving the merger agreement and the merger. | ||
Financing (See “Financing” on page 117) | Equity Financing. Pursuant to replacement equity commitment letters signed in connection with Amendment No. 3, Bain Capital Fund IX, L.P. and Thomas H. Lee Equity Fund VI, L.P., which we refer to as the “Sponsors”, have severally agreed to purchase (either directly or indirectly through one or more intermediate |
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entities) up to an aggregate of $2.4 billion of equity securities of Holdings and to cause all or a portion of such cash to be contributed to Merger Sub as needed for the merger and related transactions (including payment of cash merger consideration to Clear Channel shareholders, repayment of certain Clear Channel debt, and payment of certain transaction fees and expenses), which we refer to as “Equity Financing.” Each of the equity commitments may be satisfied by compliance with the provisions of the Escrow Agreement and was reduced by half of the amount of any or all amounts actually contributed into escrow in accordance with the Escrow Agreement, by or on behalf of Merger Sub, Holdings or certain of their affiliates. The equity commitment letters entered into in connection with Amendment No. 3 superseded the equity commitment letters previously delivered by the Sponsors. | ||
Debt Financing.In connection with Amendment No. 3 and the Settlement Agreement, on May 13, 2008, Merger Sub entered into definitive agreements providing for $19.1 billion in aggregate debt financing (the “Debt Financing”). The Debt Financing consists of (i) senior secured credit facilities in an aggregate principal amount of approximately $15.8 billion, subject to increase in certain circumstances (the “Senior Secured Credit Facilities”), (ii) a receivables based facility of up to $1.0 billion (subject to reduction in certain circumstances) with availability limited by a “borrowing base” (the “Receivables Based Credit Facility”), and (iii) a note purchase agreement (together with the Senior Secured Credit Facilities and the Receivables Based Facility, the “Financing Agreements”) for the issuance of $980 million aggregate principal amount of its 10.75% senior cash pay notes due 2016 (the “Senior Cash Pay Notes”) and $1.33 billion aggregate principal amount of its 11.00%/11.75% senior toggle notes due 2016 (the “Senior Toggle Notes”). The proceeds of the Debt Financing on the closing date will be used to finance, in part, the payment of the merger consideration, the repayment or refinancing of certain of our debt outstanding on the closing date of the merger and the payment of fees and expenses in connection with the transactions contemplated by the merger agreement. | ||
Regulatory Approvals (See “Regulatory Approvals” on page 138) | Under the Communications Act of 1934, as amended, which we refer to as the “Communications Act,” Clear Channel and the Fincos may not complete the merger unless they have first obtained the approval of the Federal Communications Commission, which we refer to as the “FCC,” to transfer control of Clear Channel’s FCC licenses to affiliates of the Fincos. FCC approval is sought through the filing of applications with the FCC, which are subject to public comment and objections from third parties. Pursuant to the merger agreement, the parties filed on December 12, 2006 the applications to transfer control of Clear Channel’s FCC licenses to affiliates of the Fincos. On June 19, 2007, Clear Channel filed applications to place certain of its FCC licenses into a divestiture trust to facilitate closing of the merger in compliance with FCC media ownership rules. On January 24, 2008, the FCC granted the applications to transfer Clear Channel. The FCC consents to the transfer of control of Clear Channel are subject to certain conditions which the parties intend to satisfy prior to the closing of the merger and remain in effect as granted or as extended. The FCC grants extensions of authority to consummate previously approved transfers of control either by right or for good cause shown. We anticipate that the FCC will grant any necessary extensions of the effective period of the previously issued consents for consummation of the transfer. | |
Under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, which we refer to as the “HSR Act,” and the rules promulgated thereunder, Clear Channel cannot complete the merger until it notifies and furnishes information to the Federal Trade Commission and the Antitrust Division of the U.S. Department of Justice, and the applicable waiting period has expired or been terminated. |
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Clear Channel notified and furnished the required information to the Federal Trade Commission and the Antitrust Division. Clear Channel agreed with the Antitrust Division to enter into a Final Judgment and Hold Separate Agreement in accordance with and subject to the Tunney Act. The waiting period under the HSR Act expired on February 13, 2008. | ||
There are no remaining regulatory approvals needed to close the transaction. | ||
Material United States Federal Income Tax Consequences (See “Material United States Federal Income Tax Consequences” on page 135) | The material U.S. federal income tax consequences of the merger to a particular U.S. holder of Clear Channel common stock will depend on the form of consideration received by the U.S. holder in exchange for its Clear Channel common stock and, in the opinion of Ropes & Gray LLP, will be as follows. |
• | A U.S. holder who exchanges shares of Clear Channel common stock solely for cash in the merger will recognize gain or loss in the amount equal to the difference between the amount of cash received and the U.S. holder’s tax basis in the shares of Clear Channel common stock exchanged in the merger. | ||
• | A U.S. holder who exchanges Clear Channel common stock solely for shares of Holdings Class A common stock will not recognize any gain or loss on the exchange. | ||
• | A U.S. holder who exchanges its shares of Clear Channel common stock for a combination of Holdings Class A common stock and cash will be treated as having disposed of its shares of Clear Channel common stock in two separate transactions. In one transaction, Clear Channel will be deemed to have redeemed a portion of such U.S. holder’s shares of Clear Channel common stock for cash, and such U.S. holder will recognize gain or loss in an amount equal to the difference between the amount of cash deemed received by such U.S. holder in the deemed redemption and the U.S. holder’s tax basis in the shares of Clear Channel common stock deemed to be so redeemed. In the other transaction, the U.S. holder will be deemed to have exchanged the remaining portion of such holder’s shares of Clear Channel common stock for Holdings Class A common stock and cash. In this deemed exchange transaction, the U.S. holder will not recognize any loss and will recognize gain, if any, equal to the lesser of (x) the cash received in the deemed exchange and (y) the gain realized on the deemed exchange. The gain realized on the deemed exchange will equal the excess of the fair market value of the Holdings Class A common stock and the cash received in the deemed exchange over such U.S. holder’s tax basis in the shares of Clear Channel common stock surrendered in the deemed exchange. As more fully discussed in “Material United States Federal Income Tax Consequences,” the relative number of shares of Clear Channel common stock disposed of by a U.S. holder in the deemed redemption transaction and the deemed exchange transaction, respectively, will depend on the number of shares of Holdings Class A common stock received by such holder in the merger and the extent to which the cash consideration in the merger is attributable to equity financing at the Holdings level or other sources. |
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Conditions to the Merger (See “The Merger Agreement — Conditions to | Before the merger can be completed, a number of conditions must be satisfied. These conditions include: | |
the Merger” on page 157) |
• | approval and adoption of the merger agreement by Clear Channel’s shareholders; | ||
• | the expiration or termination of any applicable waiting period under the HSR Act and any applicable foreign antitrust laws (which the parties have acknowledged have been satisfied); and such expiration or termination continuing to be in effect on the closing date of the merger; | ||
• | no governmental authority having enacted any law or order making the merger illegal or otherwise prohibiting the consummation of the merger; | ||
• | the receipt of the approval of the FCC to transfer control of Clear Channel’s FCC licenses to affiliates of the Fincos, which we refer to as the “FCC Consent” (which the parties have acknowledged have been satisfied), and the FCC Consent shall not have been revoked and shall continue to be in effect as of the closing date; | ||
• | the performance, in all material respects, by Clear Channel of certain specified operating covenants set forth in the merger agreement, and no “Material Adverse Effect on Clear Channel” (as defined on page 147 of this proxy statement/prospectus) having occurred as a result of Clear Channel’s failure to perform or comply with any other agreement or covenant in the merger agreement; and | ||
• | the performance in all material respects, by the Fincos, Holdings and Merger Sub of their respective agreements and covenants in the merger agreement. |
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Solicitation of Alternative Proposals (See “The Merger Agreement — Solicitation of Alternative Proposals” on page 152) | Following execution of the merger agreement and until 11:59 p.m., Eastern Standard Time, on December 7, 2006, Clear Channel was permitted to initiate, solicit and encourage a Competing Proposal from third parties (including by way of providing access to non-public information and participating in discussions or negotiations regarding, or taking any other action to facilitate a Competing Proposal). During this period 22 parties were contacted, including 16 potential strategic buyers and six private equity firms (two of which had previously been contacted, but had not entered into confidentiality agreements). Clear Channel did not receive any Competing Proposals from the parties that were contacted or any other person prior to 11:59 p.m. Eastern Standard Time on December 7, 2006. | |
From and after 11:59 p.m., Eastern Standard Time, on December 7, 2006 Clear Channel has agreed not to: |
• | initiate, solicit, or knowingly facilitate or encourage the submission of any inquiries proposals or offers with respect to a Competing Proposal (including by way of furnishing information); | ||
• | participate in any negotiations regarding, or furnish to any person any information in connection with, any Competing Proposal; | ||
• | engage in discussions with any person with respect to any Competing Proposal; | ||
• | approve or recommend any Competing Proposal; | ||
• | enter into any letter of intent or similar document or any agreement or commitment providing for any Competing Proposal; | ||
• | otherwise cooperate with, or assist or participate in, or knowingly facilitate or encourage any effort or attempt by any person (other than the Fincos or their representatives) with respect to, or which would reasonably be expected to result in, a Competing Proposal; or | ||
• | exempt any person from the restrictions contained in any state takeover or similar law or otherwise cause such restrictions not to apply to any person or to any Competing Proposal. |
• | immediately cease and cause to be terminated any solicitation, encouragement, discussion or negotiation with any persons conducted prior to November 16, 2006 with respect to any actual or potential Competing Proposal; and | ||
• | with respect to parties with whom discussions or negotiations have been terminated on, prior to or subsequent to November 16, 2006, use its reasonable best efforts to obtain the return or the destruction of, in accordance with the terms of the applicable confidentiality agreement, any confidential information previously furnished by it. |
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• | furnish information to the third party making the Competing Proposal; and | ||
• | engage in discussions or negotiations with the third party with respect to the Competing Proposal. |
Termination (See “The Merger Agreement — Termination” on page 158) | Clear Channel and the Fincos may agree to terminate the merger agreement without completing the merger at any time. The merger agreement may also be terminated in certain other circumstances, including (in each case subject to certain limitations and exceptions): | |
• | by either the Fincos or Clear Channel, if: |
• | the closing of the merger has not occurred on or before December 31, 2008, which may be extended under certain limited circumstances, which we refer to as the “Termination Date”; | ||
• | any governmental entity has issued an order, decree or ruling or taken any other action permanently restraining, enjoining or otherwise prohibiting the merger and that order or other action is final and non-appealable; | ||
• | Clear Channel’s shareholders do not approve and adopt the merger agreement at the special meeting or any postponement or adjournment thereof; or | ||
• | there is a material breach by the non-terminating party of any of its covenants or agreements in the merger agreement that would result in the failure of certain closing conditions and that breach has not been cured within 30 days following delivery of written notice by the terminating party; |
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• | by Clear Channel, if, prior to the approval and adoption of the merger agreement by the shareholders, the board of directors has concluded in good faith, after consultation with outside legal and financial advisors, that a Competing Proposal is a Superior Proposal; | ||
• | by the Fincos, if the board of directors changes, qualifies, withdraws or modifies in a manner adverse to the Fincos its recommendation that Clear Channel’s shareholders approve and adopt the merger agreement, or fails to reconfirm its recommendation within five business days of receipt of a written request from the Fincos; or | ||
• | by the Fincos, if the board of directors fails to include in the proxy statement/prospectus distributed to Clear Channel’s shareholders, its recommendation that Clear Channel’s shareholders approve and adopt the merger agreement. |
Termination Fees (See “The Merger Agreement — Termination Fees” on page 158) | The merger agreement provides that, upon termination of the merger agreement under specified circumstances, Clear Channel will be required to pay the Fincos a termination fee of $500 million. These circumstances include a termination of the merger agreement by: | |
(i) Clear Channel in order to accept a Superior Proposal; | ||
(ii) the Fincos, if the board of directors, (a) changes its recommendation to Clear Channel’s shareholders that they approve and adopt the merger agreement, (b) fails to reconfirm its recommendation, or (c) fails to include its recommendation in this proxy statement/prospectus; | ||
(iii) the Fincos or Clear Channel, if Clear Channel’s shareholders do not approve and adopt the merger agreement at the special meeting, so long as prior to the special meeting, a Competing Proposal has been publicly announced or made to known to Clear Channel and not withdrawn at least two business days prior to the special meeting and within 12 months of the termination of the merger agreement Clear Channel enters into a definitive proposal with respect to, or consummates, any Competing Proposal; or | ||
(iv) the Fincos, if the Fincos are not in material breach of their obligations under the merger agreement and if Clear Channel has willfully and materially breached its obligations under the merger agreement, which breach has not been cured within 30 days, and prior to the date of termination of the merger agreement Clear Channel enters into a definitive agreement with respect to any Competing Proposal. | ||
The merger agreement further provides that Clear Channel will be required to pay the Fincos a termination fee of $200 million, but only if the $500 million termination fee that is payable under the circumstances described above is not otherwise payable, if the merger agreement is terminated by: | ||
(i) the Fincos or Clear Channel, if any governmental entity has issued an order, decree or ruling or taken any other action permanently restraining, enjoining or otherwise prohibiting the merger and that order or other action is final and non-appealable; | ||
(ii) the Fincos or Clear Channel, if Clear Channel’s shareholders do not approve and adopt the merger agreement at the special meeting or any postponement or adjournment thereof; or |
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(iii) the Fincos, if the Fincos are not in material breach of their obligations under the merger agreement and if Clear Channel has breached its obligations under the merger agreement, which breach has not been cured within 30 days; and | ||
within twelve (12) months after such termination (i) Clear Channel or any of its subsidiaries consummates a transaction based on a proposal submitted by certain agreed third parties (we refer to such third parties as “Contacted Parties” and such a proposal as a “Contacted Parties Proposal”), (ii) Clear Channel or any of its subsidiaries enters into a definitive agreement with respect to a Contacted Party Proposal, or (iii) one or more Contacted Parties acting alone or as a group (as defined in Section 13(d) of the Exchange Act, with certain exceptions), commences a tender offer with respect to a Contacted Party Proposal, and, in the case of each of clause (ii) and (iii) above, subsequently consummates (whether during or after such twelve (12) month period) such Contacted Party Proposal (all as described on page 160 of this proxy/prospectus). | ||
The merger agreement and the Escrow Agreement provide that, upon termination of the merger agreement under specified circumstances, Clear Channel will be entitled to receive a termination fee that will be funded pursuant to the terms of the Escrow Agreement. The circumstances under which that fee will be payable are as follows: | ||
(i) if Clear Channel or the Fincos terminate the merger agreement, because the effective time of the merger has not occurred on or before the Termination Date, the terminating party has not breached in any material respect its obligations under the merger agreement that proximately caused the failure to consummate the merger on or before the Termination Date, and all conditions to the Fincos’ and Merger Sub’s obligation to consummate the merger have been satisfied, then Clear Channel will be entitled to receive a termination fee of $600 million in cash that will be paid pursuant to the Escrow Agreement; and | ||
(ii) if Clear Channel terminates the merger agreement, due to the Fincos, Holdings and Merger Sub having breached or failed to perform in any material respect any of their obligations under the merger agreement such that certain closing conditions would not be satisfied, which breach has not been cured within 30 days and all conditions to the Fincos’ and Merger Sub’s obligation to consummate the merger have been satisfied, then Clear Channel will be entitled to receive a termination fee of $150 million in cash that will be paid pursuant to the Escrow Agreement. The amount of the termination fee is increased to $600 million in cash if such termination is due to a willful and material breach by the Fincos, Holdings and Merger Sub; | ||
In the event that the merger agreement is terminated by Clear Channel or the Fincos because of the failure to obtain the approval of Clear Channel’s shareholders at the special meeting or any adjournment or postponement thereof, and a termination fee is not otherwise then payable by Clear Channel under the merger agreement, Clear Channel has agreed to pay reasonable out-of-pocket fees and expenses incurred by the Fincos, Merger Sub and Holdings in connection with the merger agreement and this proxy statement/prospectus, not to exceed an amount equal to $45 million. If Clear Channel becomes obligated to pay a termination fee under the merger agreement after payment of the expenses, the amount previously paid to the Fincos as expenses will be credited toward the termination fee amount payable by Clear Channel. | ||
In addition, Clear Channel will promptly pay the Fincos a set amount in respect of the expenses incurred by Merger Sub and the Fincos (which amount will be in addition to any termination fees that may become payable by Clear Channel) as follows: |
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(i) $150 million if the Fincos terminate the merger agreement because Clear Channel has breached or failed to perform in any material respect any of its covenants or other agreements set forth in the merger agreement such that the corresponding closing condition would not be satisfied, which breach has not been cured within 30 days; and | ||
(ii) $100 million if the merger agreement is terminated: | ||
(a) by Clear Channel, prior to approval and adoption of the merger agreement by Clear Channel’s shareholders, in order to enter into a definitive agreement relating to a Superior Proposal; (b) by the Fincos, if the board of directors effects a Change of Recommendation, fails to reconfirm Company Recommendation, or fails to include the Company Recommendation in this proxy statement/prospectus; or (c) by either the Fincos or Clear Channel if the closing of the merger has not occurred on or before the Termination Date, and the party seeking termination has not breached in any material respect its obligations under the merger agreement that shall have proximately caused the failure to consummate the merger on or before the Termination Date. | ||
Limited Guarantee of the Sponsors (See “The Merger Agreement — Limited Guarantees” on page 161) | In connection with Amendment No. 3, each of the Sponsors and Clear Channel entered into an amended and restated limited guarantee pursuant to which, among other things, each of the Sponsors is providing Clear Channel a guarantee of payment of its pro rata portion of the termination fees payable by Merger Sub. The amended and restated limited guarantees entered into in connection with Amendment No. 3 superseded the limited guarantees previously delivered by the Sponsors. The Sponsors’ obligations under the amended and restated limited guarantees was reduced ratably to the extent that they paid any amount, or caused any amount to be paid, into escrow under the Escrow Agreement. | |
Transaction Fees and Certain Affiliate Transactions (See “The Merger Agreement — Transaction Fees” on page 156 and “Certain Affiliate Transactions” on page 116) | As part of the merger agreement, the Fincos have agreed that the transaction fees paid to or to be paid to the Fincos or their affiliates in connection with the closing of the merger will not exceed $87.5 million. Other than those fees, unless otherwise approved by Clear Channel’s independent directors or holders of a majority of the outstanding shares of Class A common stock of Holdings, none of Holdings or any of its subsidiaries will pay management, transaction, monitoring or any other fees to the Fincos or their affiliates except pursuant to an arrangement whereby the holders of shares of Holdings Class A common stock are made whole for any portion of such fees paid by Holdings or any of its subsidiaries. | |
Settlement Agreement (See “Settlement and Escrow Agreements” on page 162) | On May 13, 2008, Clear Channel, Merger Sub, the Fincos, Holdings and Clear Channel Capital IV, LLC (“CCC IV”) entered a settlement agreement with a bank syndicate comprised of Citigroup Global Markets Inc., Citibank, N.A., Citicorp USA, Inc., Citicorp North America, Inc., Morgan Stanley Senior Funding, Inc., Credit Suisse, Cayman Islands Branch, Credit Suisse Securities (USA) LLC, The Royal Bank of Scotland PLC, RBS Securities Corporation, Wachovia Bank, National Association, Wachovia Investment Holdings, LLC, Wachovia Capital Markets, LLC, Deutsche Bank AG New York Branch, Deutsche Bank AG Cayman Island Branch and Deutsche Bank Securities Inc. (collectively, the “Banks”) pursuant to which they settled certain ongoing litigation initiated in New York and Texas (the “Settlement Agreement”). | |
Clear Channel, Merger Sub, the Fincos, Holdings, CCC IV and the Sponsors agreed to release their outstanding claims against the Banks in exchange for the Banks agreeing: |
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Upon receipt by the Escrow Agent (as defined below) of all money, property or letters of credit required to be delivered under the terms of the Escrow Agreement, each party to the Settlement Agreement and each of the Sponsors released each other party to the Settlement Agreement and each of the Sponsors from all claims that the releasing party ever had, now has or subsequently may have against any released party, from the beginning of time through the date the escrow is fully funded, with respect to the matters arising out of or relating to the merger agreement, the equity commitment letters and guarantees, and the debt commitment letters. | ||
On the consummation of the merger, each party to the Settlement Agreement and each of the Sponsors releases each other party to the Settlement Agreement and each of the Sponsors from all claims that the releasing party ever had, now has or subsequently may have against any released party from the beginning of the world through the consummation of the merger with respect to the matters arising out of or related to the merger agreement, the equity commitment letters and guarantees. | ||
Escrow Agreement (See “Settlement and Escrow Agreements” on page 162) | As contemplated by the Settlement Agreement, each of Clear Channel, Merger Sub, Holdings, the Fincos, THL Equity Fund VI Investors (Clear Channel), L.P. and Bain Capital CC Investors, L.P. as designees of Holdings (each, a “Buyer Designee”), Mark P. Mays, Randall T. Mays, L. Lowry Mays, MPM Partners, Ltd., RTM Partners, Ltd. LLM Partners, Ltd. (each a “Management Investor”), Highfields Capital Management LP (“Highfields Management”), Abrams Capital Partners I, LP, Abrams Capital Partners II, LP, Whitecrest Partners, LP, Abrams Capital International, Ltd, and Riva Capital Partners LP, (each an “Abrams Investor”), certain of the Banks and affiliates of certain of the Banks (each, a “Bank Escrow Party”) and The Bank of New York, as escrow agent (the “Escrow Agent”) entered into an escrow agreement (the “Escrow Agreement”) pursuant to which: (i) the Bank Escrow Parties agreed to deposit with the Escrow Agent cash or letters of credit in an aggregate amount equal to $16,410,638,000; (ii) the Buyer Designees agreed to deposit with the Escrow Agent cash or letters of credit in an aggregate amount equal to $2,400,000,000; (iii) the Management Investors agreed to deposit with the Escrow Agent a combination of vested shares of Clear Channel common stock and vested options to purchase shares of Clear Channel common stock with an aggregate value of $35,074,625; (iv) Highfields Management agreed to deposit with the Escrow Agent an aggregate of 11,111,112 shares of Clear Channel common stock beneficially owned by investment funds managed by Highfields Management; and (v) the Abrams Investors agreed to deposit with the Escrow Agent an aggregate of 2,777,778 shares of Clear Channel common stock. | |
On May 22, 2008, the Escrow Agent confirmed receipt of the entire amount to be deposited into escrow by the Bank Escrow Parties and on May 28, 2008, the Escrow Agent confirmed receipt of all other amounts and property required to be delivered under the Escrow Agreement, including the entire amount to be deposited into escrow by the Buyer Designees. | ||
The amounts deposited with the Escrow Agent are to be released upon consummation of the merger upon confirmation of satisfaction of the conditions to consummating the merger set forth in the merger agreement and the conditions to funding set forth in the Financing Agreements. | ||
In event that the merger agreement is terminated prior to consummation of the merger, the escrow amounts shall be paid to the respective depositors, provided, however that in certain circumstances the termination fee otherwise then payable |
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by Merger Sub under the merger agreement shall be paid to Clear Channel from escrow amounts deposited by the Bank Escrow Parties or the Buyer Designees, as applicable. | ||
Clear Channel’s Stock Price (See “Market Prices of Clear Channel Common Stock and Dividend Data” on page 168) | Clear Channel common stock is listed on the NYSE under the trading symbol “CCU.” On October 24, 2006, which was the last trading day immediately prior to the date on which Clear Channel announced that the board of directors was exploring possible strategic alternatives for Clear Channel to enhance shareholder value, Clear Channel common stock closed at $32.20 per share and the average closing stock price of Clear Channel common stock during the 60 trading days ended October 24, 2006, was $29.27 per share. On November 15, 2006, which was the last trading day immediately prior to the date on which Clear Channel announced the approval of the merger agreement by Clear Channel’s board of directors, Clear Channel common stock closed at $34.12 per share. On May 9, 2008, which was the last trading day prior to a public report that Clear Channel was exploring a settlement, Clear Channel common stock closed at $30.00 per share. On , 2008, which was the last trading day before the date of this proxy statement/prospectus, Clear Channel common stock closed at $ per share. | |
Shares Held by Directors and Executive Officers (See “Security Ownership By Certain Beneficial Owners and Management” page 169) | As of May 28, 2008, the directors and executive officers of Clear Channel beneficially owned approximately 8.4% shares of Clear Channel common stock entitled to vote at the special meeting, assuming Clear Channel’s outstanding options are not exercised. Except for the shares and options held by directors and officers of Clear Channel who have agreed to convert shares or options into equity securities of Holdings in the merger, each director and executive officer (other than L. Lowry Mays, Mark P. Mays and Randall T. Mays with respect to the shares of Clear Channel common stock and options to purchase shares of Clear Channel common stock delivered into escrow pursuant to the terms of the Escrow Agreement, and the Rollover Shares) has the option of electing the Cash Consideration or the Stock Consideration, or a combination thereof. The shares and options to purchase shares of Clear Channel common stock held by directors and officers of Clear Channel who have agreed to convert those interests into shares of Holdings Class A common stock (other than 580,356 shares of Clear Channel common stock delivered into escrow by L. Lowry Mays) will not affect the number of shares of Holdings Class A common stock available for issuance as Stock Consideration. | |
Dissenters’ Rights of Appraisal (See “Dissenters’ Rights of Appraisal” on page 184) | The Texas Business Corporation Act provides you with appraisal rights in connection with the merger. This means that if you are not satisfied with the amount you are receiving in the merger, you are entitled to have the fair value of your shares determined by a Texas court and to receive payment based on that valuation. The ultimate amount you receive as a dissenting shareholder in an appraisal proceeding may be more or less than, or the same as, the amount you would have received in the merger. To exercise your appraisal rights, you must deliver a written objection to the merger before the special meeting at which the vote on the merger agreement will be held and you must not vote in favor of the approval and adoption of the merger agreement. Your failure to follow exactly the procedures specified under Texas law will result in the loss of your appraisal rights. | |
Stock Exchange Listing (See “Delisting and Deregistration of Clear Channel Common Stock” on page 168) | Following the consummation of the merger, shares of Holdings Class A common stock will not be listed on a national securities exchange, but it is anticipated that the shares will be quoted on the Over-the-Counter Bulletin Board. |
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Resale of Holdings Class A Common Stock (See “Resale of Holdings Class A Common Stock” on page 139) | The shares of Holdings Class A common stock issued in the merger will not be subject to any restrictions on transfer arising under the Securities Act of 1933, as amended, which we refer to as the “Securities Act,” except for shares issued to any Clear Channel shareholder who may be deemed to be an “affiliate” of Clear Channel or Holdings for purposes of Rule 144 or Rule 145 under the Securities Act. | |
Holdings Stockholders Agreement (See “Stockholders Agreements” on page 171) | Holdings expects, prior to the consummation of the merger, to enter into a stockholders agreement with Merger Sub, certain of Clear Channel’s executive officers and directors who are expected to become stockholders of Holdings (including Messrs. Mark P. Mays, Randall T. Mays and L. Lowry Mays), CCC IV and Clear Channel Capital V, L.P., a newly-formed limited partnership that is jointly controlled by affiliates of the Sponsors and is expected to hold all of the shares of Holdings non-voting Class C common stock that will be outstanding as of the closing of the merger (“CCC V”). It is anticipated that the stockholders agreement, among other things, (i) would specify how the parties would vote in elections of the board of directors of Holdings, (ii) restrict the transfer of shares subject to the agreement, (iii) include the ability of CCC IV to compel the parties to sell their shares in a change-of-control transaction or participate in a recapitalization of Holdings, (iv) give the parties the right to subscribe for their pro rata share of proposed future issuances of equity securities by Holdings or its subsidiaries to the Sponsors or their affiliates, (v) require the parties to agree to customary lock-up agreements in connection with underwritten public offerings and (vi) provide the parties with customary demand and “piggy-back” registration rights. | |
Holdings, CCC IV and CCC V also expect to enter into a separate agreement with Messrs. Mark P. Mays, Randall T. Mays and L. Lowry Mays that would set forth terms and conditions under which certain of their shares of Holdings common stock would be repurchased by Holdings following the termination of their employment (through the exercise of a “call option” by Holdings or a “put option” by Messrs. Mark P. Mays, Randall T. Mays and L. Lowry Mays, as applicable). | ||
Description of Holdings’ Capital Stock (See “Description of Holdings’ Capital Stock” on page 174) | Pursuant to its third amended and restated certificate of incorporation, Holdings has the authority to issue 650,000,000 shares of common stock, of which (i) 400,000,000 shares will be Class A common stock, (ii) 150,000,000 shares will be Class B common stock and (iii) 100,000,000 shares will be Class C common stock. | |
Voting. Every holder of shares of Class A common stock will be entitled to one vote for each share of Class A common stock. Every holder of shares of Class B common stock will be entitled to a number of votes per share equal to the number obtained by dividing (a) the sum of total number of shares of Class B common stock outstanding as of the record date for such vote and the number of Class C common stock outstanding as of the record date for such vote by (b) the number of shares of Class B common stock outstanding as of the record date for such vote. Except as otherwise required by law, the holders of outstanding shares of Class C common stock will not be entitled to any votes upon any questions presented to stockholders of Holdings. | ||
Other rights. Except with respect to voting as described above, and as otherwise required by law, all shares of Class A common stock, Class B common stock and Class C common stock will have the same powers, privileges, preferences and relative participating, optional or other special rights, and the qualifications, |
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limitations or restrictions thereof, and will be identical to each other in all respects. | ||
Comparison of Shareholder Rights (See “Comparison of Shareholder Rights” on page 177) | The rights of Clear Channel shareholders are currently governed by the Texas Business Corporation Act and the Texas Miscellaneous Corporate Laws Act, and Clear Channel’s restated articles of incorporation, as amended, and seventh amended and restated bylaws. The rights of Holdings shareholders are governed by the Delaware General Corporation Law, which we refer to as the “DGCL,” and Holdings’ third amended and restated certificate of incorporation and amended and restated bylaws. Upon completion of the merger, Clear Channel shareholders who receive Holdings Class A common stock will be stockholders of Holdings, and their rights will be governed by the DGCL and Holdings’ third amended and restated certificate of incorporation and amended and restated bylaws. | |
Management of Holdings (See “Board of Directors and Management of Holdings” on page 58 and “The Merger — Voting Agreements” on page 113) | Following the completion of the merger and the issuance of the Class A common stock of Holdings, Holdings will increase the size of its board of directors from eight members to twelve members. Holders of Holdings Class A common stock, voting as a separate class, will be entitled to elect two (2) members of Holdings’ board of directors. These directors are referred to in this proxy statement/prospectus as the “independent directors.” Because the Sponsors and their affiliates will hold a majority of the outstanding capital stock and voting power of Holdings after the merger, holders of Holdings Class A common stock, including shareholders and option holders who elect to receive Stock Consideration will not have the voting power to elect the remaining 10 members of Holdings’ board of directors. Pursuant to a voting agreement (the “Highfields Voting Agreement”) entered into among the Fincos, Merger Sub, Holdings and Highfields Capital I LP, a Delaware limited partnership, Highfields Capital II LP, a Delaware limited partnership, Highfields Capital III LP, an exempted limited partnership organized under the laws of the Cayman Islands, B.W.I. (together with Highfields Capital I, LP and Highfields Capital II, LP the “Highfields Funds,”) and Highfields Management, immediately following the effective time of the merger one of the independent directors of Holdings, who will also be named to Holdings’ nominating committee, will be Mr. Jonathon Jacobson, who is associated with Highfields Management, and the other independent director of Holdings will be Mr. David Abrams, who is associated with the Abrams Investors. In addition, until the Highfields Funds own less than 5% of the outstanding voting securities of Holdings issued as Stock Consideration, in connection with each election of independent directors, Holdings will nominate two candidates as independent directors, of which one candidate will be selected by Highfields Management (who initially will be Mr. Jonathon Jacobson) and one candidate will be selected by Holdings’ nominating committee after consultation with Highfields Management (who initially will be Mr. David Abrams). Holdings’ will recommend and solicit proxies for the election of such candidates, and to the extent authorized by stockholders granting proxies, vote the securities represented by all proxies granted by stockholders in favor of such candidates. Holdings has also agreed that until the termination of the Highfields Voting Agreement and subject to the fiduciary duties of Holdings’ board of directors, Holdings shall cause at least one of the independent directors to be appointed to each committee of the board of directors of Holdings, and if such independent director shall cease to serve as a director of Holdings or otherwise is unable to fulfill his or her duties on any such committee, Holdings shall cause the director to be succeeded by another independent director. Pursuant to the terms of the Escrow Agreement, the Highfield Funds delivered 11,111,112 shares of Clear Channel common stock into escrow to be exchanged for shares of Holdings Class A common stock. These shares represent the maximum number of shares issuable to the Highfield |
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Funds pursuant to the Individual Cap. | ||
Holdings anticipates that after completion of the merger, the current executive officers of Clear Channel will be appointed as officers of Holdings by the board of directors of Holdings. |
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• | the current market price of Clear Channel common stock may reflect a market assumption that the merger will occur and a failure to complete the merger could result in a decline in the market price of shares of Clear Channel common stock; |
• | management’s attention from Clear Channel’s day-to-day business may be diverted; |
• | uncertainties with regard to the merger may adversely affect Clear Channel’s relationships with its employees, vendors and customers; and |
• | Clear Channel may be required to pay significant transactions costs related to the merger, including under certain circumstances, a termination fee, as well as legal, accounting and other fees of the Sponsors, up to a maximum of $150 million. |
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• | as a result of the risk factors listed in this proxy statement/prospectus; |
• | actual or anticipated fluctuations in our operating results; |
• | for reasons unrelated to operating performance, such as reports by industry analysts, investor perceptions, or negative announcements by our customers or competitors regarding their own performance; |
• | regulatory changes that could impact Holdings’ or Clear Channel’s business; and |
• | general economic and industry conditions. |
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• | making it more difficult to make payments on indebtedness as they become due; |
• | requiring a substantial portion of Clear Channel’s cash flow to be dedicated to the payment of principal and interest on indebtedness (with the minimum average annual amount during the first five years after the consummation of the merger anticipated to be at least $2.2 billion based on assumptions set forth under “Notes to Unaudited Pro Forma Condensed Consolidated Financial Data” beginning on page 50 of this proxy statement/prospectus and under “Contractual Obligations: Indebtedness and Dividend Policy Following the Merger” beginning on page 56 of this proxy statement/prospectus), thereby reducing cash available for other purposes, including to fund operations and capital expenditures, invest in new technology and pursue other business opportunities; |
• | limiting Holdings’ and Clear Channel’s liquidity and operational flexibility and limiting Holdings’ and Clear Channel’s ability to obtain additional financing for working capital, capital expenditures, debt service requirements, acquisitions and general corporate or other purposes; |
• | limiting Holdings’ and Clear Channel’s ability to adjust to changing economic, business and competitive conditions; |
• | requiring Holdings and Clear Channel to consider deferring planned capital expenditures, reducing discretionary spending, selling assets, restructuring existing indebtedness or deferring acquisitions or other strategic opportunities; |
• | limiting Holdings’ and Clear Channel’s ability to refinance any of its indebtedness or increasing the cost of any such financing in any downturn in its operating performance or decline in general economic condition; |
• | exposing Holdings and Clear Channel to the risk of increased interest rates as a substantial portion of Holdings’ and Clear Channel’s indebtedness will be at variable rates of interest; and |
• | making Holdings and Clear Channel more vulnerable to a downturn in its operating performance or a decline in general economic or industry conditions. |
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• | exposure to local economic conditions; |
• | potential adverse changes in the diplomatic relations of foreign countries with the United States; |
• | hostility from local populations; |
• | the adverse effect of currency exchange controls; |
• | restrictions on the withdrawal of foreign investment and earnings; |
• | government policies against businesses owned by foreigners; |
• | investment restrictions or requirements; |
• | expropriations of property; |
• | the potential instability of foreign governments; |
• | the risk of insurrections; |
• | risks of renegotiation or modification of existing agreements with governmental authorities; |
• | foreign exchange restrictions; |
• | withholding and other taxes on remittances and other payments by subsidiaries; and |
• | changes in taxation structure. |
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• | certain of Clear Channel’s acquisitions may prove unprofitable and fail to generate anticipated cash flows; |
• | to successfully manage Clear Channel’s large portfolio of broadcasting, outdoor advertising and other properties, Clear Channel may need to: |
• | recruit additional senior management as Clear Channel cannot be assured that senior management of acquired companies will continue to work for Clear Channel and, in this highly competitive labor market, Clear Channel cannot be certain that any of its recruiting efforts will succeed, and |
• | expand corporate infrastructure to facilitate the integration of Clear Channel’s operations with those of acquired properties, because failure to do so may cause Clear Channel to lose the benefits of any expansion that it decides to undertake by leading to disruptions in Clear Channel’s ongoing businesses or by distracting its management; |
• | entry into markets and geographic areas where Clear Channel has limited or no experience; |
• | Clear Channel may encounter difficulties in the integration of operations and systems; |
• | Clear Channel’s management’s attention may be diverted from other business concerns; and |
• | Clear Channel may lose key employees of acquired companies or stations. |
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• | unfavorable economic conditions, both general and relative to the radio broadcasting, outdoor advertising and all related media industries, which may cause companies to reduce their expenditures on advertising; |
• | unfavorable shifts in population and other demographics which may cause Clear Channel to lose advertising customers as people migrate to markets where Clear Channel has a smaller presence, or which may cause advertisers to be willing to pay less in advertising fees if the general population shifts into a less desirable age or geographical demographic from an advertising perspective; |
• | an increased level of competition for advertising dollars, which may lead to lower advertising rates as Clear Channel attempts to retain customers or which may cause Clear Channel to lose customers to Clear Channel’s competitors who offer lower rates that Clear Channel is unable or unwilling to match; |
• | unfavorable fluctuations in operating costs which Clear Channel may be unwilling or unable to pass through to Clear Channel customers; |
• | technological changes and innovations that Clear Channel is unable to adopt or is late in adopting that offer more attractive advertising or listening alternatives than what Clear Channel currently offers, which may lead to a loss of advertising customers or to lower advertising rates; |
• | the impact of potential new royalties charged for terrestrial radio broadcasting which could materially increase Clear Channel’s expenses; |
• | unfavorable changes in labor conditions which may require Clear Channel to spend more to retain and attract key employees; and |
• | changes in governmental regulations and policies and actions of federal regulatory bodies which could restrict the advertising media which Clear Channel employs or restrict some or all of Clear Channel’s customers that operate in regulated areas from using certain advertising media, or from advertising at all. |
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Three Months Ended | ||||||||||||||||||||||||||||
(In thousands) | Year Ended December 31, | March 31, | ||||||||||||||||||||||||||
2007 (1) | 2006 (2) | 2005 | 2004 | 2003 | 2008 | 2007 | ||||||||||||||||||||||
Statement of Operations: | (Unaudited) | (Unaudited) | ||||||||||||||||||||||||||
Revenue | $ | 6,921,202 | $ | 6,567,790 | $ | 6,126,553 | $ | 6,132,880 | $ | 5,786,048 | $ | 1,564,207 | $ | 1,505,077 | ||||||||||||||
Operating expenses: | ||||||||||||||||||||||||||||
Direct operating expenses (excludes depreciation and amortization) | 2,733,004 | 2,532,444 | 2,351,614 | 2,216,789 | 2,024,442 | 705,947 | 627,879 | |||||||||||||||||||||
Selling, general and administrative expenses (excludes depreciation and amortization) | 1,761,939 | 1,708,957 | 1,651,195 | 1,644,251 | 1,621,599 | 426,381 | 416,319 | |||||||||||||||||||||
Depreciation and amortization | 566,627 | 600,294 | 593,477 | 591,670 | 575,134 | 152,278 | 139,685 | |||||||||||||||||||||
Corporate expenses (excludes depreciation and amortization) | 181,504 | 196,319 | 167,088 | 163,263 | 149,697 | 46,303 | 48,150 | |||||||||||||||||||||
Merger expenses | 6,762 | 7,633 | — | — | — | 389 | 1,686 | |||||||||||||||||||||
Gain on disposition of assets — net | 14,113 | 71,571 | 49,656 | 43,040 | 7,377 | 2,097 | 6,947 | |||||||||||||||||||||
Operating income | 1,685,479 | 1,593,714 | 1,412,835 | 1,559,947 | 1,422,553 | 235,006 | 278,305 | |||||||||||||||||||||
Interest expense | 451,870 | 484,063 | 443,442 | 367,511 | 392,215 | 100,003 | 118,077 | |||||||||||||||||||||
Gain (loss) on marketable securities | 6,742 | 2,306 | (702 | ) | 46,271 | 678,846 | 6,526 | 395 | ||||||||||||||||||||
Equity in earnings of nonconsolidated affiliates | 35,176 | 37,845 | 38,338 | 22,285 | 20,669 | 83,045 | 5,264 | |||||||||||||||||||||
Other income (expense) — net | 5,326 | (8,593 | ) | 11,016 | (30,554 | ) | 20,407 | 11,787 | (12 | ) | ||||||||||||||||||
Income before income taxes, minority interest, discontinued operations and cumulative effect of a change in accounting principle | 1,280,853 | 1,141,209 | 1,018,045 | 1,230,438 | 1,750,260 | 236,361 | 165,875 | |||||||||||||||||||||
Income tax expense | 441,148 | 470,443 | 403,047 | 471,504 | 753,564 | 66,581 | 70,466 | |||||||||||||||||||||
Minority interest expense, net of tax | 47,031 | 31,927 | 17,847 | 7,602 | 3,906 | 8,389 | 276 | |||||||||||||||||||||
Income before discontinued operations and cumulative effect of a change in accounting principle | 792,674 | 638,839 | 597,151 | 751,332 | 992,790 | 161,391 | 95,133 | |||||||||||||||||||||
Income from discontinued operations, net (3) | 145,833 | 52,678 | 338,511 | 94,467 | 152,801 | 638,262 | 7,089 | |||||||||||||||||||||
Income before cumulative effect of a change in accounting principle | 938,507 | 691,517 | 935,662 | 845,799 | 1,145,591 | 799,653 | 102,222 | |||||||||||||||||||||
Cumulative effect of a change in accounting principle, net of tax of, $2,959,003 in 2004 (4) | — | — | — | (4,883,968 | ) | — | — | — | ||||||||||||||||||||
Net income (loss) | $ | 938,507 | $ | 691,517 | $ | 935,662 | $ | (4,038,169 | ) | $ | 1,145,591 | $ | 799,653 | $ | 102,222 | |||||||||||||
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Three Months Ended | ||||||||||||||||||||||||||||
Year ended December 31, | March 31, | |||||||||||||||||||||||||||
2007(1) | 2006(2) | 2005 | 2004 | 2003 | 2008 | 2007 | ||||||||||||||||||||||
Net income (loss) per common share: | (Unaudited) | (Unaudited) | ||||||||||||||||||||||||||
Basic: | ||||||||||||||||||||||||||||
Income before discontinued operations and cumulative effect of a change in accounting principle | $ | 1.60 | $ | 1.27 | $ | 1.09 | $ | 1.26 | $ | 1.61 | $ | .33 | $ | .19 | ||||||||||||||
Discontinued operations | .30 | .11 | .62 | .16 | .25 | 1.29 | .02 | |||||||||||||||||||||
Income before cumulative effect of a change in accounting principle | 1.90 | 1.38 | 1.71 | 1.42 | 1.86 | 1.62 | .21 | |||||||||||||||||||||
Cumulative effect of a change in accounting principle | — | — | — | (8.19 | ) | — | — | — | ||||||||||||||||||||
Net income (loss) | $ | 1.90 | $ | 1.38 | $ | 1.71 | $ | (6.77 | ) | $ | 1.86 | $ | 1.62 | $ | .21 | |||||||||||||
Diluted: | ||||||||||||||||||||||||||||
Income before discontinued operations and cumulative effect of a change in accounting principle | $ | 1.60 | $ | 1.27 | $ | 1.09 | $ | 1.26 | $ | 1.60 | $ | .32 | $ | .19 | ||||||||||||||
Discontinued operations | .29 | .11 | .62 | .15 | .25 | 1.29 | .02 | |||||||||||||||||||||
Income before cumulative effect of a change in accounting principle | 1.89 | 1.38 | 1.71 | 1.41 | 1.85 | 1.61 | .21 | |||||||||||||||||||||
Cumulative effect of a change in accounting principle | — | — | — | (8.16 | ) | — | — | — | ||||||||||||||||||||
Net income (loss) | $ | 1.89 | $ | 1.38 | $ | 1.71 | $ | (6.75 | ) | $ | 1.85 | $ | 1.61 | $ | .21 | |||||||||||||
Dividends declared per share | $ | .75 | $ | .75 | $ | .69 | $ | .45 | $ | .20 | $ | — | $ | .1875 | ||||||||||||||
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(In thousands) | December 31, | March 31, | ||||||||||||||||||||||||||
2007 | 2006 | 2005 | 2004 | 2003 | 2008 | 2007 | ||||||||||||||||||||||
Balance Sheet Data: | (Unaudited) | (Unaudited) | ||||||||||||||||||||||||||
Current assets | $ | 2,294,583 | $ | 2,205,730 | $ | 2,398,294 | $ | 2,269,922 | $ | 2,185,682 | $ | 2,679,319 | $ | 2,065,806 | ||||||||||||||
Property, plant and equipment — net, including discontinued operations (5) | 3,215,088 | 3,236,210 | 3,255,649 | 3,328,165 | 3,476,900 | 3,090,228 | 3,188,918 | |||||||||||||||||||||
Total assets | 18,805,528 | 18,886,455 | 18,718,571 | 19,959,618 | 28,352,693 | 19,053,211 | 18,686,330 | |||||||||||||||||||||
Current liabilities | 2,813,277 | 1,663,846 | 2,107,313 | 2,184,552 | 1,892,719 | 2,298,917 | 1,815,182 | |||||||||||||||||||||
Long-term debt, net of current maturities | 5,214,988 | 7,326,700 | 6,155,363 | 6,941,996 | 6,898,722 | 5,072,000 | 6,862,109 | |||||||||||||||||||||
Shareholders’ equity | 8,797,491 | 8,042,341 | 8,826,462 | 9,488,078 | 15,553,939 | 9,661,909 | 8,128,722 |
(1) | Effective January 1, 2007, Clear Channel adopted FASB Interpretation No. 48,Accounting for Uncertainty in Income Taxes, or FIN 48. In accordance with the provisions of FIN 48, the effects of adoption were accounted for as a cumulative-effect adjustment recorded to the balance of retained earnings on the date of adoption. | |
(2) | Effective January 1, 2006, Clear Channel adopted FASB Statement No. 123(R),Share-Based Payment. In accordance with the provisions of Statement 123(R), Clear Channel elected to adopt the standard using the modified prospective method. | |
(3) | Includes the results of operations of Clear Channel’s live entertainment and sports representation businesses, which Clear Channel spun-off on December 21, 2005, Clear Channel’s television business which we disposed of on March 14, 2008 and certain of our non-core radio stations. | |
(4) | Clear Channel recorded a non-cash charge of $4.9 billion, net of deferred taxes of $3.0 billion, as a cumulative effect of a change in accounting principle during the fourth quarter of 2004 as a result of the adoption of EITF Topic D-108,Use of the Residual Method to Value Acquired Assets other than Goodwill. | |
(5) | Excludes the property, plant and equipment — net of Clear Channel’s live entertainment and sports representation businesses, which Clear Channel spun-off on December 21, 2005. |
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AT MARCH 31, 2008
(In thousands)
Clear Channel | Transaction | Pro Forma | ||||||||||||
ASSETS | Historical | Adjustments | ||||||||||||
Current assets: | ||||||||||||||
Cash and cash equivalents | $ | 602,112 | $ | (168,897 | ) | (G) | $ | 433,215 | ||||||
Accounts receivable, net | 1,681,514 | — | 1,681,514 | |||||||||||
Prepaid expenses | 125,387 | — | 125,387 | |||||||||||
Other current assets | 270,306 | 43,015 | (A),(B) | 313,321 | ||||||||||
Total Current Assets | $ | 2,679,319 | $ | (125,882 | ) | $ | 2,553,437 | |||||||
Property, plant & equipment, net | 3,074,741 | 148,701 | (A) | 3,223,442 | ||||||||||
Property, plant and equipment from discontinued operations, net | 15,487 | 4,482 | (A) | 19,969 | ||||||||||
Definite-lived intangibles, net | 489,542 | 437,067 | (A) | 926,609 | ||||||||||
Indefinite-lived intangibles — licenses | 4,213,262 | 2,420,063 | (A) | 6,633,325 | ||||||||||
Indefinite-lived intangibles — permits | 252,576 | 2,954,805 | (A) | 3,207,381 | ||||||||||
Goodwill | 7,268,059 | 3,246,222 | (A) | 10,514,281 | ||||||||||
Goodwill and intangible assets from discontinued operations, net | 31,889 | 3,263 | (A) | 35,152 | ||||||||||
Other assets: | ||||||||||||||
Notes receivable | 11,630 | — | 11,630 | |||||||||||
Investments in, and advances to, nonconsolidated affiliates | 296,481 | 221,897 | (A) | 518,378 | ||||||||||
Other assets | 361,281 | 134,826 | (A), (B) | 496,107 | ||||||||||
Other investments | 351,216 | — | 351,216 | |||||||||||
Other assets from discontinued operations | 7,728 | — | 7,728 | |||||||||||
Total Assets | $ | 19,053,211 | $ | 9,445,444 | $ | 28,498,655 | ||||||||
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AT MARCH 31, 2008
(In thousands)
Clear Channel | Transaction | |||||||||||||||
Historical | Adjustments | Pro Forma | ||||||||||||||
LIABILITIES AND SHAREHOLDERS’ EQUITY | ||||||||||||||||
Accounts payable, accrued expenses and accrued interest | $ | 1,037,592 | $ | — | $ | 1,037,592 | ||||||||||
Current portion of long-term debt | 869,631 | — | 869,631 | |||||||||||||
Deferred income | 242,861 | — | 242,861 | |||||||||||||
Accrued income taxes | 148,833 | — | 148,833 | |||||||||||||
Total Current Liabilities | 2,298,917 | — | 2,298,917 | |||||||||||||
Long-term debt | 5,072,000 | 13,919,095 | (A), (C) | 18,991,095 | ||||||||||||
Other long-term obligations | 167,775 | — | 167,775 | |||||||||||||
Deferred income taxes | 830,937 | 2,576,190 | (A), (D) | 3,407,127 | ||||||||||||
Other long-term liabilities | 560,945 | (31,761 | ) | (A), (E) | 529,184 | |||||||||||
Minority interest | 460,728 | — | 460,728 | |||||||||||||
Shareholders’ equity | ||||||||||||||||
Common Stock | 49,817 | (49,817 | ) | (F) | — | |||||||||||
Class A common stock, par $.001 per share, 30.6 million shares authorized | — | 32 | 32 | |||||||||||||
Class B and C common stock, par $.001 per share, 71.4 million shares authorized | — | 70 | 70 | |||||||||||||
Additional paid-in capital | 26,871,648 | (24,227,921 | ) | (F) | 2,643,727 | (G) | ||||||||||
Retained deficit | (17,689,490 | ) | 17,689,490 | (F) | — | |||||||||||
Accumulated other comprehensive income | 436,544 | (436,544 | ) | (F) | — | |||||||||||
Cost of shares held in treasury | (6,610 | ) | 6,610 | (F) | — | |||||||||||
Total Shareholders’ Equity | 9,661,909 | (7,018,080 | ) | (F) | 2,643,829 | (G) | ||||||||||
Total Liabilities and Shareholders’ Equity | $ | 19,053,211 | $ | 9,445,444 | $ | 28,498,655 | ||||||||||
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YEAR ENDED DECEMBER 31, 2007
(In thousands)
Clear Channel | Transaction | Pro Forma | ||||||||||||
Historical | Adjustments | |||||||||||||
Revenue | $ | 6,921,202 | $ | — | $ | 6,921,202 | ||||||||
Operating expenses: | ||||||||||||||
Direct operating expenses (excludes depreciation and amortization) | 2,733,004 | — | 2,733,004 | |||||||||||
Selling, general and administrative expenses (excludes depreciation and amortization) | 1,761,939 | — | 1,761,939 | |||||||||||
Depreciation and amortization | 566,627 | 115,324 | (H) | 681,951 | ||||||||||
Corporate expenses (excludes depreciation and amortization) | 181,504 | 9,729 | (K) | 191,233 | ||||||||||
Merger expenses | 6,762 | (6,762 | ) | (J) | — | |||||||||
Gain on disposition of assets — net | 14,113 | — | 14,113 | |||||||||||
Operating income (loss) | 1,685,479 | (118,291 | ) | 1,567,188 | ||||||||||
Interest expense | 451,870 | 1,181,169 | (I) | 1,633,039 | ||||||||||
Gain on marketable securities | 6,742 | — | 6,742 | |||||||||||
Equity in earnings of nonconsolidated affiliates | 35,176 | — | 35,176 | |||||||||||
Other income (expense) — net | 5,326 | — | 5,326 | |||||||||||
Income (loss) before income taxes and minority interest | 1,280,853 | (1,299,460 | ) | (18,607 | ) | |||||||||
Income tax (expense) benefit | (441,148 | ) | 490,238 | (D) | 49,090 | |||||||||
Minority interest expense, net of tax | 47,031 | — | 47,031 | |||||||||||
Income (loss) from continuing operations | $ | 792,674 | $ | (809,222 | ) | $ | (16,548 | ) | ||||||
Basic EPS: | ||||||||||||||
Income (loss) from continuing operations | 1.60 | (L) | (.17 | ) | ||||||||||
Diluted EPS: | ||||||||||||||
Income (loss) from continuing operations | 1.60 | (L) | (.17 | ) |
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THREE MONTHS ENDED MARCH 31, 2008
(In thousands)
Clear Channel | Transaction | Pro Forma | ||||||||||||
Historical | Adjustments | |||||||||||||
Revenue | $ | 1,564,207 | $ | — | $ | 1,564,207 | ||||||||
Operating expenses: | ||||||||||||||
Direct operating expenses (excludes depreciation and amortization) | 705,947 | — | 705,947 | |||||||||||
Selling, general and administrative expenses (excludes depreciation and amortization) | 426,381 | — | 426,381 | |||||||||||
Depreciation and amortization | 152,278 | 28,831 | (H) | 181,109 | ||||||||||
Corporate expenses (excludes depreciation and amortization) | 46,303 | 2,432 | (K) | 48,735 | ||||||||||
Merger expenses | 389 | (389 | ) | (J) | — | |||||||||
Gain on disposition of assets — net | 2,097 | — | 2,097 | |||||||||||
Operating income (loss) | 235,006 | (30,874 | ) | 204,132 | ||||||||||
Interest expense | 100,003 | 308,313 | (I) | 408,316 | ||||||||||
Gain on marketable securities | 6,526 | — | 6,526 | |||||||||||
Equity in earnings of nonconsolidated affiliates | 83,045 | — | 83,045 | |||||||||||
Other income (expense) — net | 11,787 | — | 11,787 | |||||||||||
Income (loss) before income taxes and minority interest | 236,361 | (339,187 | ) | (102,826 | ) | |||||||||
Income tax (expense) benefit | (66,581 | ) | 128,002 | (D) | 61,421 | |||||||||
Minority interest expense, net of tax | 8,389 | — | 8,389 | |||||||||||
Income (loss) from continuing operations | $ | 161,391 | $ | (211,185 | ) | $ | (49,794 | ) | ||||||
Basic EPS: | ||||||||||||||
Income (loss) from continuing operations | .33 | (L) | (.52 | ) | ||||||||||
Diluted EPS: | ||||||||||||||
Income (loss) from continuing operations | .32 | (L) | (.52 | ) |
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CONDENSED CONSOLIDATED FINANCIAL DATA
9.9% | 100 bps increase | 100 bps decrease | ||||||||||
(In thousands) | ||||||||||||
Definite-lived intangibles, net | $ | 926,609 | $ | (4,851 | ) | $ | 4,851 | |||||
Indefinite-lived intangibles — licenses | 6,633,325 | (26,859 | ) | 26,859 | ||||||||
Indefinite-lived intangibles — permits | 3,207,381 | (32,795 | ) | 32,795 | ||||||||
Goodwill | 10,514,281 | (33,388 | ) | 33,388 | ||||||||
Total assets | 28,498,655 | (102,093 | ) | 102,093 | ||||||||
Total shareholders’ equity | 2,643,829 | (82,664 | ) | 82,664 | ||||||||
Income (loss) from continuing operations for the year ended December 31, 2007 | (16,548 | ) | 2,071 | (2,071 | ) | |||||||
Income (loss) from continuing operations for the three months ended March 31, 2008 | (49,794 | ) | 518 | (518 | ) |
(In thousands) | ||||
Consideration for Equity(i) | $ | 17,928,262 | ||
Rollover of restricted stock awards | 13,567 | |||
Estimated transaction costs | 235,359 | |||
Total Consideration | 18,177,188 | |||
Less: Net assets acquired | 9,661,909 | |||
Less: Adjustment for historical carryover basis per EITF 88-16 | 818,369 | |||
Excess Consideration to Be Allocated | $ | 7,696,910 | ||
Allocation: | ||||
Fair Value Adjustments: | ||||
Other current assets (B) | $ | (4,108 | ) | |
Property, plant and equipment, net | 148,701 | |||
Property, plant and equipment from discontinued operations, net | 4,482 |
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(In thousands) | ||||
Definite-lived intangibles(ii) | 437,067 | |||
Indefinite-lived intangibles — Licenses(iii) | 2,420,063 | |||
Indefinite-lived intangibles — Permits(iii) | 2,954,805 | |||
Goodwill and intangible assets from discontinued operations, net | 3,263 | |||
Investments in, and advances to, nonconsolidated affiliates | 221,897 | |||
Other assets (B) | (162,736 | ) | ||
Long-term debt (C) | 931,310 | |||
Deferred income taxes recorded for fair value adjustments to assets and liabilities (D) | (2,576,190 | ) | ||
Other long term liabilities (E) | 31,761 | |||
Termination of interest rate swaps (C) | 40,373 | |||
Goodwill(iv) | 3,246,222 | |||
Total Adjustments | $ | 7,696,910 | ||
(i) | Consideration for equity: |
Total shares outstanding(1) | 498,007 | |||
Multiplied by: Price per share(2) | $ | 36.00 | ||
$ | 17,928,262 | |||
(1) | Total shares outstanding include 836.8 thousand equivalent shares subject to employee stock options. |
(2) | Price per share is assumed to be the $36.00 per share. |
(ii) | Identifiable intangible assets acquired subject to amortization includes contracts amortizable over a weighted average amortization period of approximately 5.1 years. |
(iii) | The licenses and permits were deemed to be indefinite-lived assets that can be separated from any other asset, do not have legal, regulatory, contractual, competitive, economic, or other factors that limit the useful lives and require no material levels of maintenance to retain their cash flows. As such, licenses and permits are not currently subject to amortization. Annually, the licenses and permits will be reviewed for impairment and useful lives evaluated to determine whether facts and circumstances continue to support an indefinite life for these assets. |
(iv) | The pro forma adjustment to goodwill consists of: |
Removal of historical goodwill | $ | (7,268,059 | ) | |
Goodwill arising from the merger | 10,514,281 | |||
$ | 3,246,222 | |||
Total debt to be redeemed(i) | $ | (1,519,860 | ) | |
Issuance of debt in merger(ii) | 16,410,638 | |||
Fair value adjustment ($1,047,090 related to Clear Channel senior notes less $12,119 related to other fair value adjustments and $103,661 related to historical carryover basis per EITF 88-16) | (931,310 | ) | ||
Less: termination of interest rate swaps in connection with the merger | (40,373 | ) | ||
Debt adjustment ($13,919,095 long-term less $0 current portion) | $ | 13,919,095 | ||
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Clear Channel bank credit facilities(1) | $ | 125,000 | ||
Clear Channel 7.650% senior notes due 2010 | 750,000 | |||
AMFM Operating Inc. 8% senior notes due 2008 | 644,860 | |||
Total | $ | 1,519,860 | ||
(1) | Pro forma balance of $125 million on Clear Channel bank credit facilities reflects the June 15, 2008 maturity of the Clear Channel 6.625% senior notes. |
Senior secured credit facilities: | ||||
Revolving credit facility | ||||
Domestic based borrowing | $ | — | ||
Foreign subsidiary borrowings | 80,000 | |||
Term loan A facility | 1,425,000 | |||
Term loan B facility | 10,700,000 | |||
Term loan C — asset sale facility | 705,638 | |||
Delayed draw term loan facility | 750,000 | |||
Receivables based facility | 440,000 | |||
Senior Cash Pay Notes due 2016 | 980,000 | |||
Senior Toggle Notes due 2016 | 1,330,000 | |||
Total | $ | 16,410,638 | ||
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(In thousands) | |||||||||
Fair value of shareholders’ equity at March 31, 2008 | $ | 17,928,262 | |||||||
Net cash proceeds from debt due to merger(i) | (14,479,631 | ) | |||||||
Fair value of equity after merger(ii) | $ | 3,448,631 | |||||||
Pro forma shareholder’s equity under EITF 88-16 | |||||||||
Fair value of equity after merger | $ | 3,448,631 | |||||||
Less: 9.9% of fair value of equity after merger ($3,448,631 multiplied by 9.9%) | (341,414 | ) | |||||||
Plus: 9.9% of shareholders’ historical carryover basis (9,661,909 multiplied by 9.9%) | 956,529 | ||||||||
Less: Deemed dividend (14,479,631 multiplied by 9.9%) | (1,433,484 | ) | |||||||
Adjustment for historical carryover basis per EITF 88-16 | (818,369 | ) | |||||||
Adjustment for rollover of restricted stock awards | 13,567 | ||||||||
Total pro forma shareholders’ equity under EITF 88-16(iii) | $ | 2,643,829 | |||||||
(i) | Net increase in debt in merger: |
Issuance of debt in merger | $ | 16,410,638 | ||
Total debt redeemed | (1,519,860 | ) | ||
Total decrease in cash | 168,897 | |||
Estimated transaction and loan costs | (580,044 | ) | ||
Total increase in debt due to merger | $ | 14,479,631 | ||
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(ii) | For purposes of the unaudited pro forma condensed consolidated financial data, the management of Holdings has assumed that the fair value of equity after the merger is $3.4 billion. The Sponsors may elect to decrease the actual fair value of equity contributed in the merger to a minimum of $3.0 billion. The ability to make this election depends on cash on hand at the closing of the merger. |
(iii) | Total pro forma shareholders’ equity under EITF 88-16: |
Class A common stock, par value $.001 per share | $ | 32 | ||
Class B and C common stock, par value $.001 per share | 70 | |||
Additional paid-in capital | 2,643,727 | |||
$ | 2,643,829 | |||
Three | ||||||||
Year Ended | Months Ended | |||||||
December 31, | March 31, | |||||||
(In thousands) | 2007 | 2008 | ||||||
Interest expense on revolving credit facility(1) | $ | 14,476 | $ | 3,619 | ||||
Interest expense on receivables based facility(2) | 23,356 | 5,895 | ||||||
Interest expense on term loan facilities(3) | 867,229 | 216,807 | ||||||
Interest expense on senior notes(4) | 251,650 | 62,913 | ||||||
Amortization of deferred financing fees and fair value adjustments on Clear Channel senior notes(5) | 232,887 | 58,222 | ||||||
Reduction in interest expense on debt redeemed | (208,429 | ) | (39,143 | ) | ||||
Total pro forma interest adjustment | $ | 1,181,169 | $ | 308,313 | ||||
(1) | Pro forma interest expense reflects an $80 million outstanding balance on the $2.0 billion revolving credit facility at a rate equal to an applicable margin (assumed to be 3.4%) over LIBOR (assumed to be 2.7%) plus a commitment fee of 0.5% on the assumed undrawn balance of the revolving credit facility. For each 0.125% per annum change in LIBOR, annual interest expense on the revolving credit facility would change by $0.1 million. | |
(2) | Reflects pro forma interest expense on the receivables based facility at a rate equal to an applicable margin (assumed to be 2.4%) over LIBOR (assumed to be 2.7%) and assumes a commitment fee of 0.375% on the unutilized portion of the receivables based facility. For each 0.125% per annum change in LIBOR, annual interest expense on the receivables based facility would change by $0.6 million. | |
(3) | Reflects pro forma interest expense on the term loan facilities at a rate equal to an applicable margin over LIBOR. The pro forma adjustment assumes margins of 3.4% to 3.65% and LIBOR of 2.7%. Assumes a commitment fee of 1.82% on the unutilized portion of the delayed draw term loan facilities. For each 0.125% per annum change in LIBOR, annual interest expense on the term loan facilities would change by $17.0 million. | |
(4) | Assumes a fixed rate of 10.75% on the senior cash pay notes and a fixed rate of 11.00% on the senior toggle notes. |
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(i) | These pro forma financial statements include the assumptions that interest expense is calculated at the rates under each tranche of the debt per the Financing Agreements and that the PIK Election has not been made in all available periods to the fullest extent possible. | ||
The table below quantifies the effects for all periods presented of two possible alternate scenarios available to Clear Channel with regard to the payment of required interest, a) paying 100% PIK for all periods presented and b) electing to pay 50% in cash and 50% through use of the PIK Election for all periods presented: |
100% PIK | 50% Cash/50% PIK | |||||||||||||||
Increase in | Increase in | |||||||||||||||
interest | Increase in | interest | Increase in | |||||||||||||
expense | net loss | expense | net loss | |||||||||||||
Year ended December 31, 2007 | $ | 14,566 | $ | 9,031 | $ | 7,283 | $ | 4,515 | ||||||||
Three months ended March 31, 2008 | $ | 7,219 | $ | 4,476 | $ | 3,610 | $ | 2,238 |
The use of the 100% PIK Election will increase cash balances by approximately $146 million, net of tax, in the first year that the debt is outstanding. The use of the 50% cash pay / 50% PIK pay election will increase cash balances by approximately $73 million, net of tax, in the first year that the debt is outstanding. |
(5) | Represents debt issuance costs associated with our new bank facilities amortized over 6 years for the receivables based facility and the revolving credit facility, 6.0 to 7.5 years for the term loan facilities and 8 years for the senior notes. |
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THE MERGER
Payment due by Period | ||||||||||||||||||||
(in thousands) | ||||||||||||||||||||
Less than | More than | |||||||||||||||||||
Total | 1 Year | 1 to 3 Years | 3 to 5 Years | 5 Years | ||||||||||||||||
Long-term Debt(1) | ||||||||||||||||||||
Existing notes and new debt | $ | 20,810,638 | $ | 125,000 | $ | 1,008,820 | $ | 2,065,990 | $ | 17,610,828 | ||||||||||
Other debt | 118,516 | 97,535 | 15,540 | 1,433 | 4,008 | |||||||||||||||
Interest payments on debt | 9,880,635 | 1,115,068 | 3,834,589 | 2,503,121 | 2,427,857 | |||||||||||||||
Non-Cancelable Operating leases | 2,748,676 | 321,657 | 655,213 | 486,677 | 1,285,129 | |||||||||||||||
Non-Cancelable Contracts | 3,269,191 | 656,134 | 1,105,389 | 697,861 | 809,807 | |||||||||||||||
Employment/Talent Contracts | 569,569 | 280,913 | 217,944 | 66,050 | 4,662 | |||||||||||||||
Capital Expenditures | 203,240 | 133,350 | 55,526 | 11,648 | 2,716 | |||||||||||||||
Other obligations(2) | 248,852 | 12,200 | 13,424 | 107,429 | 115,799 | |||||||||||||||
Total(3) | $ | 37,849,317 | $ | 2,741,857 | $ | 6,906,445 | $ | 5,940,209 | $ | 22,260,806 | ||||||||||
(1) | Long-term Debt excludes $0.9 billion of fair value purchase accounting adjustments made in the pro forma balance sheet. | |
(2) | Other obligations consist of $71.2 million related to asset retirement obligations recorded pursuant to Financial Accounting Standards No. 143,Accounting for Asset Retirement Obligations, which assumes the underlying assets will be removed at some period over the next 50 years. Also included is $103.0 million related to the maturity value of loans secured by forward exchange contracts that we accrete to maturity using the effective interest method and can be settled in cash or the underlying shares. These contracts had an accreted value of $88.2 million and the underlying shares had a fair value of $114.5 million recorded on our consolidated balance sheets at March 31, 2008. Also included in the table is $39.8 million related to retirement plans and $12.2 million related to unrecognized tax benefits recorded pursuant to Financial Accounting Standard Board Interpretation No. 48,Accounting for Uncertainty in Income Taxes. | |
(3) | Excluded from the table is $464.3 million related to various obligations with no specific contractual commitment or maturity, $232.8 million of which relates to unrecognized tax benefits recorded pursuant to Financial Accounting Standard Board Interpretation No. 48,Accounting for Uncertainty in Income Taxes. |
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OPERATIONS OF CC MEDIA HOLDINGS, INC.
Name | Age | Position | |||||||
Scott M. Sperling | 50 | President and Director | |||||||
Steve Barnes | 48 | Director | |||||||
Richard J. Bressler | 50 | Director | |||||||
Charles A. Brizius | 39 | Director | |||||||
John Connaughton | 42 | Director | |||||||
Ed Han | 33 | Director | |||||||
Ian K. Loring | 42 | Director | |||||||
Kent R. Weldon | 41 | Director |
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Name | Age | Position | |||||||
Mark P. Mays | 44 | Director and Chief Executive Officer | |||||||
Randall T. Mays | 42 | Director and President | |||||||
Scott M. Sperling | 50 | Director | |||||||
Steve Barnes | 48 | Director | |||||||
Richard J. Bressler | 50 | Director | |||||||
Charles A. Brizius | 39 | Director | |||||||
John Connaughton | 42 | Director | |||||||
Ed Han | 33 | Director | |||||||
Ian K. Loring | 42 | Director | |||||||
Kent R. Weldon | 41 | Director | |||||||
Jonathon S. Jacobson | 46 | Director | |||||||
David Abrams | 47 | Director | |||||||
L. Lowry Mays | 72 | Chairman Emeritus | |||||||
Paul J. Meyer | 65 | Global President and Chief Operating Officer — Clear Channel Outdoor, Inc. | |||||||
John E. Hogan | 51 | President/Chief Executive Officer — Clear Channel Radio |
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• | support our business strategy and business plan by clearly communicating what is expected of executives with respect to goals and results and by rewarding achievement; |
• | recruit, motivate and retain executive talent; and |
• | create a strong performance alignment with shareholders. |
• | annual base salary; |
• | an annual incentive bonus, the amount of which is dependent on Holdings’ operating performance and, for most executives, individual performance during the prior fiscal year; |
• | long-term incentive compensation, delivered in the form of stock options grants, restricted stock awards and cash (or some combination thereof) that is designed to align executive officers’ interests over a multi-year period directly with those of shareholders by rewarding outstanding performance and providing long-term incentives; and |
• | other executive benefits and perquisites. |
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• | how proposed amounts of total compensation to our executives compare to amounts paid to similar executives by Media Peers both for the prior year and over a multi-year period; |
• | the value of any stock options and shares of restricted stock previously awarded; |
• | internal pay equity considerations; and |
• | broad trends in executive compensation generally. |
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• | the nature and responsibility of the position and, to the extent available, salary norms for persons in comparable positions at Media Peers; |
• | the expertise of the individual executive; |
• | the competitiveness of the market for the executive’s services; and |
• | the recommendations of our chief executive officer (except in the case of his own compensation). |
• | At the outset of the fiscal year: |
1. | Set performance goals for the year for Holdings and each participant. |
2. | Set a target bonus for each individual. |
• | After the end of the fiscal year: |
1. | Measure actual performance (individual and company-wide) against the predetermined Holdings’ and individual performance goals to determine the preliminary bonus. |
2. | Make adjustments to the resulting preliminary bonus calculation to reflect Holdings’ performance relative to the performance of the Media Peers. |
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Operating | Non-cash | Depreciation | Gain on | |||||||||||||||||
income | compensation | and | Disposition of | |||||||||||||||||
(loss) | expense | amortization | assets-net | OIBDAN | ||||||||||||||||
Radio Broadcasting | $ | 237,346 | $ | 4,809 | $ | 31,487 | $ | — | $ | 273,642 | ||||||||||
Outdoor | 55,045 | 1,930 | 105,090 | — | 162,065 | |||||||||||||||
Other | (8,644 | ) | — | 11,555 | — | 2,911 | ||||||||||||||
Gain on disposition of assets — net | 2,097 | — | — | (2,097 | ) | — | ||||||||||||||
Corporate and Merger costs | (50,838 | ) | 2,851 | 4,146 | — | (43,841 | ) | |||||||||||||
Consolidated | $ | 235,006 | $ | 9,590 | $ | 152,278 | $ | (2,097 | ) | $ | 394,777 | |||||||||
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Value of | ||||||||||||||||||||
Name | Base Salary | Bonus | Benefits(1) | Other | Total | |||||||||||||||
L. Lowry Mays | $ | 1,000,000 | (2) | $ | 4,000,000 | (3) | $ | 24,615 | $ | 2,975,385 | (4) | $ | 8,000,000 | |||||||
Mark P. Mays | $ | 2,685,000 | (5) | $ | 19,875,000 | (6) | $ | 30,550 | $ | 11,963,462 | (7) | $ | 34,554,012 | |||||||
Randall T. Mays | $ | 2,604,999 | (5) | $ | 19,875,000 | (6) | $ | 34,540 | $ | 11,900,929 | (7) | $ | 34,415,468 | |||||||
Paul J. Meyer | $ | 650,000 | (8) | — | — | $ | 600,000 | (10) | $ | 1,250,000 | ||||||||||
John E. Hogan | $ | 750,000 | (8) | — | (9) | — | $ | 1,600,000 | (10) | $ | 2,350,000 |
(1) | The values associated with the continued provision of health benefits are based on the total 2008 premiums for medical and life insurance multiplied by the number of years the executive is entitled to those benefits pursuant to his employment agreement. | |
(2) | Represents the remaining annual base salary due Mr. L. Lowry Mays under the terms of his employment agreement (i.e., four years of Mr. Mays’ annual base salary). | |
(3) | Represents the remaining annual bonus due Mr. L. Lowry Mays under the terms of his employment agreement (i.e., four years of Mr. Mays’ annual bonus). | |
(4) | Represents the income tax gross up payment due Mr. L. Lowry Mays under the terms of his employment agreement. | |
(5) | Represents three times the annual base salary for the year ended December 31, 2007 for each of Mr. Mark P. Mays and Mr. Randall T. Mays, respectively. | |
(6) | Represents three times the annual incentive bonus for the year ended December 31, 2007 for each of Mr. Mark P. Mays and Mr. Randall T. Mays, respectively. | |
(7) | Represents the excise tax gross up payment due Mr. Mark P. Mays and Mr. Randall T. Mays under the terms of their employment agreements. The excise tax gross up payment was calculated using the provisions of Sections 280G and 4999 of the Internal Revenue Code and the Regulations thereunder. The calculation includes the value associated with the accelerated vesting and lapse of restrictions on certain restricted stock grants that may occur as a result of the termination of employment without Cause or for Good Reason. The calculation assumes a $36.00 stock price at termination date and applicable federal rates as of May 2008 to determine the value associated with the accelerated vesting and lapse of restrictions on the restricted stock. | |
(8) | Represents one year’s annual base salary for each of Mr. Paul J. Meyer and Mr. John E. Hogan, respectively. | |
(9) | Cannot be estimated as Mr. John E. Hogan’s annual incentive bonus is determined and awarded based upon his performance at the end of each year. | |
(10) | Not payable if Mr. Paul J. Meyer or Mr. John E. Hogan, respectively, terminates his employment. |
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(1) | One or more new entities ultimately controlled by Bain Capital Investors, LLC and Thomas H. Lee Partners, L.P. or their affiliates will acquire between approximately 66% and 96% of the voting power and economic interests of Holdings (see footnote 3). Bain Capital Investors, LLC and Thomas H. Lee Partners, L.P. will each have fifty percent control of each such new entity. The equity interests of the new entities will be owned by Bain Capital Investors, LLC, Thomas H. Lee Partners, L.P., their affiliates and/or coinvestors. | |
(2) | Messrs. L. Lowry Mays, Mark P. Mays and Randall T. Mays have committed to roll over into shares of Holdings Class A common stock shares of Clear Channel common stock, shares of Clear Channel restricted stock and/or “in the money” Clear Channel stock options with an aggregate value equal to $45 million (see “Interests of Clear Channel’s Directors and Executive Officers in the Merger — Equity Rollover”). The merger agreement contemplates that the Fincos and Holdings may permit other |
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executive officers to elect to convert some of their outstanding shares of Clear Channel common stock, Clear Channel restricted stock and “in the money” Clear Channel stock option into shares or options to purchase shares of Holdings following effectiveness of the merger. The Fincos and Merger Sub have informed Clear Channel that they anticipate (i) converting approximately 636,667 unvested shares of Clear Channel restricted stock held by management and employees pursuant to a grant of restricted stock made in May 2007 into Holdings Class A restricted shares on a one for one basis and (ii) offering to certain members of Clear Channel’s management and certain Clear Channel employees the opportunity to purchase up to an aggregate of $15 million of Holdings Class A common stock at the same price per share paid by the Sponsors in connection with the Equity Financing (see “Interests of Clear Channel’s Directors and Executive Officers in the Merger — Equity Rollover”). Upon their execution of new or amended employment agreements with the surviving corporation, Messrs. Mark P. Mays and Randall T. Mays each will be issued Holdings Class A restricted shares with a value equal to $20 million. Other than 580,356 shares of Clear Channel common stock included within the roll over commitment of Mr. L. Lowry Mays, shares of Holdings Class A common stock issued pursuant to the foregoing arrangements will not reduce the shares of Holdings Class A common stock available pursuant to Stock Elections. | ||
(3) | Consists of a combination of strong voting Class B common stock and nonvoting Class C common stock (with aggregate votes equal to one vote per share, e.g., if “strong voting Class B common stock” has 10 votes, each share of strong voting Class B common stock will be issued with nine shares of nonvoting Class C common stock.Note: the numbers are for illustration purposes only). Each share of Holdings Class A common stock, nonvoting Class C common stock and strong voting Class B common stock have the same economic rights. The percentage ownership of Holdings attributable to entities ultimately controlled by Bain Capital Investors, LLC and Thomas H. Lee Partners, L.P. or their affiliates will vary within the disclosed range based on, among other things, (i) the number of shareholders who elect to receive Stock Consideration, and (ii) the number of shares issued to management and other employees (see footnote 4). | |
(4) | Consists of shares of Holdings Class A common stock with voting power equal to one vote per share. Each of Messrs. L. Lowry Mays, Mark P. Mays and Randall T. Mays has committed to roll over into shares of Holdings Class A common stock shares of Clear Channel common stock, shares of Clear Channel restricted stock and/or “in the money” Clear Channel stock options with an aggregate value equal to $45 million (see “Interests of Clear Channel’s Directors and Executive Officers in the Merger — Equity Rollover”). The merger agreement contemplates that the Fincos and Holdings may permit other executive officers to elect to convert some of their outstanding shares of Clear Channel common stock, Clear Channel restricted stock and “in the money” Clear Channel stock option into shares or options to purchase shares of Holdings following effectiveness of the merger. The Fincos and Merger Sub have informed Clear Channel that they anticipate (i) converting approximately 636,667 unvested shares of Clear Channel restricted stock held by management and employees pursuant to a grant of restricted stock made in May 2007 into Holdings Class A restricted shares on a one for one basis and (ii) offering to certain members of Clear Channel’s management and certain Clear Channel employees the opportunity to purchase up to an aggregate of $15 million of Holdings Class A common stock at the same price per share paid by the Sponsors in connection with the Equity Financing (see “Interests of Clear Channel’s Directors and Executive Officers in the Merger — Equity Rollover”). Upon their execution of new or amended employment agreements with the surviving corporation, Mr. Mark P. Mays and Randall T. Mays each will be issued restricted shares of Holdings Class A common stock with a value equal to $20 million. Other than 580,356 shares of Clear Channel common stock included within the roll over commitment of Mr. L. Lowry Mays, shares of Holdings Class A common stock issued pursuant to the foregoing arrangements will not reduce the shares of Holdings Class A common stock available pursuant to Stock Elections. | |
(5) | Consists of shares of Holdings Class A common stock with voting power equal to one vote per share. The percentage ownership of Holdings attributable to the public will vary within the disclosed range based on the number of shareholders who make a Stock Election. The maximum number of shares of Class A common stock issued to the public pursuant to Stock Elections will be equal to 30% of the outstanding capital stock and voting power of Holdings after the merger. |
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• | determined that the merger agreement and the merger are advisable and in the best interest of Clear Channel’s shareholders; | ||
• | approved and adopted the merger agreement and the merger; and | ||
• | unanimously recommended that Clear Channel’s shareholders approve and adopt the merger agreement and the merger. |
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• | a merger price of $36 per share (with no additional per share consideration and the cessation of the payment of all dividends); | ||
• | the rollover by Lowry Mays of up to $200 million of Clear Channel common stock; |
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• | a provision that would require up to $500 million of Clear Channel shares for which a cash election was made be exchanged for shares of Holdings Class A common stock if necessary to provide the required equity at close; and | ||
• | equity commitments by the Sponsors of up to $2.4 billion. |
• | total debt would be reduced by $1.75 billion; | ||
• | interest rate margins on the senior secured credit facilities would be increased by 40 basis points; | ||
• | funding conditions would be limited to closing of the merger and delivery of final loan documents; and | ||
• | enhanced enforcement rights on the part of the Sponsors and Clear Channel. |
• | None of the Clear Channel shares of common stock for which cash elections are made should be exchanged for shares of Holdings Class A common stock. | ||
• | There should be no condition to closing of the merger agreement or debt or equity funding other than the Required Shareholder Approval and the absence of an injunction against closing the merger. | ||
• | The Sponsors should have no right to terminate the merger agreement other than as a result of a failed shareholder vote. | ||
• | The reverse termination fee payable by Merger Sub under the circumstances described in the merger agreement should be increased over the existing $500 million. |
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• | Additional per share consideration should begin to accrue at 8% per annum if the closing had not occurred on or prior to September 30, 2008. | ||
• | The definitive debt agreements should be executed concurrently with the amended merger agreement (in lieu of debt commitments). | ||
• | Clear Channel should be a named third party beneficiary with full rights to specific performance with respect all of the transaction documents. | ||
• | All equity and debt commitments should be funded into escrow at the signing of the amended merger agreement. | ||
• | Clear Channel should be paid the reverse termination fee in the event that the shareholders of Clear Channel do not approve the transaction. |
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• | Clear Channel’s board of directors’ familiarity with the business, financial condition, results of operations, prospects and competitive position of Clear Channel, including the challenges faced by Clear Channel and other risks inherent in achieving Clear Channel’s plans including the risks described in “Risk Factors — Risks Relating to Clear Channel’s Business” beginning on page 36. Included among the challenges and risks considered by the Clear Channel board of directors were the following: the intense competition in the industries in which Clear Channel competes and the fact that Clear Channel may not be able to maintain or increase its current audience ratings or advertising and sales revenues; and the potential negative impact on Clear Channel’s overall revenues and profit margins in the event of unfavorable economic conditions, shifts in population and other demographics, increased levels of competition for advertising dollars, unfavorable fluctuations in |
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operating costs, technological changes and innovation that are occurring in Clear Channel’s industries or unfavorable changes in labor conditions or governmental regulations and policies. |
• | The judgment of the disinterested directors regarding the prospects of Clear Channel based on its current and historical performance, management’s projections, the uncertainties regarding industries in which Clear Channel operates and the risks inherent in achieving management’s projections, varying public growth forecasts for the radio industry as a whole and the difficulty of accurately predicting growth in the industry in light of technological changes and the growth of competitive formats. Clear Channel’s board of directors concluded that, in light of the foregoing and the risks and challenges described in the immediately preceding paragraph and the inherent nature of projections, Clear Channel’s ability to achieve management’s projections is inherently uncertain. | ||
• | The results of the Clear Channel board of directors’ review, with the assistance of Goldman Sachs, of the strategic alternatives available to Clear Channel, including the board of directors’ assessment of the risks and challenges presented by each alternative; the potential value that each alternative could generate to Clear Channel’s shareholders; the potential disruption to Clear Channel’s existing business plans and prospects occasioned by each alternative; and the likelihood of successfully executing each such alternative. The strategic alternatives reviewed, in addition to a leveraged buy-out transaction, were the spin-off of Clear Channel Outdoor, a recapitalization combined with a special dividend, continued pursuit of existing business plans and prospects, the sale of non-core radio and television assets and combinations of the foregoing. In conducting this review of the prior merger agreement the board of directors gave consideration to management’s projections, the financial analyses provided by Goldman Sachs on May 17, 2007 (which included indicative values for the Clear Channel common stock greater than the indicative values resulting from the comparable financial analyses delivered by Goldman Sachs to the board of directors in connection with Goldman Sachs’ prior opinions dated November 16, 2007 and April 18, 2007) and other information considered relevant by the board of directors. After giving consideration to management’s projections, the financial analyses provided by Goldman Sachs on May 17, 2007 (which included indicative values for the Clear Channel common stock greater than the indicative values resulting from the comparable financial analyses delivered by Goldman Sachs to the board of directors in connection with Goldman Sachs’ prior opinions dated November 16, 2007 and April 18, 2007) and the other information available to it, Clear Channel’s board of directors concluded that, while some of the strategic alternatives considered had the potential of resulting in superior values if management’s projections and theoretical future trading values were achieved or exceeded, in light of the uncertainties and risks of achieving both of these results, the merger contemplated by the prior merger agreement represented the best of the alternatives available at the time. | ||
• | The prior strategic initiatives implemented by Clear Channel, including the initial public offering of approximately 10% of the common stock of Clear Channel Outdoor, the 100% spin-off of Live Nation, a $1.6 billion return of capital to Clear Channel’s shareholders in the form of stock repurchases and a 50% increase in Clear Channel’s regular quarterly dividend, which had failed to increase the market price of Clear Channel common stock to a level reflective of the value of Clear Channel’s businesses. | ||
• | The fact that Clear Channel, with the assistance of its advisors, had conducted a wide-ranging process to solicit indications of interest in a transaction, including (i) the public announcement on October 25, 2006 of its intention to evaluate strategic alternatives, (ii) the execution of nine confidentiality agreements, (iii) the receipt of preliminary indications of interest from four consortia of private equity firms, (iv) active due diligence and management interviews by three consortia of private equity firms, (v) the conduct of discussions and negotiations with consortia of private equity firms and (vi) the receipt of two definitive proposals to acquire Clear Channel, as described under “The Merger — Background of the Merger.” | ||
• | The fact that during the 21-day period following the execution of the merger agreement, Goldman Sachs contacted a total of 22 potential buyers that might be interested in exploring a transaction with Clear Channel none of whom submitted a proposal to pursue a transaction with Clear Channel. | ||
• | The opinion dated May 17, 2007 of Goldman Sachs to the Clear Channel board of directors, to the effect that as of that date, and based upon and subject to the factors and assumptions set forth therein, the cash consideration of $39.20 per Public Share that the holders of Public Shares can elect to receive pursuant to the prior merger agreement was fair from a financial point of view, to such holders. Clear Channel’s board of directors was aware that a portion of Goldman Sachs’ fees is contingent upon the closing of the merger and that Goldman Sachs recently provided or currently provides services to THL Partners, Bain and their respective affiliates. Clear Channel’s board of directors concluded that these factors did not materially detract from its reliance upon Goldman Sachs’ opinion. |
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• | The current and historical market prices of Clear Channel’s common stock and the premium over the recent historical market prices of Clear Channel’s common stock reflected in the $39.20 price per share, a premium of approximately 21.7% above the closing trading price of Clear Channel common stock on October 24, 2006, the day prior to the announcement of Clear Channel’s decision to consider strategic alternatives, a premium of approximately 30.7% above the average closing price of Clear Channel common stock during the 30 trading days ended October 24, 2006, a premium of approximately 33.9% above the average closing price of Clear Channel common stock during the 60 trading days ended October 24, 2006, and a premium of approximately 17.9% over the average closing trading price of Clear Channel common stock over the one year period ended May 25, 2007. | ||
• | The fact that the $39.20 price per share reflected the highest firm proposal received from all parties contacted in soliciting indications of interest under the process discussed above. | ||
• | The Debt Commitment Letter indicated a strong commitment on the part of the lenders with few conditions that would permit the lenders to terminate their commitments which the Clear Channel board of directors believed increased the likelihood that Holdings would be able to obtain the financing necessary to complete the merger. | ||
• | The terms of the prior merger agreement and the related agreements, including: |
1. | A 21-day post-signing go-shop period, during which Clear Channel may solicit additional interest in transactions involving Clear Channel, and after such 21-day period, continue discussions with certain persons under certain circumstances for an additional 29 days; | ||
2. | Clear Channel’s ability after the go-shop period, under certain other limited circumstances, to furnish information to and conduct negotiations with third parties regarding other proposals; | ||
3. | the fact that the prior merger agreement permits Clear Channel to respond to Competing Proposals, and upon payment of a fee of $500 million ($300 million during the go-shop period), to accept a proposal that Clear Channel’s board of directors determines to be superior to the terms of the prior merger agreement and the transactions contemplated thereby, under certain circumstances as more fully described under “The Merger Agreement — Solicitation of Alternative Proposals”; | ||
4. | the limited number and nature of the conditions to funding set forth in the Debt Commitment Letter and the obligation of the buyer to use its reasonable best efforts (1) to obtain the debt financing and (2) if the buyer fails to effect the closing because of a failure to obtain the debt financing, to pay Clear Channel a $500 million termination fee; | ||
5. | the provisions of the prior merger agreement that allow Clear Channel’s board of directors, under certain circumstances, to change its recommendation that Clear Channel’s shareholders vote in favor of the approval and adoption of the prior merger agreement which would permit Clear Channel, in such circumstances, to pursue strategic alternatives; | ||
6. | the limited number and nature of the conditions which must be satisfied prior to the consummation of the merger under the prior merger agreement, including the absence of a financing condition which the board believed increased the likelihood that the merger could be completed; | ||
7. | the fact that Clear Channel will be entitled to a termination fee of $600 million, in certain circumstances, if the merger agreement is terminated due to the failure to receive the requisite regulatory approvals prior to a specified date provided that all other conditions to Merger Sub’s obligations to consummate the merger have been satisfied which fee would mitigate the costs and time commitment of management and incentivize the Sponsors to complete the merger process; and | ||
8. | the fact that the Sponsors have agreed not to syndicate equity interests in Merger Sub to other private equity firms that executed confidentiality agreements prior to the signing of the merger agreement. |
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• | The modifications to the employment agreements of Messrs. Mark P. Mays, Randall T. Mays, and L. Lowry Mays, including the agreement that the proposed transaction would not be deemed a change of control under their employment agreements which had the effect of lowering the expenses triggered by the merger and thus potentially increasing the merger consideration that could be negotiated with the Sponsors. | ||
• | The several limited guarantees provided by the Sponsors and the respective representations, warranties and covenants of the parties. | ||
• | The understanding of the directors, after consulting with their financial and legal advisers, that the termination fee of $500 million ($300 million if the termination occurs during the go-shop period) to be paid by Clear Channel if the prior merger agreement is terminated under certain circumstances, was reasonable, customary and not preclusive. | ||
• | The fact that Clear Channel shareholders have the option to receive an equity interest in Holdings following the proposed transaction and therefore could have the opportunity to participate in a portion potential future growth or earnings of Clear Channel. | ||
• | The availability of appraisal rights to Clear Channel’s shareholders who comply with all required procedures under Texas law. | ||
• | The experience of the Sponsors in completing acquisitions which increases the likelihood that the merger may be completed. |
• | The risk that the financing contemplated by the Debt Commitment Letter for the consummation of the merger might not be obtained. | ||
• | The fact that the holders who receive Stock Consideration in the merger would be subject to the risks of Holdings’ operations subsequent to the merger, including: |
1. | the fact that financing the merger would result in significantly increased levels of debt which would increase interest expense, adversely affect net income, involve more restrictive covenants imposed by financing sources due to increased leverage, require a substantial portion of Clear Channel’s cash flow to be dedicated to the payment of principal, limit liquidity and operational flexibility, limit Holdings’ and Clear Channel’s ability to adjust to changing economic, business and competitive conditions, and limit the scope and timing of capital expenditures, making Holdings’ and Clear Channel more vulnerable to a downturn in operating performance or a decline in general economic or industry conditions; | ||
2. | the fact that shares of Holdings Class A common will not be listed on an exchange and may experience reduced trading volume and liquidity and increased volatility; and | ||
3. | the fact that entities affiliated with the Sponsors would control Holdings and consequently would have the power to elect all but two of its directors, appoint new management and approve any action requiring the approval of the holders of Holdings’ capital stock, including adopting amendments to Holdings’ certificate of incorporation and approving mergers or sales of substantially all of Holdings or its assets. |
• | The fact that the merger would be a taxable transaction to the shareholders of Clear Channel with respect to the cash portion of the consideration. | ||
• | The fact that the interests of certain directors and officers of Clear Channel are different in certain respects from the interests of shareholders generally, as described under “The Merger — Interests of Clear Channel’s Directors and Executive Officers in the Merger,” including potential payments to be made to members of Clear Channel’s management in the transaction. |
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• | The restrictions on the conduct of Clear Channel’s business prior to the consummation of the merger, which, subject to specific limitations, may delay or prevent Clear Channel from taking certain actions during the time that the prior merger agreement remains in effect which may adversely affect Clear Channel’s results of operations or implementation of strategic business plans, and inhibit Clear Channel’s ability to compete in the market. | ||
• | The requirement that under the terms of the merger agreement, Clear Channel would pay the Fincos a termination fee if it were to terminate the prior merger agreement to accept a Superior Proposal for the acquisition of Clear Channel, if the board of directors were to change its recommendation concerning the merger agreement, and in certain other circumstances (including, in some instances, if shareholders do not vote to approve and adopt the merger agreement), and that Clear Channel’s obligation to pay the termination fee might discourage other parties from proposing a business combination with, or an acquisition of, Clear Channel. | ||
• | The fact that Clear Channel is entering into the prior merger agreement with a newly formed entity with essentially no assets and, accordingly, that its remedy in connection with a breach, even a breach that is deliberate or willful, of the prior merger agreement by Merger Sub is limited to a termination fee of $500 million ($600 million in certain circumstances if the breach results in a failure to obtain necessary regulatory consents). | ||
• | The risks and costs to Clear Channel if the merger does not close, including the diversion of management and employee attention, potential employee attrition and the potential impact on Clear Channel’s businesses. | ||
• | The risk that while the merger is expected to be completed, there can be no assurance that all conditions to the parties’ obligations to complete the merger will be satisfied, and as a result, it is possible that the merger may not be completed even if approved by Clear Channel’s shareholders. | ||
• | The approvals required for consummation of the transaction, including the approval of the FTC or the Antitrust Division of the U.S. Department of Justice under the HSR Act and the FCC Consent, and the time periods that may be required to obtain those approvals. |
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• | The current and historical market prices of Clear Channel’s common stock and the premium over the recent historical market prices of Clear Channel’s common stock reflected in the $36.00 price per share, including a premium of approximately 20% above the closing trading price of Clear Channel common stock on May 9, 2008, the day prior to the publication that the board was considering Amendment No. 3, and a premium of approximately 21.6% above the average closing price of Clear Channel common stock during the 30 trading days ended May 13, 2008, and a premium of approximately 15.8% above the average closing price of Clear Channel common stock during the 60 trading days ended May 13, 2008. | ||
• | the decline in management’s internal estimates of future results of operations since May 17, 2007; | ||
• | the declines in one year forward adjusted EBITDA multiples for Clear Channel and other major competitors in the radio industry; |
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• | the fact that the Banks had failed to provide debt financing under the Debt Commitments and that Clear Channel had no contractual right to specifically enforce such funding; | ||
• | the condition of the current debt markets, making it highly unlikely that alternative debt financing could be obtained on terms that the Sponsors would consider favorable, if at all, or on terms that would allow Clear Channel to pursue an alternative strategic transaction that would permit it to incur additional indebtedness that would allow it to pay a significant special dividend to its shareholders; | ||
• | the risks inherent in any litigation and the uncertainty that Clear Channel would recover damages commensurate with its losses in the Texas Actions; | ||
• | the board of directors’ view that, due to the failure of the Banks to fund the closing under the prior merger agreement, the merger agreement substantially reduced the uncertainty as to whether a merger transaction would occur; | ||
• | the fact that the Company had not received any acquisition proposal from any other party since the prior merger agreement had been first signed in November 2006; | ||
• | The opinion dated May 13, 2008 of Goldman Sachs to the Clear Channel board of directors, to the effect that as of that date, and based upon and subject to the factors and assumptions set forth therein, the cash consideration of $36.00 per Public Share to be received by the holders of Public Shares pursuant to the merger agreement was fair from a financial point of view, to such holders. Clear Channel’s board of directors was aware that a portion of Goldman Sachs’ fees is contingent upon the closing of the merger and that Goldman Sachs recently provided or currently provides services to THL Partners, Bain and their respective affiliates. Clear Channel’s board of directors concluded that these factors did not materially detract from its reliance upon Goldman Sachs’ opinion; | ||
• | The terms and conditions of the merger agreement, including the increased certainty of closing provided by reducing the number of conditions to closing, including, but not limited to, the “material adverse change” or “MAC” condition; and | ||
• | the financial and other terms and conditions of the merger agreement, as reviewed by the board of directors with its legal and financial advisors, were the product of arm’s-length negotiations between the parties, which resulted in, among other things, the following changes from the Sponsor’s proposed amended terms: an increase in the amount of termination fees payable by the Sponsors or the Banks in the event of a termination of the agreement by Clear Channel in certain circumstances by $100 million; fully negotiated and executed financing agreements at the time of the signing of the merger agreement; the funding of all equity and debt financing necessary to fund the closing into an escrow account; the Company being named a third party beneficiary to the equity commitments and financing agreements; and the Company’s express right to specifically enforce all of the material agreements, including the merger agreement, the equity commitments and the financing agreements. |
• | the reduction in the consideration payable to Clear Channel shareholders when compared to the consideration payable on the terms specified in the prior merger agreement; | ||
• | the fact that the merger agreement provides an increase in the circumstances in which Clear Channel would be required to reimburse Parent for its expenses and the substantial increase in the amount of such reimbursement; | ||
• | the Sponsors were required to dismiss their claim for specific performance of the debt commitments in the New York Action as part of the settlement; | ||
• | Clear Channel and Holdings were required to dismiss its tortious interference claim in the Texas Actions as part of the Settlement; | ||
• | Under certain circumstances, Clear Channel shareholders making a Cash Election would be required to exchange up to 1/36th of their shares of Clear Channel common stock subject to such election for Holdings Class A common stock; and | ||
• | Clear Channel did not undertake an affirmative attempt to contact other potential buyers prior to entering into Amendment No. 3. |
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• | determined that the merger is advisable and in the best interests of Clear Channel and its unaffiliated shareholders; | ||
• | approved, adopted and declared advisable the merger agreement and the transactions contemplated by the merger agreement; | ||
• | recommended that the shareholders of Clear Channel vote in favor of the merger and directed that such matter be submitted for consideration of the shareholders of Clear Channel at the special meeting (except that the board of directors did not, and will not, make any recommendation to the shareholders with respect to the election of the Stock Consideration); and | ||
• | authorized the execution, delivery and performance of the merger agreement and the transactions contemplated by the merger agreement. |
Weighted | ||||||||||||||||||||||||
Number of | Weighted | Average | ||||||||||||||||||||||
Aggregate | Shares | Average | Exercise Price | Value of | ||||||||||||||||||||
Shares | Underlying | Exercise Price | Value of | of Vested and | Vested and | |||||||||||||||||||
Subject to | Unvested | of Unvested | Unvested | Unvested | Unvested | |||||||||||||||||||
Name | Options | Options | Options | Options | Options | Options | ||||||||||||||||||
Alan D. Feld | — | — | — | — | $ | — | $ | — | ||||||||||||||||
Perry J. Lewis | — | — | — | — | $ | — | $ | — | ||||||||||||||||
L. Lowry Mays | 749,693 | — | — | — | $ | 32.43055 | $ | 2,675,992 |
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Weighted | ||||||||||||||||||||||||
Number of | Weighted | Average | ||||||||||||||||||||||
Aggregate | Shares | Average | Exercise Price | Value of | ||||||||||||||||||||
Shares | Underlying | Exercise Price | Value of | of Vested and | Vested and | |||||||||||||||||||
Subject to | Unvested | of Unvested | Unvested | Unvested | Unvested | |||||||||||||||||||
Name | Options | Options | Options | Options | Options | Options | ||||||||||||||||||
Mark P. Mays | 499,691 | 264,685 | $ | 30.76653 | $ | 1,385,221 | $ | 32.78604 | $ | 1,605,985 | ||||||||||||||
Randall T. Mays | 499,691 | 264,685 | $ | 30.76653 | $ | 1,385,221 | $ | 32.78604 | $ | 1,605,985 | ||||||||||||||
B. J. McCombs | 30,333 | 16,634 | $ | 31.61523 | $ | 72,936 | $ | 31.57640 | $ | 134,181 | ||||||||||||||
Phyllis B. Riggins | — | — | — | — | $ | — | $ | — | ||||||||||||||||
Theodore H. Strauss | — | — | — | — | $ | — | $ | — | ||||||||||||||||
J. C. Watts | — | — | — | — | $ | — | $ | — | ||||||||||||||||
John H. Williams | — | — | — | — | $ | — | $ | — | ||||||||||||||||
John B. Zachry | 22,500 | 13,500 | $ | 31.72000 | $ | 57,5780 | $ | 31.72000 | $ | 96,300 | ||||||||||||||
Paul J. Meyer | — | — | — | — | — | — | ||||||||||||||||||
John E. Hogan | 244,268 | 77,745 | $ | 30.31070 | $ | 442,315 | $ | 31.15280 | $ | 1,184,015 | ||||||||||||||
Herbert W. Hill, Jr. | 15,626 | 5,182 | $ | 30.31070 | $ | 29,482 | $ | 33.48541 | $ | 39,293 | ||||||||||||||
Andrew W. Levin | 40,717 | 11,779 | $ | 30.31070 | $ | 67,014 | $ | 33.35672 | $ | 107,627 |
Aggregate Shares of | Value of Shares of | |||||||
Clear Channel | Clear Channel | |||||||
Name | Restricted Stock | Restricted Stock | ||||||
Alan D. Feld | 5,850 | $ | 210,600 | |||||
Perry J. Lewis | 5,850 | $ | 210,600 | |||||
L. Lowry Mays | 59,000 | $ | 2,124,000 | |||||
Mark P. Mays | 209,000 | $ | 7,524,000 | |||||
Randall T. Mays | 209,000 | $ | 7,524,000 | |||||
B. J. McCombs | 1,875 | $ | 67,500 | |||||
Phyllis B. Riggins | 6,150 | $ | 221,400 | |||||
Theodore H. Strauss | 5,850 | $ | 210,600 | |||||
J. C. Watts | 5,850 | $ | 210,600 | |||||
John H. Williams | 5,850 | $ | 210,600 | |||||
John B. Zachry | 1,875 | $ | 67,500 | |||||
Paul J. Meyer | 9,000 | $ | 324,000 | |||||
John E. Hogan | 75,000 | $ | 2,700,000 | |||||
Herbert W. Hill, Jr. | 9,500 | $ | 342,000 | |||||
Andrew W. Levin | 20,387 | $ | 733,932 |
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• | Effective upon consummation of the merger, or a transaction qualifying as a “Superior Proposal” as defined in the merger agreement, the employment agreements for each of Messrs. Mark P. Mays and Randall T. Mays have been modified to provide that if his employment is terminated by Clear Channel without “Cause” or if they resign for “Good Reason” (as modified as described above), then they will each receive (i) a lump-sum cash payment equal to the base salary, bonus and accrued vacation pay through the date of termination, (ii) a lump-sum cash payment equal to 2.99 times the sum of his base salary and bonus (using the highest bonus paid to executive in the three years preceding the termination, but not less than $1,000,000), and (iii) three years continued benefits for himself, his spouse and his dependents. As part of the amendments, both Messrs. Mark P. Mays and Randall T. Mays have also relinquished the right to receive a federal and state income-tax “gross-up” payment in connection with amounts payable upon termination, as well as the right to receive options to purchase 1,000,000 shares of Clear Channel common stock upon termination. Except as described above, the employment agreements otherwise remain as previously in effect until the effective time of the merger, at which time new or amended employment agreements, described below, will take effect. | ||
• | Effective upon consummation of the merger or a transaction qualifying as a Superior Proposal as defined in the merger agreement, the employment agreement for Mr. L. Lowry Mays has been modified to provide that, if his employment is terminated by Clear Channel without “Cause” or if he resigns for “Good Reason” (as modified as described above), then he will receive a lump-sum cash payment equal to his base salary, bonus and accrued vacation pay through the date of termination. As part of the amendment, Mr. L. Lowry Mays has relinquished (i) his right to any other cash severance payments (other than the right to receive a federal and state income tax “gross-up” payment in connection with amounts payable upon termination), as well as (ii) the right to receive options to purchase 1,000,000 shares of Clear Channel common stock upon termination. Except as described above, the employment agreement otherwise remains as previously in effect until the effective time of the merger, at which time new or amended employment agreements, described below, will take effect. |
Estimated Potential Cash | ||||
Name | Severance Benefits | |||
L. Lowry Mays(1) | — | |||
Mark P. Mays(1) | — | |||
Randall T. Mays(1) | — | |||
Paul J. Meyer(1) | — | |||
John E. Hogan(1) | — | |||
Herbert W. Hill, Jr. (2) | $ | 421,500 | ||
Andrew W. Levin(2) | $ | 989,250 |
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• | cause 24,000,000 (in the case of the Highfields Entities) or 2,777,778 (in the case of the Abrams Investors) shares of Clear Channel common stock they respectively owned as of the date of the Voting Agreements (their respective “Covered Shares”) and any other shares of Clear Channel common stock they respectively own as of the date of such meeting (their respective “After Acquired Shares”) to be counted as present for purposes of calculating a quorum, and | ||
• | vote (or cause to be voted) in person or by proxy, or deliver a written consent (or cause a consent to be delivered) covering all of their respective Covered Shares and any of their respective After Acquired Shares that the Highfields Entities or the Abrams Investors, as the case may be, are entitled to vote, |
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• | immediately following the effective time of the merger, the Board of Directors of Holdings will consist of 12 directors, one of whom will be a United States citizen and be named by Highfields Management (which member will be named to Holdings’ nominating committee and initially will be Jonathon Jacobson) and one member of which will be a United States citizen and will be selected by Holdings’ nominating committee after consultation with Highfields Management (which member initially will be David Abrams) (these two directors, “Public Directors”); | ||
• | until the Highfields Entities beneficially own (as defined under the Exchange Act) less than 5% of the outstanding shares of voting securities of Holdings issued as Stock Consideration (the “Required Percentage”), in connection with each election of Public Directors (and with respect to any replacements of such directors if they can no longer serve), Holdings will: |
• | until the Highfields Entities no longer own the Required Percentage, the Fincos and their affiliates will vote all shares of voting securities which they own and which are eligible to vote for the election of the Public Directors in favor of such candidates’ election as Public Directors; and | ||
• | until the Highfields Entities no longer own the Required Percentage, subject to the Holdings Board’s fiduciary duties, at least one Public Director will be appointed (and, if required, replaced by another Public Director) to each of the committees of the Board of Directors of Holdings. |
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• | a $1,115 million term loan A facility, subject to increase as described below, with a maturity of six years; | ||
• | a $10,700 million term loan B facility with a maturity of seven years and six months; | ||
• | a $706 million term loan C—asset sale facility, subject to reduction as described below, with a maturity of seven years and six months; | ||
• | $1,250 million delayed draw term loan facilities with maturities of seven years and six months, up to $750 million of which may be drawn on or after the closing date to purchase or repay Clear Channel’s outstanding 7.65% senior notes due 2010 and the remainder of which will be available after the closing date to purchase or repay Clear Channel’s outstanding 4.25% senior notes due 2009; and | ||
• | a $2,000 million revolving credit facility with a maturity of six years, including a letter of credit sub-facility and a swingline loan sub-facility. |
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• | with respect to loans under the term loan A facility and the revolving credit facility, (i) 2.40%, in the case of base rate loans and (ii) 3.40%, in the case of Eurodollar loans; and | ||
• | with respect to loans under the term loan B facility, term loan C—asset sale facility and delayed draw term loan facility, (i) 2.65%, in the case of base rate loans and (ii) 3.65%, in the case of Eurodollar loans. |
• | 50% (which percentage will be reduced to 25% and to 0% based upon Clear Channel’s leverage ratio) of annual excess cash flow (as calculated in accordance with the senior secured credit facilities), less any voluntary prepayments of term loans and revolving credit loans (to the extent accompanied by a permanent reduction of the commitment) and subject to customary credits; | ||
• | 100% of the net cash proceeds of sales or other dispositions (including casualty and condemnation events) of specified assets being marketed for sale, subject to certain exceptions; | ||
• | 100% (which percentage will be reduced to 75% and 50% based upon Clear Channel’s leverage ratio) of the net cash proceeds of sales or other dispositions by Clear Channel or its wholly-owned restricted subsidiaries (including casualty and condemnation events) of assets other than specified assets being marketed for sale, subject to reinvestment rights and certain other exceptions; and | ||
• | 100% of the net cash proceeds of any incurrence of certain debt, other than debt permitted under the senior secured credit facilities. |
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• | the term loan A facility will amortize in quarterly installments commencing on the first interest payment date after the second anniversary of the closing date, in annual amounts equal to 5% of the original funded principal amount of such facility in years three and four, 10% thereafter, with the balance being payable on the final maturity date of such term loans; and | ||
• | the term loan B facility, term loan C—asset sale facility and delayed draw term loan facilities will amortize in quarterly installments on the first interest payment date after the third anniversary of the closing date, in annual amounts equal to 2.5% of the original funded principal amount of such facilities in years four and five and 1% thereafter, with the balance being payable on the final maturity date of such term loans. |
• | a first-priority lien on the capital stock of Clear Channel; | ||
• | 100% of the capital stock of any future material wholly-owned domestic license subsidiary that is not a “Restricted Subsidiary” under the indenture governing our existing notes; | ||
• | certain specified assets of Clear Channel and the guarantors that do not constitute “principal property” (as defined in the indenture governing the existing notes), including certain specified assets being marketed for sale; | ||
• | certain specified assets of Clear Channel and the guarantors that constitute “principal property” (as defined in the indenture governing Clear Channel’s existing notes) securing obligations under the senior secured credit facilities up to the maximum amount permitted to be secured by such assets without requiring equal and ratable security under the indenture governing the existing notes; and | ||
• | a second-priority lien on the accounts receivable and related assets securing the receivables based facility. |
• | the receipt of executed counterparts of the definitive credit agreement by Clear Channel Capital I, LLC, Clear Channel and each subsidiary co-borrower; |
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• | the consummation of the merger in accordance with the merger agreement; | ||
• | the absence of amendments or waivers to certain provisions of the merger agreement in a manner materially adverse to the lenders without their consent; | ||
• | the receipt of equity contributions (including the value of all equity of Holdings issued to existing shareholders and management in connection with the merger) in an amount determined in accordance with the senior secured credit facilities, but in any event not less than $3 billion. |
• | incur additional indebtedness; | ||
• | create liens on assets; | ||
• | engage in mergers, consolidations, liquidations and dissolutions; | ||
• | sell assets; | ||
• | pay dividends and distributions or repurchase Clear Channel’s capital stock; | ||
• | make investments, loans, or advances; | ||
• | prepay certain junior indebtedness; | ||
• | engage in certain transactions with affiliates; | ||
• | amend material agreements governing certain junior indebtedness; and | ||
• | change Clear Channel’s lines of business. |
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Year | Percentage | |||
2012 | 105.375 | % | ||
2013 | 102.688 | % | ||
2014 and thereafter | 100.000 | % |
Year | Percentage | |||
2012 | 105.500 | % | ||
2013 | 102.750 | % | ||
2014 and thereafter | 100.000 | % |
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• | the receipt of conformed counterparts of the indenture governing the notes executed by Clear Channel, the trustee and the paying agent; | ||
• | the receipt of conformed counterparts of the joinder agreement to the purchase agreement executed by Clear Channel; | ||
• | the consummation of the merger in accordance with the merger agreement; | ||
• | the absence of amendments or waivers to certain provisions of the merger agreement in a manner materially adverse to the initial purchasers and which have not been approved by the initial purchasers in writing; | ||
• | the satisfaction of certain equity contributions set forth in the purchase agreement. |
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• | the merger agreement; | ||
• | annual reports to shareholders and Annual Reports on Form 10-K of Clear Channel for the five years ended December 31, 2007; | ||
• | annual reports to shareholders and Annual Reports on Form 10-K of Clear Channel Outdoor for the three years ended December 31, 2007; | ||
• | Clear Channel Outdoor’s Registration Statement on Form S-1, including the prospectus contained therein, dated November 10, 2005, relating to the Clear Channel Outdoor Class A common stock; | ||
• | certain interim reports to shareholders and Quarterly Reports on Form 10-Q of Clear Channel and Clear Channel Outdoor; | ||
• | certain other communications from Clear Channel and Clear Channel Outdoor to their respective shareholders; and | ||
• | certain internal financial analyses and forecasts for Clear Channel prepared by Clear Channel’s management, and approved for Goldman Sachs’ use by Clear Channel, which included financial analyses and forecasts for Clear Channel Outdoor (the “Management Forecasts”). |
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Closing Date | Illustrative Present Value | |||
August 31, 2008 | $ | 35.01-$35.41 | ||
September 30, 2008 | $ | 34.75-$35.26 | ||
December 31, 2008 | $ | 34.26-$35.09 |
$30.00 per | $36.00 per | |||||||||||
Share | Share | |||||||||||
Pro Forma Adjusted Enterprise Value/Revenue | 2008E | 2.8x | 3.2x | |||||||||
2009E | 2.7x | 3.1x | ||||||||||
Pro Forma Adjusted Enterprise Value/EBITDA | 2008E | 8.5x | 9.8x | |||||||||
2009E | 8.2x | 9.4x | ||||||||||
Adjusted Equity Value/Adjusted FCF | 2008E | 13.5x | 16.5x | |||||||||
2009E | 11.9x | 14.5x |
$30.00 per | $36.00 per | |||||||
Share | Share | |||||||
Premium to market price of $30.00 per share (as of May 9, 2008) | 0.0 | % | 20.0 | % | ||||
Premium to pre-announcement price of $34.11 per share (as of November 14, 2006) | (12.0 | )% | 5.5 | % | ||||
Premium to undisturbed price of $29.05 per share (as of September 22, 2006) | 3.3 | % | 23.9 | % | ||||
Premium to average price of $34.89 per share for the period between May 17, 2007 and May 9, 2008 | (14.0 | )% | 3.2 | % |
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Estimated | ||||
One-Year Forward | ||||
EBITDA Multiple | ||||
as of May 9, 2008 | ||||
CBS Corporation | 6.7x | |||
Citadel Broadcasting Corporation | 8.4x | |||
Cox Radio, Inc. | 8.9x | |||
Cumulus Media Inc. | 7.2x | |||
Emmis Communications Corporation | 9.6x | |||
Entercom Communications Corporation | 7.3x | |||
J.C. Decaux S.A. | 9.6x | |||
Lamar Advertising Company | 12.0x |
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• | a citizen or individual resident of the United States; | ||
• | a corporation, or other entity taxable as a corporation, created or organized in or under the laws of the United States or any political subdivision thereof; | ||
• | an estate the income of which is subject to United States federal income tax regardless of its source; or | ||
• | a trust if, in general, the trust is subject to the supervision of a court within the United States, and one or more U.S. persons have the authority to control all significant decisions of the trust. |
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• | the amount of Sponsor Cash received and | ||
• | the gain realized on the Deemed Exchange, which will be equal to the excess of (i) the sum of the fair market value of the Holdings Class A common stock and the Sponsor Cash received by such U.S. holder over (ii) such holder’s tax basis in Clear Channel common stock surrendered in the Deemed Exchange. |
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• | shares of Clear Channel common stock held in Clear Channel’s treasury or owned by Merger Sub or Holdings immediately prior to the effective time of the merger, which shares will automatically be canceled, retired and will cease to exist without conversion or consideration; | ||
• | shares of Clear Channel common stock held by shareholders who do not vote in favor of approval and adoption of the merger agreement and who have properly demanded and perfected their appraisal rights in accordance with Texas law, which shares will be entitled to only such rights as are granted by Texas law; and | ||
• | Rollover Shares. |
• | If the merger is completed after November 1, 2008, but on or before December 1, 2008, the pro rata portion, based upon the number of days elapsed since November 1, 2008, of $36.00 multiplied by 4.5% per annum; plus | ||
• | If the merger is completed after December 1, 2008, the pro rata portion, based on the number of days elapsed since December 1, 2008, of $36.00 multiplied by 6% per annum. |
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• | a proration factor will be determined by dividing the Maximum Stock Election Number by the total number of Public Shares and Net Electing Option Shares for which holders have made valid Stock Elections (“Stock Election Shares”); and | ||
• | with respect to each form of election submitted by a record holder of Public Shares and/or Clear Channel stock options, the number of Stock Election Shares will be converted into the right to receive a number of shares of Holdings Class A common stock (plus the Additional Consideration, if any, which will be paid in cash) equal to the product of (A) the proration factor times (B) the total number of Stock Election Shares reflected on such form of election (the result of such calculation, the “Prorated Shares”); plus | ||
• | the right to receive the Cash Consideration with respect to the Public Shares and Net Electing Option Shares elected to be converted into Holdings Class A common stock which are not converted into shares of Holdings Class A common stock. |
• | if Highfields Management makes a Stock Election with respect to at least the number of Highfields’ Escrow Shares (as defined below), then the number of Highfields’ Prorated Shares shall be equal to the Sponsor Investment Factor (as defined below) multiplied by the Highfields Escrow Shares (but in no event will Highfields’ Prorated Shares be reduced below 6,805,855 shares or exceed 11,111,112 shares), and | ||
• | if the Abrams Investors make a Stock Election with respect to at least the number of Abrams Escrow Shares (as defined below), then the number of Abrams’ Prorated Shares shall be equal to the Sponsor Investment Factor multiplied by the Abrams Escrow Shares (but in no event will Abrams’ Prorated Shares be reduced below 1,666,667 shares or exceed 11,111,112 shares). |
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• | $1.00, or | ||
• | a fraction equal to: |
• | the positive difference between: |
• | the total funds that Holdings determines it needs to fund the Merger, the Merger-related expenses, and Clear Channel’s cash requirements (such funds referred to as “Uses of Funds”), and | ||
• | the sources of funds available to Merger Sub from borrowings, equity contributions, Stock Consideration and Clear Channel’s available cash (such funds referred to as “Sources of Funds”), divided by, |
• | the total number of Public Shares that will receive the Cash Consideration |
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• | Clear Channel’s and its subsidiaries’ due organization, valid existence, good standing and qualification to do business; | ||
• | Clear Channel’s and its subsidiaries’ articles of incorporation, bylaws and other organizational documents; | ||
• | Clear Channel’s capitalization, including in particular the number of issued and outstanding shares of Clear Channel common stock, Clear Channel stock options and warrants and Clear Channel restricted stock outstanding; | ||
• | Clear Channel’s corporate power and authority to enter into the merger agreement, Amendment No. 1, Amendment No. 2 and Amendment No. 3, and to consummate the transactions contemplated by the merger agreement and perform its obligations under Amendment No. 1, Amendment No. 2 and Amendment No. 3; |
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• | the approval and recommendation of the merger agreement, Amendment No. 1, Amendment No. 2 and Amendment No. 3, and the approval of the merger and the other transactions contemplated by the merger agreement by the board of directors (except that the board of directors did not, and will not, make any recommendation to the shareholders with respect to the Stock Consideration); | ||
• | the required vote of Clear Channel’s shareholders in connection with the approval and adoption of the merger agreement; | ||
• | the absence of certain specified violations of, or conflicts with, Clear Channel’s governing documents, applicable law or certain agreements as a result of entering into the merger agreement and consummating the merger; | ||
• | the required consents and approvals of governmental entities in connection with consummation of the merger and the other transactions contemplated by the merger agreement; | ||
• | compliance with applicable laws and permits, including FCC licenses; | ||
• | our SEC forms, documents, registration statements and reports since December 31, 2004, and to Clear Channel’s knowledge, the SEC forms, documents, registration statements and reports of Clear Channel Outdoor since November 2, 2005, including the financial statements contained therein; | ||
• | our disclosure controls and procedures and internal controls over financial reporting; | ||
• | the absence of a Material Adverse Effect on Clear Channel and certain other changes or events related to Clear Channel or its subsidiaries since December 31, 2005; | ||
• | the absence of certain undisclosed liabilities; | ||
• | the absence of legal proceedings and governmental orders against Clear Channel; | ||
• | taxes; | ||
• | the absence of any untrue statement of a material fact or omission of a material fact required to be stated in this proxy statement/prospectus or any other document filed with the SEC in connection with the merger; | ||
• | our material contracts; | ||
• | employment and labor matters affecting Clear Channel or Clear Channel’s subsidiaries, including matters relating to Clear Channel’s or its subsidiaries’ employee benefit plans; | ||
• | the inapplicability to the merger agreement and the merger of restrictions imposed on business combinations by Article 13 of the Texas Business Corporation Act; and | ||
• | the absence of undisclosed brokers’ fees. |
• | changes in general economic or political conditions or the securities, credit or financial markets in general, in each case, generally affecting the general television or radio broadcasting, music, internet, outdoor advertising or event industries; | ||
• | general changes or developments in the general television or radio broadcasting, music, internet or event industries, including general changes in law or regulation across such industries; | ||
• | the announcement of the merger agreement or the pendency or consummation of the merger; | ||
• | the identity of Merger Sub, the Sponsors or any of their affiliates as the acquirer of Clear Channel; |
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• | compliance with the terms of, or the taking of any action required by, the merger agreement or consented to by the Fincos; | ||
• | any acts of terrorism or war (other than any of the foregoing that causes any damage or destruction to or renders unusable any facility or property of Clear Channel or any of its subsidiaries); | ||
• | changes in generally accepted accounting principles or the interpretation thereof; | ||
• | any weather related event; or | ||
• | any failure to meet internal or published projections, forecasts or revenue or earning predictions for any period (provided that the underlying causes of the failure will be considered in determining whether there is a Material Adverse Effect on Clear Channel). |
• | their due organization, valid existence and good standing; | ||
• | their certificates of incorporation, bylaws and other organizational documents; | ||
• | their power and authority to enter into the merger agreement, Amendment No. 1, Amendment No. 2 and Amendment No. 3, and to consummate the transactions contemplated by the merger agreement and perform their obligations under Amendment No. 1, Amendment No. 2 and Amendment No. 3; | ||
• | the absence of violations of, or conflicts with, their governing documents, applicable law or certain agreements as a result of entering into the merger agreement and consummating the merger; | ||
• | the required consents and approvals of governmental entities in connection with the transactions contemplated by the merger agreement; | ||
• | their qualification under the Communications Act to hold FCC licenses; | ||
• | the absence of litigation and government orders against the Fincos, Holdings and Merger Sub; | ||
• | the Fincos’ and Merger Sub’s ability to secure financing for the merger; | ||
• | the delivery of limited guarantees of certain of the obligations of the Fincos and Merger Sub executed by each of the Sponsors; | ||
• | the capitalization of Holdings, Merger Sub and any other subsidiaries of Holdings; | ||
• | the absence of undisclosed broker’s fees; | ||
• | the absence of any untrue statement of a material fact or omission of a material fact required to be stated in any information supplied by the Fincos, Merger Sub or Holdings for inclusion in this proxy statement/prospectus; and | ||
• | the solvency of the surviving corporation and Holdings following the consummation of the merger. |
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• | Clear Channel and its subsidiaries will conduct business in the ordinary course and consistent with past practice in all material respects; and | ||
• | Clear Channel and its subsidiaries will use their reasonable best efforts to preserve substantially intact Clear Channel’s business organizations and to keep available the services of certain senior executive officers. |
• | amend Clear Channel’s articles of incorporation or bylaws or the organizational documents of its subsidiaries; | ||
• | issue, sell, pledge, dispose, encumber or grant any equity securities or convertible securities of Clear Channel or its subsidiaries; | ||
• | acquire any business organization or any division thereof or any material amount of assets with a purchase price in excess of $150 million in the aggregate for the period from November 17, 2006 to May 13, 2008 and $100 million in the aggregate for the period following May 13, 2008; | ||
• | adjust, recapitalize, reclassify, combine, split, subdivide, redeem, purchase or otherwise acquire any equity securities or convertible securities of Clear Channel or its subsidiaries; | ||
• | declare, set aside for payment or pay any dividend payable in cash, property or stock on, or make any other distribution in respect of, any shares of its capital stock (other than certain regular quarterly dividends that were paid before May 11, 2008); | ||
• | create, incur, guarantee or assume any indebtedness except for indebtedness: (i) incurred under Clear Channel’s or a subsidiary’s existing credit facilities, and certain permitted refinancings, (ii) for borrowed money incurred pursuant to agreements in effect prior to the execution of the merger agreement, (iii) incurred prior to May 13, 2008 as otherwise required in the ordinary course of Clear Channel’s business consistent with past practice, or (iv) in an aggregate principal amount not to exceed $250 million; | ||
• | make any material change to its methods of accounting in effect at December 31, 2005, except as required by generally accepted accounting principles, Regulation S-X of the Exchange Act, as required by a governmental authority, as required by a change in applicable law, or as disclosed in the documents filed by Clear Channel with the SEC prior to November 16, 2006; | ||
• | adopt or enter into a plan of restructuring, recapitalization or other reorganization (other than the merger and other than transactions exclusively between Clear Channel and its subsidiaries or between Clear Channel’s subsidiaries, in which case, the Fincos’ consent will not be unreasonably withheld or delayed); | ||
• | sell, lease, license, transfer, exchange or swap, mortgage or otherwise encumber (including securitizations), or subject to any lien (other than permitted liens) or otherwise dispose of any asset or any portion of its properties or assets with a sale price in excess of $50 million (other than certain permitted dispositions); |
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• | make any material change in any method of tax accounting or any annual tax accounting period, make, change or rescind any material tax election, participate in any settlement negotiations concerning United States federal income taxes in respect of the 2003 or subsequent tax year, settle or compromise any material tax liability, audit claim or assessment, surrender any right to claim for a material tax refund, file any amended tax return involving a material amount of additional taxes, enter into any closing agreement relating to material taxes, or waive or extend the statute of limitations in respect of material taxes other than pursuant to extensions of time to file tax returns obtained in the ordinary course of business, provided, that, Clear Channel shall calculate the amount of estimated taxes that are owed by Clear Channel during the period from July 1, 2008 to September 30, 2008 based on the assumption that the closing of the transaction will occur on or before September 30, 2008; | ||
• | grant any stock options, restricted shares or other rights to acquire any of Clear Channel’s or its subsidiaries’ capital stock or take any action to cause to be exercisable any otherwise unexercisable options under any of Clear Channel’s option plans, except as may be required under any option plans or an employment agreement or pursuant to any customary grants made to employees at fair market value (provided that the number of shares of Clear Channel common stock thereunder will not exceed 0.25% of the outstanding shares of Clear Channel common stock as of the close of business on November 10, 2006); | ||
• | increase the compensation or other benefits payable to (i) current or former directors (including L. Lowry Mays, Mark P. Mays, and Randall T. Mays in their capacities as executive officers of Clear Channel), (ii) any other senior executive officers of Clear Channel by an amount exceeding a specified amount agreed upon by Clear Channel and the Fincos, or (iii) other employees except in the ordinary course of business consistent with past practices; | ||
• | grant any severance or termination pay to, or enter into any severance agreement with, any current or former director, executive officer or employee of Clear Channel or any of its subsidiaries, except as are required in accordance with any benefit plan of Clear Channel and in the case of employees other than the senior executive officers, other than in the ordinary course of business consistent with past practice; | ||
• | enter into any employment agreement with any director, executive officer or employee of Clear Channel or any of its subsidiaries, except (i) employment agreements to replace a departing executive officer or employee upon substantially similar terms, (ii) employment agreements with on-air talent, (iii) new employment agreements entered into in the ordinary course of business providing for compensation not in excess of $250,000 annually and with a term of no more than two years, or (iv) extensions of employment agreements other than agreements with senior executive officers in the ordinary course of business consistent with past practice; | ||
• | adopt, approve, ratify, enter into or amend any collective bargaining agreement, side letter, memorandum of understanding or similar agreement with any labor union; | ||
• | adopt, amend or terminate any benefit plan of Clear Channel or any retention, change-in-control, profit sharing, or severance plan or contract for the benefit of any of Clear Channel’s current or former directors, officers, or employees or any of their beneficiaries, except for any amendment to comply with Section 409(A) of the Code and retention bonus arrangements in amounts not exceeding $1.5 million. | ||
• | make any capital expenditure in excess of $70 million individually, or $200 million in the aggregate, except for any capital expenditures in aggregate amounts consistent with past practice or as required pursuant to new contracts entered into in the ordinary course of business; | ||
• | make any investment in, or loan or advance (other than travel and similar advances to its employees in the ordinary course of business consistent with past practice) to, any person in excess of $50 million in the aggregate for all such investments, loans or advances, other than an investment in, or loan or advance to, a subsidiary of Clear Channel, provided that (other than travel and similar advances in the ordinary course of business) Clear Channel will not make any loans or advances to any senior executive officer; | ||
• | settle or compromise any material claim, suit, action, arbitration or other proceeding, provided that Clear Channel may settle or compromise any claim that is not related to the merger agreement or the transactions contemplated hereby that do not exceed $10 million individually, or $30 million in the aggregate, and do not impose any material restriction on the business or operations of Clear Channel or its subsidiaries; |
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• | except with respect to certain permitted divestitures, without the Fincos’ consent (which consent may not be unreasonably withheld, delayed or conditioned), enter into any local marketing or similar agreement in respect of the programming of any radio or television broadcast station or contract for the acquisition or sale of any radio broadcast station, television broadcast station or daily newspaper or of any equity or debt interest in any person that directly or indirectly has an attributable interest in any radio broadcast station, television broadcast station or daily newspaper; | ||
• | make any amendment or modification to, or give any consent or grant any waiver under, that certain Master Agreement, dated as of November 16, 2005, by and between Clear Channel and Clear Channel Outdoor (the “Master Agreement”) to permit Clear Channel Outdoor to issue any capital stock, options or other securities, consolidate or merge with another person, declare or pay any dividend, sell or encumber any of its assets, amend, modify, cancel, forgive or assign any intercompany notes or amend, terminate or modify the Master Agreement or the Corporate Services Agreement, dated November 16, 2005, between Clear Channel Management Services, L.P. and Clear Channel Outdoor; | ||
• | enter into any transaction, agreement, arrangement or understanding between Clear Channel or any of its subsidiaries, on the one hand, and any affiliate of Clear Channel (other than its subsidiaries) on the other hand, of the type that would be required to be disclosed under Item 404 of Regulation S-K that involves more than $100,000; | ||
• | adopt any takeover defenses or take any action to render any state takeover statutes inapplicable to any transaction other than the transactions contemplated by the merger agreement; or | ||
• | authorize or enter into any written agreement or otherwise make any commitment to do any of the foregoing. |
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• | initiate, solicit and encourage Competing Proposals from third parties, including by way of providing access to non-public information to third parties pursuant to a confidentiality agreement; and | ||
• | participate in discussions or negotiations regarding, and take any other action to facilitate any Competing Proposal. |
• | immediately cease and cause to be terminated any solicitation, encouragement, discussion or negotiation with any persons conducted prior these dates with respect to any actual or potential Competing Proposal; and | ||
• | with respect to parties with whom discussions or negotiations have been terminated on, prior to or subsequent to November 16, 2006, use its reasonable best efforts to obtain the return or the destruction of, in accordance with the terms of the applicable confidentiality agreement, any confidential information previously furnished by it. |
• | initiate, solicit, or knowingly facilitate or encourage the submission of any inquiries, proposals or offers with respect to a Competing Proposal; | ||
• | participate in any negotiations regarding, or furnish to any person any information in connection with, any Competing Proposal; |
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• | engage in discussions with any person with respect to any Competing Proposal; | ||
• | approve or recommend any Competing Proposal; | ||
• | enter into any letter of intent or similar document or any agreement or commitment providing for any Competing Proposal; | ||
• | otherwise cooperate with, or assist or participate in, or knowingly facilitate or encourage any effort or attempt by any person (other than the Fincos or their representatives) with respect to a Competing Proposal; or | ||
• | exempt any person from the restrictions contained in any state takeover or similar laws or otherwise cause these restrictions not to apply to any person or to any Competing Proposal. |
• | any direct or indirect acquisition or purchase, in any single transaction or series of related transactions, by any person or “group” as defined in Section 13(d) of the Exchange Act, which does not include any of the Fincos, Merger Sub or their respective affiliates, of 15% or more of the fair market value of the assets, issued and outstanding shares of Clear Channel common stock or other ownership interests of Clear Channel and its consolidated subsidiaries, taken as a whole, or to which 15% or more of Clear Channel’s and its subsidiaries net revenues or earnings on a consolidated basis are attributable; | ||
• | any tender offer or exchange offer that if consummated would result in any person or group beneficially owning 15% or more of the shares of Clear Channel common stock; or | ||
• | any merger, consolidation, business combination, recapitalization, issuance of or amendment to the terms of outstanding stock or other securities, liquidation, dissolution or other similar transaction involving Clear Channel as a result of which any person or group acting in concert would acquire 15% or more of the fair market value of the assets, issued and outstanding shares of Clear Channel common stock or other ownership interests (including capital stock of Clear Channel’s subsidiaries) of Clear Channel and its consolidated subsidiaries, taken as a whole or to which 15% or more of Clear Channel’s and its subsidiaries net revenues or earnings on a consolidated basis are attributable. |
• | furnish information to the third party making the Competing Proposal, provided Clear Channel receives from the third party an executed confidentiality agreement; and | ||
• | engage in discussions or negotiations with the third party with respect to the Competing Proposal. |
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• | disclose to the shareholders a position contemplated by Rules 14e-2(a) and 14d-9 under the Exchange Act; and | ||
• | make other disclosures to Clear Channel’s shareholders, if the board of directors reasonably determines in good faith, after consultation with outside legal counsel, that the failure to do so would be inconsistent with any applicable state or federal securities law. |
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• | for one year following the closing of the merger, provide the surviving corporation’s employees and its subsidiaries’ employees (other than those senior executive officers who have existing employment agreements or other employees that enter into new employment arrangements with the Fincos or the surviving corporation in connection with the merger) compensation and employee benefits (other than any equity-based benefits) that, in the aggregate, are no less favorable than the compensation and employee benefits for these employees immediately prior to the consummation of the merger; | ||
• | for one year following the closing of the merger, provide to Clear Channel employees who experience a termination of employment severance benefits that are no less than the severance benefits that would have been provided to these employees upon a similar termination of employment immediately prior to the effective time of the merger; | ||
• | credit all service with Clear Channel and its subsidiaries for purposes of eligibility and vesting and for accrual of vacation, other paid time off and severance benefits under any employee benefit plan applicable to employees of the surviving corporation or its subsidiaries after the consummation of the merger to the extent recognized by Clear Channel under a corresponding benefit plan; and | ||
• | honor any and all collective bargaining agreements. |
• | The Fincos and Merger Sub have agreed to use their reasonable best efforts to enforce their rights under the executed loan agreements, including, but not limited to, bringing an action for specific performance or an alternative remedy as provided in the Settlement Agreement; and | ||
• | The Fincos have agreed to give Clear Channel prompt notice of any material breach of or termination of any executed loan agreement. |
• | preparing business, financial and other pertinent information and data of the type required by Regulation S-X and Regulation S-K under the Securities Act and of the type and form customarily included in private placements resold under Rule 144A of the Securities Act to consummate the offerings or issuances of debt securities contemplated by the debt financing commitments; |
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• | participation in meetings, presentations, road shows, drafting sessions, due diligence sessions and sessions with rating agencies; | ||
• | assistance with the preparation of materials for rating agency presentations, offering documents and similar documents required in connection with the debt financing; | ||
• | entering into agreements, executing and delivering officer’s certificates and pledging assets and facilitating diligence with respect thereto; | ||
• | using reasonable best efforts to obtain customary accountants’ comfort letters, consents, legal opinions, survey and title insurance along with assistance and cooperation from independent accountants and other professional advisors as reasonably requested by Merger Sub or the Fincos; and | ||
• | otherwise reasonably cooperating in connection with the consummation of the debt financing and the syndication and marketing thereof. |
• | amend or otherwise change any of Merger Sub’s or Holdings’ organizational documents that would be likely to prevent or materially delay the consummation of the merger and related transactions, or change the rights, preferences or privileges of the shares of Holdings Class A common stock in any material respect which would render the representation and warranty regarding the capitalization of Holdings to be untrue or inaccurate at the effective time of the merger; | ||
• | acquire or make any investment in any corporation, partnership, limited liability company, other business organization or any division thereof that holds, or has an attributable interest in, any license, authorization, permit or approval issued by the FCC if such acquisition or investment would delay, impede or prevent receipt of the FCC Consent; or | ||
• | take any action that would be reasonably likely to cause a material delay in the satisfaction of certain specified conditions contained in the merger agreement or the consummation of the merger. |
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• | Shareholder Approval.The approval and adoption of the merger agreement by Clear Channel’s shareholders. | ||
• | HSR Act Approvals.Any applicable waiting period under the HSR Act and any applicable foreign antitrust laws relating to the consummation of the merger will have expired or been terminated (which the parties acknowledge have been satisfied as of May 13, 2008), and such expiration or termination shall continue to be in effect as of the closing date. | ||
• | No Law or Orders.No governmental authority will have enacted or issued any law or order which is then in effect and has the effect of making the merger illegal or otherwise prohibiting the consummation of the merger. | ||
• | FCC Consent.The FCC Consent will have been obtained (which the parties acknowledge have been satisfied as of May 13, 2008), and not revoked and continue to be in effect as of the closing date. |
• | Performance of obligations.Since May 13, 2008, Clear Channel shall have performed or complied in all material respects with certain specified covenants or agreements in the merger agreement including those relating to implementing the merger transaction and restrictions on the issuance of equity securities, the acquisition of businesses, payment of dividends, the incurrence of indebtedness, changes in accounting principles and policies, and the making of investments or loans. | ||
• | In addition, the performance of Clear Channel’s other agreements and covenants other than where the failure to perform would not constitute a Material Adverse Effect. |
• | Performance of obligations.Since May 13, 2008, the Fincos, Holdings and Merger Sub shall have performed or complied in all material respects with all agreements and covenants in the merger agreement required to be performed or complied with by them on or prior to the consummation of the merger. |
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• | by either the Fincos or Clear Channel, if: |
• | the closing of the merger has not occurred on or before December 31, 2008, (such date, as may be extended in accordance with this paragraph, the “Termination Date”), except that, following the shareholders’ meeting held after May 13, 2008, if as of the Termination Date there is an on-going dispute among any of the parties to the Escrow Agreement with respect to the disbursement of the Escrowed Amount, the Fincos or Clear Channel may, by written notice to the other party, extend the Termination Date to any date that is no later than the fifth business day following the settlement of any dispute with respect to the disbursement of such funds; | ||
• | any governmental entity has issued an order, decree or ruling or taken any other action permanently restraining, enjoining or otherwise prohibiting the merger and such order, decree, ruling or other action is final and non-appealable; | ||
• | Clear Channel’s shareholders do not approve adopt the merger agreement at the special meeting or any adjournment or postponement of the special meeting; or | ||
• | the non-terminating party has breached or failed to perform in any material respect any of its covenants or agreements in the merger agreement such that the closing conditions would not be satisfied by the Termination Date and such breach has not been cured within 30 days following delivery of written notice by the terminating party. |
• | by Clear Channel, if prior to the approval and adoption of the merger agreement by Clear Channel shareholders, the board of directors has concluded in good faith, after consultation with outside legal and financial advisors, that an unsolicited Competing Proposal is a Superior Proposal; | ||
• | by the Fincos, if the board of directors effects a Change of Recommendation; and | ||
• | by the Fincos, if the board of directors fails to include in the proxy statement/prospectus distributed to Clear Channel’s shareholders its recommendation that Clear Channel’s shareholders approve and adopt the merger agreement. |
• | by Clear Channel, prior to approval and adoption of the merger agreement by Clear Channel’s shareholders, in order to enter into a definitive agreement relating to a Superior Proposal, such termination fee to be paid concurrently with the termination of the merger agreement; | ||
• | by the Fincos, if the board of directors effects a Change of Recommendation, fails to reconfirm the Company Recommendation, or fails to include the Company Recommendation in this proxy statement/prospectus, such termination fee |
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to be paid promptly following the termination of the merger agreement (and in any event no later than two business days after delivery to Clear Channel of notice of demand for payment); | |||
• | by the Fincos or Clear Channel, if Clear Channel’s shareholders do not approve and adopt the merger agreement at the special meeting and prior to the special meeting a Competing Proposal has been publicly announced or been made known to Clear Channel and not withdrawn at least two business days prior to the special meeting, and within 12 months after the termination of the merger agreement, Clear Channel or any of its subsidiaries enters into a definitive agreement with respect to, or consummates, any Competing Proposal, such termination fee to be paid promptly following the execution of a definitive agreement or the consummation of the transaction contemplated by the Competing Proposal (and in any event no later than two business days after delivery to Clear Channel of notice of demand of payment); or | ||
• | by the Fincos, if the Fincos are not in material breach of their obligations under the merger agreement and, if Clear Channel has willfully and materially breached or failed to perform in any material respect any of its covenants or other agreements set forth in the merger agreement such that the corresponding closing condition would not be satisfied, which breach has not been cured within 30 days, and prior the date of termination a Competing Proposal has been publicly announced or been made known to Clear Channel and within 12 months after the termination of the merger agreement Clear Channel or any of its subsidiaries enters into a definitive agreement with respect to, or consummates, any Competing Proposal, such termination fee to be paid promptly following the execution of a definitive agreement or the consummation of the transaction contemplated by the Competing Proposal (and in any event no later than two business days after delivery to Clear Channel of notice of demand of payment). |
• | $150 million if the Fincos terminate the merger agreement, and the Fincos are not in material breach of their obligations under the merger agreement, and if Clear Channel has breached or failed to perform in any material respect any of its covenants or other agreements set forth in the merger agreement such that the corresponding closing condition would not be satisfied, which breach has not been cured within 30 days; and | ||
• | $100 million if the merger agreement is terminated: (i) by Clear Channel, prior to approval and adoption of the merger agreement by Clear Channel’s shareholders, in order to enter into a definitive agreement relating to a Superior Proposal; (ii) by the Fincos, if the board of directors effects a Change of Recommendation, fails to reconfirm Company Recommendation, or fails to include the Company Recommendation in this proxy statement/prospectus; or (iii) by either the Fincos or Clear Channel if the closing of the merger has not occurred on or before the Termination Date, and the party seeking termination has not breached in any material respect its obligations under the merger agreement that shall have proximately caused the failure to consummate the merger on or before the Termination Date (other than in the event such termination is a result of a breach by Merger Sub, Holdings or the Fincos that was not caused by the providers of the Debt Financing). |
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• | If Clear Channel or the Fincos terminate the merger agreement because the effective time of the merger has not occurred on or before the Termination Date, the terminating party has not breached in any material respect its obligations under the merger agreement that proximately caused the failure to consummate the merger on or before the Termination Date and all conditions to Fincos’ and Merger Sub’s obligations to consummate the merger have been satisfied, then Merger Sub will owe Clear Channel a termination fee of $600 million that will be paid pursuant to the Escrow Agreement; and | ||
• | If Clear Channel terminates the merger agreement, and Clear Channel is not in material breach of its obligations under the merger agreement, because the Fincos, Holdings and Merger Sub have breached or failed to perform in any material respect any of their obligations set forth in the merger agreement such that certain closing condition would not be satisfied, which breach has not been cured within 30 days, and in each case, all conditions to the Fincos’, Holdings’ and Merger Sub’s obligations to consummate the merger have been satisfied, then Merger Sub will owe Clear Channel a termination fee of $150 million that will be paid pursuant to the Escrow Agreement. This fee will increase to $600 million if such termination is due to a willful and material breach by the Fincos, Holdings and Merger Sub. |
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• | extend the time for the performance of any of the obligations or other acts of the other parties to the merger agreement; | ||
• | waive any inaccuracies in the representations and warranties of the other party contained in the merger agreement or in any document delivered pursuant to the merger agreement; or | ||
• | waive compliance with any of the agreements or conditions contained in the merger agreement which may be legally waived. |
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• | each Bank Escrow Party shall cause to be delivered to the Escrow Agent a pro rata portion of $16,410,638,000 (the “Bank Escrow Amount”), in cash by wire transfer of immediately available funds or in the form of approved letters of credit, or a combination of the foregoing, and each such pro rata portion shall be held by the Escrow Agent in a segregated account (each a “Bank Escrow Account”), | ||
• | each Buyer Designee shall cause to be delivered to the Escrow Agent a pro rata portion of $2,400,000,000 (the “Buyer Escrow Amount”) by wire transfer of immediately available funds or in the form of letters of credit, or a combination of the foregoing, and each such pro rata portion shall be held by the Escrow Agent in a segregated account (each a “Buyer Escrow Account”), | ||
• | the Management Investors shall cause to be delivered to the Escrow Agent (i) a combination of vested shares of Clear Channel common stock and vested options to purchase shares of Clear Channel common stock with an aggregate value of $35,074,625 (the “Management Escrow Shares”), all of which shall be held by the Escrow Agent in a segregated account (the “Management Escrow Account”), | ||
• | Highfields Management shall cause to be delivered to the Escrow Agent an aggregate of 11,111,112 shares of Clear Channel common stock that are beneficially owned by investment funds managed by Highfields Management (the “Highfields Escrow Shares”), all of which shall be held by the Escrow Agent in a segregated account (the “Highfields Escrow Account”), and |
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• | the Abrams Investors shall cause to be delivered to the Escrow Agent an aggregate of 2,777,778 shares of Clear Channel common stock (the “Abrams Escrow Shares”), all of which shall be held by the Escrow Agent in a segregated account (the “Abrams Escrow Account”). |
• | the Highfields Escrow Shares, together with the election forms and letters of transmittal pursuant to which Highfields Management made a Stock Election for the Highfields Escrow Shares, | ||
• | the Abrams Escrow Shares, together with the election forms and letters of transmittal pursuant to which the Abrams Investors made Stock Elections for the Abrams Escrow Shares, and | ||
• | 580,356 shares of Clear Channel common stock previously delivered into the Management Escrow Account by L. Lowry Mays and LLM Partners, Ltd as part of the Management Escrow Shares (the “Founder Election Shares”), together with the election forms and letters of transmittal pursuant to which L. Lowry Mays and LLM Partners, Ltd. made Stock Elections for the Founder Election Shares. |
• | a written notice from Holdings and Clear Channel stating that each such party expects that as of the Anticipated Closing Date, the specified conditions to the consummation of the Merger have been satisfied, and | ||
• | a written notice from Holdings that the conditions to the Bank Escrow Party’s obligations to fund under the Financing Agreements are expected to be satisfied on the Anticipated Closing Date, |
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• | pay from the Bank Escrow Accounts by wire transfer of same day funds |
• | an aggregate amount equal to the Bank Escrow Amount from the Bank Escrow Accounts on a pro rata basis among the Bank Escrow Accounts (net of fees and expenses owed to the Bank Escrow Parties) to the Paying Agent (the making of such payment, the “Debt Funding”), and | ||
• | to each Bank Escrow Party the respective amount of the Bank Escrow Fund, if any, including the applicable Bank Escrow Party’s pro rata percentage of the fees and expenses owed to the Bank Escrow Parties, that after payment of the Debt Funding remains in such Bank Escrow Party’s Escrow Account; |
• | pay from the Buyer Escrow Accounts by wire transfer of same day funds |
• | an aggregate amount equal to the Buyer Escrow Amount from the Buyer Escrow Accounts on a pro rata basis to the Paying Agent (the making of such payment, the “Sponsor Equity Funding”), and | ||
• | to each Buyer Designee, the respective amount in the Buyer Escrow Fund, if any, that remains after payment of the Sponsor Equity Funding in such Buyer Designee’s Escrow Account; and |
• | deliver to Holdings all of the certificates evidencing the Management Escrow Shares other than the Founder Election Shares (together with the stock powers or equivalent transfer instruments, if any, related thereto that were delivered to the Escrow Agent). |
• | the aggregate amount of funds then available to Merger Sub to consummate the merger from borrowings, equity contributions, cash available to Clear Channel and shares of common stock of Holdings and | ||
• | the aggregate amount of funds that are needed to pay the aggregate merger consideration under the merger agreement and the expenses related to the merger and to meet Clear Channel’s anticipated post-merger cash requirements. |
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• | to each Bank Escrow Party the respective portion of the Bank Escrow Fund on deposit in such Bank Escrow Party’s Escrow Account (with letters of credit to be delivered in kind); provided that if the Merger Agreement has been terminated, or was validly terminable, by the Company due to a breach by the Fincos, Holdings or Merger Sub that was the result, in whole or in material part, of a breach by any of the Bank Escrow Parties of the Escrow Agreement, the Settlement Agreement or any of the Financing Agreements, then there shall be first withdrawn from each Bank Escrow Party’s Escrow Account and paid |
• | to Clear Channel an amount equal to that Bank Escrow Party’s pro rata percentage of the Merger Sub Termination Fee, and | ||
• | except in the case where the Merger Agreement was terminated by Clear Channel because the board of directors determined that an unsolicited Competing Proposal is a Superior Proposal or by the Fincos because the board of directors effects a Change of Recommendation or fails to reconfirm its recommendation in favor of the merger upon request, to Holdings or its designees cash in an amount equal to such Bank’s pro rata percentage of $150,000,000 as reimbursement for fees, costs and expenses of the Fincos, Merger Sub and Holdings in connection with the Merger. |
• | the entire Buyer Escrow Fund to Holdings or its designees (with letters of credit to be delivered in kind); provided that if the Merger Agreement has been terminated, or was validly terminable, due to a breach by the Fincos, Holdings or Merger Sub that was not the result, in whole or in material part, of a breach by any of the Bank Escrow Parties of the Escrow Agreement, the Settlement Agreement or any of the Financing Agreements, then there shall be first withdrawn from each Buyer Designee’s Escrow Account and paid to Clear Channel an amount equal to such Buyer Designee’s pro rata percentage of the Merger Sub Termination Fee; | |
• | all of the Management Escrow Shares (including all of the Founder Election Shares) to the Management Investors who are the record owners thereof (together with the stock powers, if any, related thereto that were delivered to the Escrow Agent); | |
• | to the extent not previously delivered to the Paying Agent, all of the Highfields Escrow Shares to Highfields Management (together with the stock powers, if any, related thereto that were delivered to the Escrow Agent); and | |
• | to the extent not previously delivered to the Paying Agent, all of the Abrams Escrow Shares to the Abrams Investors on whose behalf such Abrams Escrow Shares were deposited in the Abrams Escrow Account (together with the stock powers, if any, related thereto that were delivered to the Escrow Agent). |
• | to each Bank Escrow Party the respective portion of the Bank Escrow Fund on deposit in such Bank Escrow Party’s Escrow Account (with Approved Letters of Credit to be delivered in kind), after first deducting from each Bank Escrow Party’s Escrow Account and paying |
• | to Clear Channel cash in an amount equal to such Bank Escrow Party’s pro rata percentage of the Merger Sub Termination Fee and | ||
• | except in the case where the Merger Agreement was terminated by Clear Channel because the board of directors determined that an unsolicited Competing Proposal is a Superior Proposal or by the Fincos because the board of directors effects a Change of Recommendation or fails to reconfirm its recommendation in favor of the merger upon request, to Holdings or its designees cash in an amount equal to such Bank’s pro rata percentage of $150,000,000 that will be paid pursuant to the |
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Escrow Agreement as reimbursement for fees, costs and expenses of the Fincos, Merger Sub and Holdings in connection with the Merger; |
• | the entire Buyer Escrow Fund to Holdings or its designees; and | ||
• | all of the Management Escrow Shares, Founder Election Shares, Highfields Escrow Shares and Abrams Escrow Shares in the same manner as discussed in the disbursement circumstances that are described above. |
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Cash | ||||||||||||
Dividend | ||||||||||||
High | Low | Declared | ||||||||||
2006 | ||||||||||||
First Quarter | $ | 32.84 | $ | 27.82 | $ | .1875 | ||||||
Second Quarter | 31.54 | 27.34 | .1875 | |||||||||
Third Quarter | 31.64 | 27.17 | .1875 | |||||||||
Fourth Quarter | 35.88 | 28.83 | .1875 | |||||||||
2007 | ||||||||||||
First Quarter | $ | 37.55 | $ | 34.45 | $ | .1875 | ||||||
Second Quarter | 38.58 | 34.90 | .1875 | |||||||||
Third Quarter | 38.24 | 33.51 | .1875 | |||||||||
Fourth Quarter | 38.02 | 32.02 | .1875 | |||||||||
2008 | ||||||||||||
First Quarter | $ | 36.55 | $ | 25.90 | — | |||||||
Second Quarter (through May 27, 2008) | $ | 35.30 | $ | 26.74 | — |
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OWNERS AND MANAGEMENT
Amount and | ||||||||
Nature of | Percent | |||||||
Beneficial | of | |||||||
Name | Ownership(1) | Class | ||||||
Alan D. Feld | 60,619 | (2) | * | |||||
Perry J. Lewis | 128,645 | (3) | * | |||||
L. Lowry Mays | 31,198,629 | (4) | 6.2 | % | ||||
Mark P. Mays | 3,047,530 | (5) | * | |||||
Randall T. Mays | 2,588,307 | (6) | * | |||||
B. J. McCombs | 4,818,447 | (7) | 1.0 | % | ||||
Phyllis B. Riggins | 21,308 | (8) | * | |||||
Theodore H. Strauss | 200,565 | (9) | * | |||||
J. C. Watts | 25,291 | (10) | * | |||||
John H. Williams | 60,379 | (11) | * | |||||
John B. Zachry | 11,500 | (12) | * | |||||
John E. Hogan | 528,091 | (13) | * | |||||
Paul J. Meyer | 21,874 | * | ||||||
Herb Hill | 148,039 | (14) | * | |||||
Andrew W. Levin | 105,470 | (15) | * | |||||
UBS (16) | 28,864,257 | 5.8 | % | |||||
Highfields Capital Management LP (17) | 38,133,415 | 7.7 | % | |||||
All Directors and Executive Officers as a Group (15 persons) | 42,196,319 | (18) | 8.4 | % |
* | Percentage of shares beneficially owned by such person does not exceed one percent of the class so owned. | |
(1) | Pursuant to Rule 13d-3 under the Exchange Act, a person has beneficial ownership of any securities as to which such person, directly or indirectly, through any contract, arrangement, undertaking, relationship or otherwise, has or shares voting power and/or investment power or as to which such person has the right to acquire such voting and/or investment power within 60 days. Percentage of beneficial ownership by a person as of a particular date is calculated by dividing the number of shares beneficially owned by such person by the sum of the number of shares outstanding as of such date and the number of unissued shares as to which such person has the right to acquire voting and/or investment power within 60 days. Unless otherwise indicated, the number of shares shown includes outstanding shares of common stock owned as of April 18, 2008 by the person indicated and shares underlying options owned by such person on April 18, 2008 that are exercisable within 60 days of that date. | |
(2) | Includes 39,165 shares subject to options held by Mr. Feld. Excludes 9,000 shares owned by Mr. Feld’s wife, as to which Mr. Feld disclaims beneficial ownership. | |
(3) | Includes 58,488 shares subject to options held by Mr. Lewis, 39,953 of which are held in a margin account. Excludes 3,000 shares owned by Mr. Lewis’ wife, as to which Mr. Lewis disclaims beneficial ownership. | |
(4) | Includes 2,473,076 shares subject to options held by Mr. L. Mays, 48,456 shares held by trusts of which Mr. L. Mays is the trustee, but not a beneficiary, 26,905,357 shares held by the LLM Partners Ltd of which Mr. L. Mays shares control of the sole |
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general partner, 1,532,120 shares held by the Mays Family Foundation and 100,184 shares held by the Clear Channel Foundation over which Mr. L. Mays has either sole or shared investment or voting authority. Mr. L. Mays’ address is c/o Clear Channel, 200 East Basse Road, San Antonio, Texas 78209. | ||
(5) | Includes 992,249 shares subject to options held by Mr. Mark P. Mays, 343,573 shares held by trusts of which Mr. Mark P. Mays is the trustee, but not a beneficiary, and 1,022,293 shares held by the MPM Partners, Ltd. Mr. Mark P. Mays controls the sole general partner of MPM Partners, Ltd. Also includes 335,734 shares and 12,290 shares, which represent shares in LLM Partners. | |
(6) | Includes 992,249 shares subject to options held by Mr. Randall T. Mays, 359,517 shares held by trusts of which Mr. Randall T. Mays is the trustee, but not a beneficiary, and 619,761 shares held by RTM Partners, Ltd. Mr. Randall T. Mays controls the sole general partner of RTM Partners, Ltd. Also includes 268,587 shares and 8,193 shares, which represent shares in LLM Partners. | |
(7) | Includes 52,864 shares subject to options held by Mr. McCombs and 4,763,083 shares held by the McCombs Family Partners, Ltd. of which Mr. McCombs is the general partner and all of which are held in a margin account. Excludes 27,500 shares held by Mr. McCombs’ wife, as to which Mr. McCombs disclaims beneficial ownership. | |
(8) | Includes 7,833 shares subject to options held by Ms. Riggins. | |
(9) | Includes 39,165 shares subject to options held by Mr. Strauss, and 72,087 shares held by the THS Associates L.P. of which Mr. Strauss is the general partner. | |
(10) | Includes 15,666 shares subject to options held by Mr. Watts. | |
(11) | Includes 39,165 shares subject to options held by Mr. Williams. Excludes 9,300 shares held by Mr. Williams’ wife, as to which Mr. Williams disclaims beneficial ownership. | |
(12) | Includes 9,000 shares subject to options held by Mr. Zachry. | |
(13) | Includes 391,084 shares subject to options held by Mr. Hogan. | |
(14) | Includes 33,131 shares subject to options held by Mr. Hill, 1,600 shares held by Mr. Hill’s son, and 4,320 shares held by trusts | |
(15) | Includes 70,717 shares subject to options held by Mr. Levin. | |
(16) | The address of UBS AG is: Bahnhofstrasse 45, PO Box CH-8021, Zurich, Switzerland. The information included herein is based solely on a Schedule 13G filed by UBS AG on February 11, 2008. | |
(17) | The address of Highfields Capital Management LP is: John Hancock Tower, 200 Clarendon Street, 51st Floor, Boston, Massachusetts 02116. Highfields Capital Management is principally engaged in the business of providing investment management services to the following investment funds: Highfields Capital I LP, Highfields Capital II, LP, and Highfields Capital III L.P. (collectively, the “Funds”). Each of Highfields GP LLC, the General Partner of Highfields Capital Management, Highfields Associates LLC, the General Partner of the Funds, and Jonathon Jacobson and Richard Grubman, the Managing Members of Highfields GP and the Senior Managing Members of Highfields Associates, by virtue of their voting and investment control with respect to the shares beneficially held by Highfields Capital Management L.P., may also be deemed to beneficially hold the shares beneficially held by Highfields Capital Management L.P. The information included herein is based solely upon a Schedule 13D of Highfields Capital Management L.P. as amended through May 15, 2008. | |
(18) | Includes 5,213,852 shares subject to options held by such persons, 612,295 shares held by trusts of which such persons are trustees, but not beneficiaries, 26,905,357 shares held by the LLM Partners Ltd, 1,022,293 shares held by the MPM Partners, Ltd., 619,761 shares held by the RTM Partners, Ltd, 4,763,083 shares held by the McCombs Family Partners, Ltd, 72,087 shares held by the THS Associates L.P., 1,532,120 shares held by the Mays Family Foundation and 100,184 shares held by the Clear Channel Foundation. |
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• | up to 30% of Holdings’ outstanding capital stock and voting power (assuming that there is no issuance of Additional Equity Consideration and excluding any shares of Class A common stock held by certain Clear Channel employees as a result of the rollover investments discussed above in “Interests of Clear Channel’s Directors and Executive Officers in the Merger — Equity Rollover”), will be held in the form of shares of Class A common stock issued to former Clear Channel shareholders who have elected to receive shares of Class A common stock in connection with the merger; and | ||
• | the remaining shares of outstanding capital stock of Holdings (approximately 70% assuming that there is no issuance of Additional Equity Consideration and that Clear Channel shareholders elect to receive the maximum permitted amount of Stock Consideration in the merger and subject to reduction on account of the rollover investments in Holdings Class A common stock referenced above) will be held in the form of Class B common stock and Class C common stock issued to affiliates of the Sponsors as part of the Equity Financing. |
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• | the board of directors has approved, before the acquisition date, either the business combination or the transaction that resulted in the person becoming an interested shareholder; | ||
• | upon completion of the transaction that resulted in the person becoming an interested shareholder, the person owns at least 85 percent of the corporation’s voting shares, excluding shares owned by directors who are officers and shares owned by employee stock plans in which participants do not have the right to determine confidentially whether shares will be tendered in a tender or exchange offer; or |
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• | after the person or entity becomes an interested shareholder, the business combination is approved by the board of directors and authorized by the vote of at least 662/3 percent of the outstanding voting shares not owned by the interested shareholder at an annual or special meeting of shareholders and not by written consent. |
• | the business combination or purchase or acquisition of shares made by the affiliated shareholder was approved by the board of directors of the corporation before the affiliated shareholder became an affiliated shareholder, or | ||
• | the business combination was approved by the affirmative vote of the holders of at least two-thirds of the outstanding voting shares of the corporation not beneficially owned by the affiliated shareholder or an affiliate or associate of the affiliated shareholder, at a meeting of shareholders called for that purpose (and not by written consent), not less than six months after the affiliated shareholder became an affiliated shareholder. |
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• | any breach of the director’s duty of loyalty to such corporation or its shareholders; | ||
• | acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of law; | ||
• | willful or negligent violation of provisions of the DGCL governing payment of dividends and stock purchases or redemptions; | ||
• | for any transaction from which the director derived an improper personal benefit; or | ||
• | any act or omission before the adoption of such a provision in the certificate of incorporation. |
• | breaching the duty of loyalty to the corporation or its shareholders; | ||
• | an act or omission not in good faith that constitutes a breach of duty of the director to the corporation or an act or omission that involves intentional misconduct or a knowing violation of law; | ||
• | a transaction from which the director received an improper benefit, whether or not the benefit resulted from an action taken within the scope of the director’s office; or | ||
• | an act or omission for which the liability of a director is expressly provided by an applicable statute. |
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• | Prior to the special meeting you must deliver to Clear Channel a written objection to the merger stating your intention to exercise your right to dissent in the event that the merger is effected and setting forth the address to which notice shall be delivered or mailed in that event. | ||
• | This written objection must be in addition to and separate from any proxy or vote abstaining from or voting against the approval and adoption of the merger agreement. Voting against or failing to vote for the approval and adoption of the merger agreement by itself does not constitute a demand for appraisal within the meaning of Article 5.12. | ||
• | You must not vote in favor of the approval and adoption of the merger agreement. A vote in favor of the approval and adoption of the merger agreement, by proxy or in person, will constitute a waiver of your appraisal rights in respect of the shares so voted and will nullify any previously filed written demands for appraisal. Failing to vote against approval and adoption of the merger agreement will not constitute a waiver of your appraisal rights. | ||
• | You must continuously hold your shares through the effective time of the merger. Your rights as a dissenting shareholder will cease upon any transfer of your shares, and such rights may be acquired by a transferee in accordance with Article 5.13. |
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• | Clear Channel’s Annual Report on Form 10-K for the year ended December 31, 2007; | ||
• | Clear Channel’s Quarterly Reports on Form 10-Q for the quarter ended March 31, 2008; | ||
• | Clear Channel’s Current Reports on Form 8-K filed January 4, 2008, February 15, 2008, March 20, 2008, March 28, 2008, March 31, 2008, May 9, 2008, May 14, 2008, May 23, 2008, May 29, 2008 and May 30, 2008; and | ||
• | Clear Channel’s proxy statement relating to its 2008 annual meeting of shareholders. |
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ANNEX A | Agreement and Plan of Merger | |
ANNEX B | Amendment No. 1 to Agreement and Plan of Merger | |
ANNEX C | Amendment No. 2 to Agreement and Plan of Merger | |
ANNEX D | Amendment No. 3 to Agreement and Plan of Merger | |
ANNEX E | Highfields Amended and Restated Voting Agreement | |
ANNEX F | Abrams Voting Agreement | |
ANNEX G | Opinion of Goldman, Sachs & Co. | |
ANNEX H | Articles 5.11-5.13 of the Texas Business Corporation Act |
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By and Among
BT TRIPLE CROWN MERGER CO., INC.
B TRIPLE CROWN FINCO, LLC
T TRIPLE CROWN FINCO, LLC
and
CLEAR CHANNEL COMMUNICATIONS, INC.
Dated as of November 16, 2006
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ARTICLE I. | DEFINITIONS | A-1 | ||||
Section 1.01 | Definitions | A-1 | ||||
ARTICLE II. | THE MERGER | A-1 | ||||
Section 2.01 | The Merger | A-1 | ||||
Section 2.02 | Closing | A-1 | ||||
Section 2.03 | Effective Time | A-2 | ||||
Section 2.04 | Articles of Incorporation and Bylaws | A-2 | ||||
Section 2.05 | Board of Directors | A-2 | ||||
Section 2.06 | Officers | A-2 | ||||
ARTICLE III. | EFFECT OF THE MERGER ON CAPITAL STOCK; EXCHANGE OF CERTIFICATES | A-2 | ||||
Section 3.01 | Effect on Securities | A-2 | ||||
Section 3.02 | Exchange of Certificates | A-3 | ||||
Section 3.03 | Stock Options and Other Awards | A-5 | ||||
Section 3.04 | Lost Certificates | A-5 | ||||
Section 3.05 | Dissenting Shares | A-6 | ||||
Section 3.06 | Transfers; No Further Ownership Rights | A-6 | ||||
Section 3.07 | Withholding | A-6 | ||||
Section 3.08 | Rollover by Shareholders | A-6 | ||||
Section 3.09 | Additional Per Share Consideration | A-6 | ||||
ARTICLE IV. | REPRESENTATIONS AND WARRANTIES OF THE COMPANY | A-7 | ||||
Section 4.01 | Organization and Qualification; Subsidiaries | A-8 | ||||
Section 4.02 | Articles of Incorporation and Bylaws | A-8 | ||||
Section 4.03 | Capitalization | A-8 | ||||
Section 4.04 | Authority Relative to Agreement | A-9 | ||||
Section 4.05 | No Conflict; Required Filings and Consents | A-9 | ||||
Section 4.06 | Permits and Licenses; Compliance with Laws | A-10 | ||||
Section 4.07 | Company SEC Documents | A-10 | ||||
Section 4.08 | Absence of Certain Changes or Events | A-11 | ||||
Section 4.09 | No Undisclosed Liabilities | A-11 | ||||
Section 4.10 | Absence of Litigation | A-12 | ||||
Section 4.11 | Taxes | A-12 | ||||
Section 4.12 | Information Supplied | A-12 | ||||
Section 4.13 | Material Contracts | A-13 | ||||
Section 4.14 | Employee Benefits and Labor Matters | A-13 | ||||
Section 4.15 | State Takeover Statutes | A-14 | ||||
Section 4.16 | Opinion of Financial Advisors | A-14 | ||||
Section 4.17 | Brokers | A-14 | ||||
Section 4.18 | No Other Representations or Warranties | A-14 | ||||
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ARTICLE V. | REPRESENTATIONS AND WARRANTIES OF THE PARENTS AND MERGERCO | A-15 | ||||
Section 5.01 | Organization and Qualification; Subsidiaries | A-15 | ||||
Section 5.02 | Certificate of Incorporation, Bylaws, and Other Organizational Documents | A-15 | ||||
Section 5.03 | Authority Relative to Agreement | A-15 | ||||
Section 5.04 | No Conflict; Required Filings and Consents | A-15 | ||||
Section 5.05 | FCC Matters | A-16 | ||||
Section 5.06 | Absence of Litigation | A-16 | ||||
Section 5.07 | Available Funds | A-16 | ||||
Section 5.08 | Limited Guarantee | A-17 | ||||
Section 5.09 | Capitalization of Mergerco | A-17 | ||||
Section 5.10 | Brokers | A-17 | ||||
Section 5.11 | Information Supplied | A-18 | ||||
Section 5.12 | Solvency | A-18 | ||||
Section 5.13 | No Other Representations or Warranties | A-18 | ||||
ARTICLE VI. | COVENANTS AND AGREEMENTS | A-18 | ||||
Section 6.01 | Conduct of Business by the Company Pending the Merger | A-18 | ||||
Section 6.02 | FCC Matters | A-21 | ||||
Section 6.03 | Proxy Statement | A-22 | ||||
Section 6.04 | Shareholders’ Meeting | A-23 | ||||
Section 6.05 | Appropriate Action; Consents; Filings | A-23 | ||||
Section 6.06 | Access to Information; Confidentiality | A-25 | ||||
Section 6.07 | No Solicitation of Competing Proposal | A-25 | ||||
Section 6.08 | Directors’ and Officers’ Indemnification and Insurance | A-28 | ||||
Section 6.09 | Notification of Certain Matters | A-29 | ||||
Section 6.10 | Public Announcements | A-30 | ||||
Section 6.11 | Employee Matters | A-30 | ||||
Section 6.12 | Conduct of Business by the Parents Pending the Merger | A-31 | ||||
Section 6.13 | Financing | A-31 | ||||
Section 6.14 | Actions with Respect to Existing Debt | A-33 | ||||
Section 6.15 | Section 16(b) | A-34 | ||||
Section 6.16 | Resignations | A-35 | ||||
Section 6.17 | Certain Actions and Proceedings | A-35 | ||||
ARTICLE VII. | CONDITIONS TO THE MERGER | A-35 | ||||
Section 7.01 | Conditions to the Obligations of Each Party | A-35 | ||||
Section 7.02 | Conditions to the Obligations of the Parents and Mergerco | A-35 | ||||
Section 7.03 | Conditions to the Obligations of the Company | A-36 | ||||
ARTICLE VIII. | TERMINATION, AMENDMENT AND WAIVER | A-36 | ||||
Section 8.01 | Termination | A-36 | ||||
Section 8.02 | Termination Fees | A-38 | ||||
Section 8.03 | Amendment | A-39 | ||||
Section 8.04 | Waiver | A-39 | ||||
Section 8.05 | Expenses; Transfer Taxes | A-40 | ||||
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ARTICLE IX. | GENERAL PROVISIONS | A-40 | ||||
Section 9.01 | Non-Survival of Representations, Warranties and Agreements | A-40 | ||||
Section 9.02 | Notices | A-40 | ||||
Section 9.03 | Interpretation; Certain Definitions | A-41 | ||||
Section 9.04 | Severability | A-41 | ||||
Section 9.05 | Assignment | A-41 | ||||
Section 9.06 | Entire Agreement; No Third-Party Beneficiaries | A-41 | ||||
Section 9.07 | Governing Law | A-42 | ||||
Section 9.08 | Consent to Jurisdiction; Enforcement | A-42 | ||||
Section 9.09 | Counterparts | A-42 | ||||
Section 9.10 | Waiver of Jury Trial | A-42 |
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111 Huntington Avenue
Boston, MA 02199
Phone:617-516-2000
Fax:617-516-2010
Attn: John Connaughton
100 Federal Street
Boston, MA 02110
Phone:617-227-1050
Fax:617-227-3514
Attn: Scott Sperling
One International Place
Boston, MA 02110
Phone:617-951-7000
Fax:617-951-7050
Attn: David C. Chapin, Esq.
Attn: Alfred O. Rose, Esq.
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200 East Basse
San Antonio, TX 78209
Phone:210-822-2828
Fax:210-832-3433
Attn: Andy Levin, Executive Vice President and
Chief Legal Officer
2029 Century Park East, Suite 2400
Los Angeles, CA 90067
Phone:310-229-1000
Fax:310-229-1001
Attn: C.N. Franklin Reddick III
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By: | /s/ Scott Sperling |
By: | John Connaughton |
By: | /s/ Scott Sperling |
Title: | Co-President |
By: | /s/ Mark P. Mays |
Title: | Chief Executive Officer |
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* | Pursuant to Item 601(b)(2) ofRegulation S-K, the Registrant hereby agrees to furnish supplementally a copy of the Mergerco Disclosure Schedule to the Agreement and Plan of Merger to the Securities and Exchange Commission upon request. |
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TO
AGREEMENT AND PLAN OF MERGER
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By: | /s/ Scott Sperling |
By: | /s/ John Connaughton |
By: | /s/ Scott Sperling |
By: | /s/ Mark P. Mays |
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B TRIPLE CROWN FINCO, LLC,
T TRIPLE CROWN FINCO, LLC,
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* | Pursuant to Item 601(b)(2) ofRegulation S-K, the Registrant hereby agrees to furnish supplementally a copy of the Amendment Disclosure Letter to Amendment No. 1 to the Agreement and Plan of Merger to the Securities and Exchange Commission upon request. |
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By: | /s/ Scott M. Sperling |
By: | /s/ Scott M. Sperling |
By: | /s/ John Connaughton |
By: | /s/ Scott M. Sperling |
By: | /s/ Mark P. Mays |
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B TRIPLE CROWN FINCO, LLC,
T TRIPLE CROWN FINCO, LLC,
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* | Pursuant to Item 601(b)(2) ofRegulation S-K, the Registrant hereby agrees to furnish supplementally a copy of the Second Amendment Disclosure Letter to Amendment No. 2 to the Agreement and Plan of Merger to the Securities and Exchange Commission upon request. |
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TO
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By: | /s/ John Connaughton |
Title: | Co-President and Secretary |
By: | /s/ Charles Brizius |
Title: | Vice President |
By: | /s/ John Connaughton |
Title: | President and Secretary |
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T TRIPLE CROWN FINCO, LLC |
By: | /s/ Charles Brizius |
Title: | Vice President and Assistant Secretary |
By: | /s/ Mark P. Mays |
Title: | Chief Executive Officer |
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THIRD AMENDMENT DISCLOSURE LETTER
to
AMENDMENT NO. 3
dated as of
May 13, 2008
to the
AGREEMENT AND PLAN OF MERGER
dated as of
November 16, 2006
By and among
BT TRIPLE CROWN MERGER CO., INC.,
B TRIPLE CROWN FINCO, LLC,
T TRIPLE CROWN FINCO, LLC,
and
CLEAR CHANNEL COMMUNICATIONS, INC.
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THIRD AMENDED COMPANY LETTER
to
AMENDMENT NO. 3
dated as of
May 13, 2008
to the
AGREEMENT AND PLAN OF MERGER
dated as of
November 16, 2006
By and among
BT TRIPLE CROWN MERGER CO., INC.,
B TRIPLE CROWN FINCO, LLC,
T TRIPLE CROWN FINCO, LLC,
and
CLEAR CHANNEL COMMUNICATIONS, INC.
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E-3
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(ii) | if to the Parents, New Holdco or Mergerco to: |
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By: | Highfields Associates LLC, its General Partner | |
By: | /s/ Joseph F. Mazzella |
Title: | Authorized Signatory |
By: | /s/ Joseph F. Mazzella |
Title: | Authorized Signatory |
By: | /s/ Joseph F. Mazzella |
Title: | Authorized Signatory |
By: | /s/ Joseph F. Mazzella |
Title: | Managing Director |
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MERGERCO: |
By: | /s/ Scott Sperling |
Title: | Co-President |
By: | /s/ John Connaughton |
Title: | Managing Director |
By: | /s/ Scott Sperling |
Title: | Co-President |
By: | /s/ Scott Sperling |
Title: | President |
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By: | /s/ John P. Connaughton |
Title: | Managing Director |
By: | /s/ Scott M. Sperling |
Title: | Co-President |
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Attn: | David Abrams (dabrams@abramscapital.com) |
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100 Federal Street
Boston, MA 02110
Phone:(617) 227-1050
Fax:(617) 227-3514
Attn: Scott Sperling
One International Place
Boston, MA 02110
Phone:(617) 951-7000
Fax:(617) 951-7050
Attn: David C. Chapin
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By: | Pamet Capital Management, LP, its investment advisor | |
By: | Pamet Capital Management, LLC, its general partner | |
By: | /s/ David Abrams |
Title: | Managing Member |
By: | Pamet Capital Management, LP, its investment advisor | |
By: | Pamet Capital Management, LLC, its general partner |
By: | /s/ David Abrams |
Title: | Managing Member |
By: | Pamet Capital Management, LP, its investment advisor | |
By: | Pamet Capital Management, LLC, its general partner |
By: | /s/ David Abrams |
Title: | Managing Member |
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By: | Pamet Capital Management, LP, its investment advisor | |
By: | Pamet Capital Management, LLC, its general partner |
By: | /s/ David Abrams |
Title: | Managing Member |
By: | Abrams Capital Management, LLC, its investment adviser |
By: | /s/ David Abrams |
Title: | Managing Member |
By: | /s/ Scott Sperling |
Title: | Co-President |
By: | /s/ John Connaughton |
Title: | Managing Director |
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By: | /s/ Scott Sperling |
Title: | Co-President |
By: | /s/ Scott Sperling |
Title: | President |
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INFORMATION NOT REQUIRED IN PROSPECTUS
Exhibit | Description | |||
2.1† | Agreement and Plan of Merger, dated as of November 16, 2006, among Clear Channel Communications, Inc., BT Triple Crown Merger Co., Inc., B Triple Crown Finco, LLC, and T Triple Crown Finco, LLC (included as Annex A to the proxy statement/prospectus contained in this registration statement). | |||
2.2† | Amendment No. 1, dated April 18, 2007, to the Agreement and Plan of Merger, dated as of November 16, 2006, among Clear Channel Communications, Inc., BT Triple Crown Merger Co., Inc., B Triple Crown Finco, LLC, and T Triple Crown Finco, LLC (included as Annex B to the proxy statement/prospectus contained in this registration statement). | |||
2.3† | Amendment No. 2, dated as of May 17, 2007, to the Agreement and Plan of Merger, dated as of November 16, 2006, as amended on April 18, 2007, among Clear Channel Communications, Inc., BT Triple Crown Merger Co., Inc., B Triple Crown Finco, LLC, T Triple Crown Finco, LLC, BT Triple Crown Capital Holdings III, Inc. (included as Annex C to the proxy statement/prospectus contained in this registration statement). | |||
2.4† | Amendment No. 3, dated as of May 13, 2008, to the Agreement and Plan of Merger, dated as of November 16, 2006, as amended on April 18, 2007, as amended on May 17, 2007, among Clear Channel Communications, Inc., BT Triple Crown Merger Co., Inc., B Triple Crown Finco, LLC, T Triple Crown Finco, LLC, and CC Media Holdings, Inc., formerly known as BT Triple Crown Capital Holdings III, Inc. (included as Annex D to the proxy statement/prospectus contained in this registration statement). | |||
3.1 | Third Amended and Restated Certificate of Incorporation of CC Media Holdings Inc., formerly known as BT Triple Crown Capital Holdings III, Inc. to be in effect as of the effective time of the Merger. | |||
3.2 | Bylaws of CC Media Holdings, Inc. to be in effect as of the effective time of the Merger. |
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Exhibit | Description | |||
5.1 | Opinion of Ropes & Gray LLP regarding the legality of the securities being registered.* | |||
8.1 | Opinion of Ropes & Gray LLP regarding certain federal income tax consequences discussed in this registration statement.* | |||
9.1 | Amended and Restated Voting Agreement, dated as of May 13, 2008, by and among CC Media Holdings, Inc., B Triple Crown Finco, LLC, T Triple Crown Finco, LLC, BT Triple Crown Capital Holdings III, Inc., and Highfields Capital I LP, Highfields Capital II LP, Highfields Capital III LP, and Highfields Capital Management LP (included as Annex E to the proxy statement/prospectus contained in this registration statement). | |||
9.2 | Voting Agreement , dated as of May 13, 2008, by and among CC Media Holdings, Inc., B Triple Crown Financing, LLC, T Triple Crown Finco, LLC, BT Triple Crown Capital Holdings III, Inc., Abrams Capital Partners I, LP, Abrams Capital II, LP, Whitecrest Partners, LP, Abrams Capital International, Ltd. And Riva Capital Partners, LP. (included as Annex F to the proxy statement/prospectus contained in this registration statement). | |||
10.1 | Letter Agreement dated May 17, 2007, between B Triple Crown Finco, LLC, T Triple Crown Finco, LLC, L. Lowry Mays, Mark P. Mays and Randall T. Mays. | |||
10.2 | Credit Agreement, dated May 13, 2008 among BT Triple Crown Merger Co., Inc., the Subsidiary Co-Borrowers party thereto, the Foreign Subsidiary Revolving Borrowers party thereto, Clear Channel Capital I, LLC, Citibank, N.A., Deutsche Bank AG New York Branch, and the other lenders party thereto, with Deutsche Bank Securities Inc. and Morgan Stanley Senior Funding, Inc., as Syndication Agents, Credit Suisse, Cayman Islands Branch, The Royal Bank of Scotland PLC and Wachovia Capital Markets, LLC, as Co-Documentation Agents, and Citigroup Global Markets Inc., Deutsche Bank Securities Inc. and Morgan Stanley Senior Funding, Inc., as Joint Lead Arrangers and Joint Bookrunners. | |||
10.3 | Credit Agreement, dated May 13, 2008 among BT Triple Crown Merger Co., Inc., the Several Subsidiary Borrowers party thereto, Clear Channel Capital I, LLC, Citibank, N.A., Deutsche Bank Trust Company Americas, and the other lenders party thereto, with Deutsche Bank Securities Inc. and Morgan Stanley Senior Funding, Inc., as Syndication Agents, Credit Suisse, Cayman Islands Branch, The Royal Bank of Scotland PLC and Wachovia Capital Markets, LLC, as Co-Documentation Agents, and Citigroup Global Markets Inc., Deutsche Bank Securities Inc. and Morgan Stanley Senior Funding, Inc., as Joint Lead Arrangers and Joint Bookrunners. | |||
10.4 | Purchase Agreement, dated May 13, 2008, by and among BT Triple Crown MergerCo., Inc., Deutsche Bank Securities Inc., Morgan Stanley & Co. Incorporated, Citigroup Global Markets Inc., Credit Suisse Securities (USA) LLC, Greenwich Capital Markets, Inc. and Wachovia Capital Markets, LLC; $980,000,000 10.75% Senior Cash Pay Notes due 2016, $1,330,000,000 11.00%/11.75% Senior Toggle Notes due 2016. | |||
23.1 | Consent of Ernst & Young LLP, Independent Registered Public Accounting Firm for Clear Channel Communications, Inc. | |||
23.2 | Consent of Ropes & Gray LLP (included in the opinion filed as Exhibit 5.1 and Exhibit 8.1 to this registration statement). | |||
24.1 | Powers of Attorney of Directors and Officers of the registrant (included on registration statement signature page). | |||
99.1 | Consent of Goldman, Sachs & Co. | |||
99.2 | Form of Clear Channel Communications, Inc. Proxy Card* | |||
99.3 | Form of Election (for use by holders of Clear Channel Communications, Inc. common stock)* |
† | Pursuant to Item 601(b)(2) of Regulation S-K, the Registrant hereby agrees to furnish supplementally a copy of any omitted schedule to the Securities and Exchange Commission upon request. | |
* | To be filed by amendment. |
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CC Media Holdings, Inc. | ||||
By: | /s/ Scott M. Sperling | |||
Name: | Scott M. Sperling | |||
Title: | President | |||
Signature | Title | Date | ||
/s/ Scott M. Sperling | President and Director | June 2, 2008 | ||
Scott M. Sperling | (Principal Executive Officer) | |||
/s/ Scott M. Sperling | President and Director | June 2, 2008 | ||
Scott M. Sperling | (Principal Accounting Officer) | |||
/s/ Scott M. Sperling | President and Director | June 2, 2008 | ||
Scott M. Sperling | (Principal Financial Officer) | |||
/s/ John Connaughton | Director | June 2, 2008 | ||
John Connaughton | ||||
/s/ Steve Barnes | Director | June 2, 2008 | ||
Steve Barnes | ||||
/s/ Richard J. Bressler | Director | June 2, 2008 | ||
Richard J. Bressler | ||||
/s/ Charles A. Brizius | Director | June 2, 2008 | ||
Charles A. Brizius |
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Signature | Title | Date | ||
/s/ Ed Han | Director | June 2, 2008 | ||
Ed Han | ||||
/s/ Ian K. Loring | Director | June 2, 2008 | ||
Ian K. Loring | ||||
/s/ Kent R. Weldon | Director | June 2, 2008 | ||
Kent R. Weldon |
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Exhibit | Description | |||
2.1† | Agreement and Plan of Merger, dated as of November 16, 2006, among Clear Channel Communications, Inc., BT Triple Crown Merger Co., Inc., B Triple Crown Finco, LLC, and T Triple Crown Finco, LLC (included as Annex A to the proxy statement/prospectus contained in this registration statement). | |||
2.2† | Amendment No. 1, dated April 18, 2007, to the Agreement and Plan of Merger, dated as of November 16, 2006, among Clear Channel Communications, Inc., BT Triple Crown Merger Co., Inc., B Triple Crown Finco, LLC, and T Triple Crown Finco, LLC (included as Annex B to the proxy statement/prospectus contained in this registration statement). | |||
2.3† | Amendment No. 2, dated as of May 17, 2007, to the Agreement and Plan of Merger, dated as of November 16, 2006, as amended on April 18, 2007, among Clear Channel Communications, Inc., BT Triple Crown Merger Co., Inc., B Triple Crown Finco, LLC, T Triple Crown Finco, LLC, BT Triple Crown Capital Holdings III, Inc. (included as Annex C to the proxy statement/prospectus contained in this registration statement). | |||
2.4† | Amendment No. 3, dated as of May 13, 2008, to the Agreement and Plan of Merger, dated as of November 16, 2006, as amended on April 18, 2007, as amended on May 17, 2007, among Clear Channel Communications, Inc., BT Triple Crown Merger Co., Inc., B Triple Crown Finco, LLC, T Triple Crown Finco, LLC, and CC Media Holdings, Inc., formerly known as BT Triple Crown Capital Holdings III, Inc. (included as Annex D to the proxy statement/prospectus contained in this registration statement). | |||
3.1 | Third Amended and Restated Certificate of Incorporation of CC Media Holdings Inc., formerly known as BT Triple Crown Capital Holdings III, Inc. to be in effect as of the effective time of the Merger. | |||
3.2 | Bylaws of CC Media Holdings, Inc. to be in effect as of the effective time of the Merger. | |||
5.1 | Opinion of Ropes & Gray LLP regarding the legality of the securities being registered.* | |||
8.1 | Opinion of Ropes & Gray LLP regarding certain federal income tax consequences discussed in this registration statement.* | |||
9.1 | Amended and Restated Voting Agreement, dated as of May 13, 2008, by and among CC Media Holdings, Inc., B Triple Crown Finco, LLC, T Triple Crown Finco, LLC, BT Triple Crown Capital Holdings III, Inc., and Highfields Capital I LP, Highfields Capital II LP, Highfields Capital III LP, and Highfields Capital Management LP (included as Annex E to the proxy statement/prospectus contained in this registration statement). | |||
9.2 | Voting Agreement , dated as of May 13, 2008, by and among CC Media Holdings, Inc., B Triple Crown Financing, LLC, T Triple Crown Finco, LLC, BT Triple Crown Capital Holdings III, Inc., Abrams Capital Partners I, LP, Abrams Capital II, LP, Whitecrest Partners, LP, Abrams Capital International, Ltd. And Riva Capital Partners, LP. (included as Annex F to the proxy statement/prospectus contained in this registration statement). | |||
10.1 | Letter Agreement dated May 17, 2007, between B Triple Crown Finco, LLC, T Triple Crown Finco, LLC, L. Lowry Mays, Mark P. Mays and Randall T. Mays. | |||
10.2 | Credit Agreement, dated May 13, 2008 among BT Triple Crown Merger Co., Inc., the Subsidiary Co-Borrowers party thereto, the Foreign Subsidiary Revolving Borrowers party thereto, Clear Channel Capital I, LLC, Citibank, N.A., Deutsche Bank AG New York Branch, and the other lenders party thereto, with Deutsche Bank Securities Inc. and Morgan Stanley Senior Funding, Inc., as Syndication Agents, Credit Suisse, Cayman Islands Branch, The Royal Bank of Scotland PLC and Wachovia Capital Markets, LLC, as Co-Documentation Agents, and Citigroup Global Markets Inc., Deutsche Bank Securities Inc. and Morgan Stanley Senior Funding, Inc., as Joint Lead Arrangers and Joint Bookrunners. | |||
10.3 | Credit Agreement, dated May 13, 2008 among BT Triple Crown Merger Co., Inc., the Several Subsidiary Borrowers party thereto, Clear Channel Capital I, LLC, Citibank, N.A., Deutsche Bank Trust Company Americas, and the other lenders party thereto, with Deutsche Bank Securities Inc. and Morgan Stanley Senior Funding, Inc., as Syndication Agents, Credit Suisse, Cayman Islands Branch, The Royal Bank of Scotland PLC and Wachovia Capital Markets, LLC, as Co-Documentation Agents, and Citigroup Global Markets Inc., Deutsche Bank Securities Inc. and Morgan Stanley Senior Funding, Inc., as Joint Lead Arrangers and Joint Bookrunners. | |||
10.4 | Purchase Agreement, dated May 13, 2008, by and among BT Triple Crown MergerCo., Inc., Deutsche Bank Securities Inc., Morgan Stanley & Co. Incorporated, Citigroup Global Markets Inc., Credit Suisse Securities (USA) LLC, Greenwich Capital Markets, Inc. and Wachovia Capital Markets, LLC; $980,000,000 10.75% Senior Cash Pay Notes due 2016, $1,330,000,000 11.00%/11.75% Senior Toggle Notes due 2016. | |||
23.1 | Consent of Ernst & Young LLP, Independent Registered Public Accounting Firm for Clear Channel Communications, Inc. | |||
23.2 | Consent of Ropes & Gray LLP (included in the opinions filed as Exhibit 5.1 and Exhibit 8.1 to this registration statement). |
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Exhibit | Description | |||
24.1 | Powers of Attorney of Directors and Officers of the registrant (included on registration statement signature page). | |||
99.1 | Consent of Goldman, Sachs & Co. | |||
99.2 | Form of Clear Channel Communications, Inc. Proxy Card* | |||
99.3 | Form of Election (for use by holders of Clear Channel Communications, Inc. common stock)* |
† | Pursuant to Item 601(b)(2) of Regulation S-K, the Registrant hereby agrees to furnish supplementally a copy of any omitted schedule to the Securities and Exchange Commission upon request. | |
* | To be filed by amendment. |
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