Clear Channel Outdoor to Sell Investment in Clear Media Limited

Clear Channel Outdoor Holdings, Inc. (the 'Company'), one of the world's largest outdoor advertising companies, today announced that it has entered into an agreement to irrevocably tender to sell its 50.91% stake in Clear Media Limited ('Clear Media'), an indirect, non-wholly owned subsidiary of the Company based in China, to Ever Harmonic Global Limited ('Ever Harmonic'). The Company also provided an update regarding its initiatives to increase liquidity and preserve financial flexibility in response to the impact of COVID-19 and is withdrawing its guidance for 2020, previously provided on February 27, 2020.

Clear Media Limited Transaction

Under the terms of the Company’s agreement with Ever Harmonic, Ever Harmonic will acquire the Company’s stake in Clear Media for HK$7.12 per share, or approximately US$253 million* in cash, as part of a proposed voluntary conditional cash offer (the 'Offer') made by and on behalf of Ever Harmonic. Ever Harmonic is a special purpose vehicle wholly owned by a consortium of investors comprising Mr. Han Zi Jing (chief executive officer and an executive director of Clear Media), Antfin (Hong Kong) Holding Limited, JCDecaux Innovate Limited and China Wealth Growth Fund III L.P. This represents a premium of approximately 86.88% over the average of the closing prices of the Clear Media shares as quoted on the Hong Kong Stock Exchange for the 30 consecutive trading days prior to the announced strategic review of our investment in China on November 29, 2019. Today’s announcement is a successful milestone following the process previously disclosed on November 29, 2019 to maximise the value of the Company’s stake in Clear Media.

The Company has included revenue of US$209 million and Adjusted EBITDA of US$54 million in its results for the 12 months ended December 31st, 2019 attributed to Clear Media.

The Offer is conditional upon the satisfaction or waiver of the conditions described in the announcement jointly made by Ever Harmonic and Clear Media on the Hong Kong Stock Exchange today (the 'Rule 3.5 Announcement').

Based on the Hong Kong Takeovers Code, the Offer document is required to be issued within 21 days of the Rule 3.5 Announcement (unless the consent of the Hong Kong regulator to delay such issue is obtained). Clear Channel KNR Neth Antilles N.V., an indirect wholly owned subsidiary of the Company, has irrevocably undertaken to accept the Offer in respect of its entire shareholding in Clear Media within seven business days following the despatch of the Offer document and payment for the sale will be made within seven business days the date on which the Offer becomes unconditional in all respects. Further details of the Offer are described in the Rule 3.5 Announcement.

The Company intends to use the anticipated net proceeds of approximately $220 million from this transaction to improve its liquidity position and increase financial flexibility, subject to any limitations set forth in its debt agreements. Pro forma for the sale of the Company’s investment in Clear Media and the draw down on the revolving credit facility of $150 million that occurred on March 25, 2020, the amount of first lien debt as of December 31st, 2019 would have been reduced to $2,666 million and the first lien net leverage ratio (FLLR) would have been 4.9x as of December 31st, 2019, well below the FLLR requirement of 7.6x under the terms of the Company’s senior secured cash flow credit facilities. 

Credit Suisse is serving as financial advisor and Kirkland & Ellis is serving as legal advisor to the Company for the Clear Media transaction.

* Figures based on the foreign exchange rates of USD/HKD = 7.75482.

Financial and Liquidity Update

In light of the rapidly-evolving impact of COVID-19, the Company is implementing and evaluating actions to strengthen its financial position and support the continuity of its platform and operations.

The Company believes the anticipated net proceeds from the sale of Clear Media combined with the cash on hand, including the $150 million recently drawn from the Revolving Credit Facility, and the initiatives the Company is actively pursuing will improve its liquidity position and provide the Company with additional financial flexibility during the economic downturn. These initiatives include but are not limited to:

• Identifying opportunities to significantly reduce annual capital expenditures. Discretionary growth capex can be largely deferred.
• Maintenance capex can be deferred to the extent possible.
• Exploring deferral options with respect to committed capex.
• Continuing discussions with landlords to align fixed site lease expenses with revenue during the economic downturn. Beginning to achieve success in both Europe and the US
• Reducing employee compensation expense. o Temporary salary reductions including 30% reductions for both the Company’s Worldwide CEO, William Eccleshare and Americas CEO, Scott Wells
• Furloughs based on market conditions, hiring freezes and variable compensation reductions.
• Aggressively cutting discretionary spending.

However, given the quickly evolving economic environment, continuing downward pressure we are currently seeing in Europe and beginning to see in the US, and the uncertainty around how long the economic downturn and its impact on our business will last, the Company is withdrawing its guidance for 2020, previously provided on February 27th, 2020. As a reminder, the Company’s next material debt maturity is 2024 when the Company’s $1.9 billion in 9.25% Senior Notes are due.

Non-GAAP Financial Measures

The Company’s first lien leverage ratio, pro forma for the sale of our investment in Clear Media and the draw down on the revolving credit facility of $150 million that occurred on March 25, 2020, presented in this press release is calculated by dividing the Company’s pro forma first lien debt, by the Company’s EBITDA (as defined by the New Senior Secured Credit Agreement) for the four quarters ended December 31st, 2019. The following table presents the Company’s pro forma first lien debt for the four quarters ended December 31st, 2019: (In millions)