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Delaware | 4832 | 26-0241222 | ||
(State or other jurisdiction of incorporation or organization) | (Primary Standard Industrial Classification Code Number) | (I.R.S. Employer Identification Number) |
John P. Connaughton Bain Capital, LLC 111 Huntington Avenue Boston, MA 02199 (617) 516-2000 | Scott M. Sperling Thomas H. Lee Partners, L.P. 100 Federal Street Boston, MA 02110 (617) 227-1050 |
Andrew W. Levin Executive Vice President, Chief Legal Officer and Secretary Clear Channel Communications, Inc. 200 East Basse San Antonio, TX 78209 (210) 822-2828 | C.N. Franklin Reddick, Esq. Akin Gump Strauss Hauer & Feld LLP 2029 Century Park East, Suite 2400 Los Angeles, CA 90067 (310) 229-1000 | David C. Chapin, Esq. Ropes & Gray LLP One International Place Boston, MA 02110 (617) 951-7000 |
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The information in this proxy statement/prospectus is not complete and may be changed. We may not sell these securities until the registration statement filed with the Securities and Exchange Commission is declared effective. This proxy statement/prospectus is not an offer to sell these securities and it is not soliciting an offer to buy these securities in any jurisdiction where the offer or sale is not permitted. |
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200 EAST BASSE ROAD
SAN ANTONIO, TEXAS 78209
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD ON , 2007
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Current Board of Directors and Executive Officers | 50 |
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Anticipated Board of Directors and Executive Officers | 51 | |||
Biographies | 51 | |||
Committees of the Board of Directors | 53 | |||
Director Compensation | 53 | |||
Compensation and Governance Committee Interlocks and Insider Participation | 53 | |||
Independence of Directors | 53 | |||
Compensation of our Named Executive Officers | 54 | |||
Compensation Discussion and Analysis | 54 | |||
Introduction | 54 | |||
Overview and Objectives of Clear Channel’s Compensation Program | 54 | |||
Compensation Practices | 54 | |||
Elements of Compensation | 55 | |||
Base Salary | 56 | |||
Annual Incentive Bonus | 56 | |||
Long-Term Incentive Compensation | 57 | |||
Executive Benefits and Perquisites | 57 | |||
Change-in-Control and Severance Arrangements | 57 | |||
Tax and Accounting Treatment | 57 | |||
Deductibility of Executive Compensation | 57 | |||
Corporate Services Agreement | 57 | |||
Employment Agreements with Named Executive Officers | 58 | |||
Potential Post-Employment Payments | 60 | |||
Holdings Equity Incentive Plan | 63 | |||
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Certificate of Amendment to the Second Amended and Restated Cerficate of Incorporation | ||||||||
Opinion of Ropes & Gray LLP | ||||||||
Second Amended and Restated Commitment Letter | ||||||||
Consent of Ernst & Young LLP | ||||||||
Form of Election | ||||||||
Consent of Goldman, Sachs & Co. |
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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 subsidiary of Holdings. Depending upon the number of shares of Class A common stock of Holdings which unaffiliated shareholders and optionholders elect to receive in the merger as part of the merger consideration, up to 30% of the outstanding capital stock and voting power of Holdings will be held by former Clear Channel unaffiliated shareholders and optionholders immediately following the merger. | |
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”): $39.20 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 common stock you own as of the record date (including shares issuable on conversion of outstanding options), subject to the prorations and Individual Cap 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 17 of this proxy statement/prospectus. | ||
The Stock Election will only be available to unaffiliated shareholders and optionholders. The Stock Election is not available to directors and executive officers of Clear Channel. In addition, shares and options held by |
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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. | ||
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 the options, less the number of shares having a value (based on the Cash Consideration) equal to the exercise price payable on such issuance plus 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 (A) the excess, if any, of the Cash Consideration over the exercise price per share of such option and (B) the number of shares of Clear Channel common stock issuable upon exercise of such Clear Channel stock option. | |
Q: | How will restricted shares of Clear Channel common stock be treated in the merger? | |
A: | 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 common stock outstanding at the time of the merger. | |
Q: | Will I receive additional consideration if the merger closes after January 1, 2008? | |
A: | Yes. Regardless of whether you make a Stock Election or Cash Election, if the merger occurs after January 1, 2008, you will also receive an additional cash payment for each share, which we refer to as the “Additional Consideration,” equal to the lesser of: | |
• the pro rata portion, based upon the number of days elapsed since January 1, 2008, of $39.20 multiplied by 8% per annum, or |
• an amount equal to (a) the operating cash flow of Clear Channel and its subsidiaries for the period from and including January 1, 2008 through and including the last day of the last month preceding the closing date of the merger for which financial statements are available at least ten (10) calendar days prior to the closing date of the merger less dividends paid or declared with respect to the foregoing period and amounts committed or paid to purchase equity interests in Clear Channel or derivatives thereof with respect to that period (but only to the extent that those dividends or amounts are not deducted from the operating cash flow for Clear Channel and its subsidiaries for any prior period) divided by (b) the sum of the number of outstanding shares of Clear Channel common stock (including outstanding restricted shares) plus the number of shares of Clear Channel common stock issuable pursuant to convertible securities of Clear Channel outstanding at the closing date of the merger with exercise prices less than the Cash Consideration. See “The Merger Agreement — Treatment of Common Stock and Other Securities” beginning on page 118 of this proxy statement/prospectus. |
Your election to receive Cash Consideration or Stock Consideration will not affect your right to receive the Additional Consideration if the merger does not close before January 1, 2008. The total amount of Cash Consideration, Stock Consideration and Additional 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 |
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Cash Consideration price of $39.20 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 shares that would represent more than 9.9% of the outstanding 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 their Individual Cap. Any shares that are not converted into Stock Consideration as a result of the Individual Cap will be converted into Cash Consideration. | |
Q: | Is there an aggregate limit on the number of shares of Clear Channel common 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 30,612,245 shares of common stock (including shares issuable upon conversion of outstanding options), in the aggregate, or approximately 6% of the outstanding shares of Clear Channel common stock (including shares issuable upon exercise of outstanding options) at the record date, may be converted into shares of Holdings Class A common stock. If all 30,612,245 shares of common stock are converted into shares of Class A common stock of Holdings, they will represent approximately 30% of the outstanding capital stock and voting power of Holdings immediately following the merger. | |
Q: | What happens if Clear Channel shareholders or optionholders elect to exchange more than 30,612,245 shares of common stock (including shares issuable upon conversion of outstanding options) for shares of Class A common stock of Holdings? | |
A: | If Clear Channel shareholders and optionholders make Stock Elections covering more than 30,612,245 shares of common stock, then each shareholder and/or optionholder making a Stock Election 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 30,612,245 shares of Holdings Class A common stock are allocated to unaffiliated shareholders and/or optionholders of Clear Channel pursuant to the Stock Elections. Any shares that are not converted into Stock Consideration as a result of proration will be converted into Cash Consideration. | |
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 onForm 10-K, 10-Q and 8-K) for at least two years following the merger. | |
Q: | How and when do I make a Stock Election or Cash Election? | |
A: | A form of election and accompanying instructions will be mailed with this proxy statement/prospectus to all shareholders as of the record date. Additional copies of the form of election may be obtained from our 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 available on its website at www.clearchannel.com/Investors. You should carefully review and follow the instructions accompanying the form of |
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election, which will include information regarding the return of the form of election and instructions for holders of shares of common stock in “street name” through a bank, broker or other custodian or nominee. The form of election will need to be properly completed, signed and delivered prior to 5:00 p.m., New York City time, on , 2007, the business day immediately preceding the date of the special meeting. | ||
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 file a new form of election at any time prior to 5:00 p.m., New York City, time on , 2007, the 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. 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. 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, 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 , 2007, the 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. | |
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. If you have made a Stock Election for any of your shares (including a guarantee of delivery), you must revoke the stock election prior to 5:00 p.m., New York City time, on , 2007, the business day immediately preceding the special meeting, with respect to any shares you will not be able to deliver to the paying agent. In order to retain the right to receive shares of Holdings Class A common stock that are allocated to you in the merger as part of a Stock Election, you must submit your certificates to the paying agent prior to the time set forth in the instructions accompanying the letter of transmittal that will be mailed to you following the date of the special meeting. You will not be able to transfer the shares after you submit the certificates to the paying agent. In the event that the merger is abandoned or the merger agreement terminated, your shares and options will be returned to you and you will be entitled to transfer or sell your sharesand/or options. |
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 , 2007, the business day immediately preceding the date of the special meeting. | |
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 156 of this proxy statement/prospectus. |
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Q: | When do you expect the merger to be completed? | |
A: | We anticipate that the merger will be completed by the end of 2007, 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. Unless amended after the date hereof, the merger agreement is subject to termination by either party after December 12, 2007 if the merger has not been consummated, except that under certain circumstances that date may be extended until June 12, 2008. | |
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 as required by the Stock Consideration notice 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 reimburse the Fincos for up to $45 million of their out-of-pocket expenses as described in this proxy statement/prospectus under the caption “The Merger Agreement — Termination Fees.” |
Q: | Where and when is the special meeting? |
A: | The special meeting will be held at the on , 2007, at 8:00 a.m., Central Daylight Saving 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. | ||
• to approve the adjournment 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. | ||
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 (excluding Messrs. Mark P. Mays, Randall T. Mays, L. Lowry Mays and B. J. McCombs who recused themselves from the deliberations), recommends that you vote: | |
• “FOR” the approval and adoption of the merger agreement; and | ||
• “FOR” the adjournment 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 3,151 holders of record. Each holder of Clear Channel common stock is entitled to one vote for each share the stockholder 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 |
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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 the special meeting, if necessary or appropriate, to solicit additional proxies? | |
A: | The proposal to adjourn 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 proposal constitute affirmative votes. Abstentions are counted for quorum purposes, but since they are not votes cast “FOR” the adjournment proposal, they will have the same effect as a vote “AGAINST” the adjournment proposal. Broker non-votes are also counted for quorum purposes, but will not count as shares present and entitled to vote to adjourn the meeting. As a result, broker non-votes will have no effect on the vote to adjourn the special meeting. | |
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 stockholder 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 7:30 a.m. 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. |
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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 Channelc/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. | |
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 Fincos have engaged Georgeson Inc. to assist them in any solicitation efforts they may decide to make in connection with the merger and it is expected that they will pay Georgeson a fee of approximately $50,000. The Fincos have also agreed to reimburse Georgeson for reasonable administrative and out-of-pocket expenses incurred in connection with the proxy solicitation and indemnify Georgeson against certain losses, costs and expenses. |
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• | the financial performance of Clear Channel through the date of 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 and regulatory approvals; | |
• | 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 failure to obtain the necessary debt financing arrangements set forth in the commitment letters received in connection with the 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 and the final terms of the financings that will be obtained for the merger; | |
• | diversion of management’s attention from ongoing business concerns; |
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• | 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 64) | Holdings is a newly formed Delaware corporation and was organized by private equity funds sponsored by Bain Capital Partners, LLC or 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. |
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 over 1,100 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 more than 195,000 national and 717,000 international outdoor advertising display faces. Additionally, Clear Channel owns or programs 51 television stations and 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 an indirect 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 |
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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. |
The Merger (See “The Merger Agreement” on page 118) | 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, or (2) the Stock Consideration, subject to pro rata adjustment if the election to receive the Stock Consideration is oversubscribed and cutback if a holder would otherwise receive shares of Holdings Class A common stock representing more than 9.9% of the outstanding common stock of Holdings immediately following the merger. 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 January 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 Consideration. |
Effects of the Merger (See “The Merger Agreement — Effects of the Merger; Structure” on page 119) | 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 Sharesand/or Net Electing Option Shares will be converted into the right to receive the Cash Consideration or Stock Consideration, in accordance with your election, unless you have properly exercised your appraisal rights. The surviving corporation will become an |
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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 Exchange Act will be terminated upon application to 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 87) | Board of Directors. Clear Channel’s board of directors by unanimous vote (excluding Messrs. Mark P. Mays, Randall T. Mays, L. Lowry Mays and B.J. McCombs who recused themselves from the deliberations), 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 AdvisoryCommittee (See “The Merger — Reasons for the Merger — Determination of the Special Advisory Committee” on page 92) | Special Advisory Committee. The special advisory committee is 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 receives a proposal from a third party seeking to acquire or purchase Clear Channel, which proposal satisfies certain conditions described on page 132 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 fairnessand/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 |
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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 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 or Amendment No. 2. |
Interests of Clear Channel’s Directors and Executive Officers inthe Merger (See “The Merger — Interests of Clear Channel’s Directors and Executive Officers in the Merger” on page 93) | 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 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 June 30, 2007, directors and executive officers held unvested options with an aggregate value of $8,858,200 and restricted stock with an aggregate value of $41,294,534, each of which would fully vest in connection with the merger. In addition, Herbert W. Hill, Jr., Andrew W. Levin and Donald D. Perry could receive aggregate estimated potential cash severance benefits of $2,230,127 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), which provides for, among other things, the conversion of equity securities of Clear Channel held by each of Messrs. 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 104) | 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 17, 2007, that, as of such date, and based upon and subject to the factors and assumptions set forth therein, the cash consideration of |
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$39.20 per Public Share that the holders of Public Shares can elect to receive 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 17, 2007, 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 E 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 $50 million, of which $15 million was paid upon signing of the definitive agreement and approximately $35 million is payable upon consummation of the merger. See “Opinion of Clear Channel’s Financial Advisor” beginning on page 103. 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 102) | Equity Financing. Pursuant to replacement equity commitment letters signed in connection with Amendment No. 2 to the merger agreement, Bain Capital Fund IX and THL Partners Fund VI, which we refer to as the Sponsors, have severally agreed to purchase (either directly or indirectly through one or more intermediate entities) up to an aggregate of $3.94 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 will be reduced by half of the amount of Stock Consideration elected by Clear Channel shareholders (that is, an aggregate reduction equal to $39.20 multiplied by the number of shares of Class A common stock of Holdings issued in the merger). The equity commitment letters entered into in connection with Amendment No. 2 superseded the equity commitment letters previously delivered. |
Debt Financing. In connection with Amendment No. 2, Merger Sub and the Fincos have obtained debt financing commitments to provide up to $22.125 billion in aggregate debt financing, which is currently anticipated to consist of (i) senior secured credit facilities in an aggregate principal amount of $18.525 billion, (ii) a receivables backed credit facility with a maximum availability of $1.0 billion, and (iii) a senior bridge facility in an aggregate principal amount of up to $2.6 billion 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 |
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expenses in connection with the merger, refinancing, financing and related transactions and, after the closing date of the merger, to provide for ongoing working capital, refinance other debt and general corporate purposes. | ||
The debt financing commitments are not conditioned on, nor do they require or contemplate, the acquisition of the outstanding public shares of Clear Channel Outdoor Holdings, Inc. The debt financing commitments do not require or contemplate any changes to the existing cash management and intercompany arrangements between the Clear Channel and Clear Channel Outdoor, the provisions of which are described in Clear Channel Outdoor’s SEC filings. The consummation of the merger will not permit Clear Channel Outdoor to terminate these arrangements and Clear Channel may continue to use the cash flows of Clear Channel Outdoor for its own general corporate purposes pursuant to the terms of the existing cash management and intercompany arrangements between Clear Channel and Clear Channel Outdoor, which may include making payments on the new debt financing. |
The debt financing arrangements are subject to change (whether as a result of market conditions or otherwise) and the debt financings described above or any other debt financings remain subject to negotiation and completion of definitive documentation. Accordingly, since the final terms, structures and amounts of the actual debt financing arrangements have not been agreed upon and may not be determined until shortly before the effective time of the merger, the final terms, structures and amounts of any or all of the actual debt financing arrangements may materially differ from those described above. See “Financing — Debt Financing” beginning on page 102. |
Regulatory Approvals (See “Regulatory Approvals” on page 116) | 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. The parties anticipate that FCC approval of the merger can be obtained by the late third quarter or early fourth quarter of 2007. The timing or outcome of the FCC approval process, however, cannot be predicted. |
Under theHart-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. The parties have had discussions with the Antitrust Division of the Department of |
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Justice in anticipation of making their requiredHart-Scott-Rodino filings, although the filings have not yet been submitted. | ||
The merger is also subject to review by the governmental authorities of various other jurisdictions under the antitrust, communication and investment review laws of those jurisdictions. |
Material United States Federal Income Tax Consequences (See “Material United States Federal Income Tax Consequences” on page 112) | 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. |
Following the closing of the merger, Holdings will provide each U.S. holder with sufficient information to determine (i) the number of shares of Clear Channel stock disposed of by such U.S. holder in |
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each of the deemed redemption transaction and the deemed exchange transaction, (ii) the amount of cash such U.S. holder received in the deemed redemption transaction and (iii) the number of shares of Holdings Class A common stock and the amount of cash such U.S. holder received in the deemed exchange transaction. Such information will not be ascertainable until after the closing of the merger. |
Conditions to the Merger (See “The Merger Agreement — Conditions to the Merger” on page 136) | Before the merger can be completed, a number of conditions must be satisfied. These conditions include: |
• 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; | ||
• 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”; |
• the performance, in all material respects, by all parties to the merger agreement of their respective agreements and covenants in the merger agreement, and the representations and warranties of Clear Channel, the Fincos, Holdings and Merger Sub in the merger agreement being true and correct, subject to certain “Material Adverse Effect” qualifications (as defined on page 126 of this proxy statement/prospectus); |
• the Fincos’ delivery to Clear Channel at the closing of a solvency certificate; and | ||
• the non-occurrence of any change, effect or circumstance that has had or would reasonably be expected to have a material adverse effect on the business, operations, results of operations or financial condition of Clear Channel and its subsidiaries taken as a whole, subject to certain exceptions. |
If a failure to satisfy one of these conditions to the obligations of Clear Channel to complete the merger is not considered by Clear Channel’s board of directors to be material to its shareholders, the board of directors could waive compliance with that condition. Clear Channel’s board of directors is not aware of any condition to the merger that cannot be satisfied. Under Texas law, after the merger agreement has been approved and adopted by Clear Channel’s shareholders, the Merger Consideration cannot be changed and the merger agreement cannot be altered in a manner adverse to Clear Channel’s shareholders without re-submitting the revisions to Clear Channel’s shareholders for their approval. To the extent that either party to the merger waives any material condition to the merger and such change in the terms of the transaction renders the disclosure previously provided to Clear Channel’s shareholders materially misleading, Clear Channel will recirculate this proxy statement/prospectus to and resolicit proxies from its shareholders. |
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Solicitation of Alternative Proposals (See “The Merger Agreement — Solicitation of Alternative Proposals” on page 131) | 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 6 private equity firms (2 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. | ||
From and after 11:59 p.m. Eastern Standard Time on December 7, 2006 Clear Channel agreed to: | ||
• 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. | ||
Notwithstanding these restrictions, at any time prior to the approval of the merger agreement by Clear Channel shareholders, if Clear Channel receives a written Competing Proposal that Clear Channel’s board of directors determines in good faith, after consultation with Clear Channel’s outside legal counsel and financial advisors, constitutes a |
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proposal that satisfies certain criteria described on page 130 of this proxy statement/prospectus and is on terms more favorable to the holders of Clear Channel’s common stock from a financial point of view than the terms set forth in the merger agreement or any other proposal made by the Fincos, which we refer to as a “Superior Proposal,” Clear Channel may, subject to certain conditions: |
• 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. | ||
In addition, Clear Channel may terminate the merger agreement and enter into a definitive agreement with respect to a Competing Proposal if it receives a bona fide written Competing Proposal that Clear Channel’s board of directors determines in good faith, after consultation with Clear Channel’s outside counsel and financial advisors, is a Superior Proposal (after giving effect to any adjustments to the terms of the merger agreement offered by the Fincos) and if Clear Channel’s board of directors determines in good faith, after consultation with the Clear Channel’s outside counsel, that the failure to take such action would reasonably be expected to be a breach of the board of directors fiduciary duties under applicable law. |
Termination (See “The Merger Agreement — Termination” on page 138) | 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 12, 2007, the date that is 12 months from the date on which all applications necessary to obtain the FCC Consent have been filed, which we refer to as the “FCC Filing Date,” except that under certain conditions that date may be extended by Clear Channel or the Fincos to June 12, 2008, the date that is 18 months from the FCC Filing Date, 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; | ||
• there is a material breach by the non-terminating party of any of its representations, warranties, 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; | ||
• by Clear Channel, if on or prior to the last day of an agreed period during which, among other things, the Fincos have certain financial |
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information about Clear Channel, as described on page 119 of this proxy statement/prospectus, which we refer to as the “Marketing Period,” none of Merger Sub, Holdings or the surviving corporation has received the proceeds of the financings sufficient to consummate the merger; |
• by Clear Channel, if, prior to the approval and adoption of the merger agreement by the shareholders of Clear Channel, 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 the 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 the shareholders of Clear Channel, its recommendation that Clear Channel’s shareholders approve and adopt the merger agreement. |
Termination Fees (See “The Merger Agreement — Termination Fees” on page 138) | 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 representations, warranties and 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 |
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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 | ||
(iii) 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 representations, warranties and 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 139 of this proxy/prospectus). |
The merger agreement provides that, upon termination of the merger agreement under specified circumstances Merger Sub will be required to pay Clear Channel a termination fee 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 and 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, all conditions to the Fincos’ and Merger Sub’s obligation to consummate the merger have been satisfied, other than conditions relating to the expiration or termination of any applicable waiting period under the HSR Act or the receipt of the FCC Consent, then Merger Sub will pay to Clear Channel a termination fee of $600 million in cash; however, if the only condition that has not been satisfied is the receipt of the FCC Consent and Merger Sub, the Fincos and each attributable investor have carried out their respective obligations relating to obtaining that consent, the termination fee will be $300 million in cash; | ||
(ii) if Clear Channel terminates the merger agreement, due to the Fincos and Merger Sub having willfully and materially breached or failed to perform in any material respect any of their representations, warranties, or obligations under the merger agreement such that |
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certain closing condition 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, other than conditions relating to the expiration or termination of any applicable waiting period under the HSR Act or the receipt of the FCC Consent, then Merger Sub will pay to Clear Channel a termination fee of $600 million in cash; however, if the only condition that has not been satisfied is the receipt of the FCC Consent and Merger Sub, the Fincos and each attributable investor have carried out their respective obligations relating to obtaining that consent, the termination fee will be $300 million in cash; | ||
(iii) if Clear Channel terminates the merger agreement due to the Fincos’ failure to effect the closing because of a failure to receive adequate proceeds from one or more of the financings contemplated by the financing commitments on or prior to the last day of the Marketing Period or the Fincos’ breach or failure to perform in any material respects, upon a willful and material breach by Merger Suband/or the Fincos, of any of their representations, warranties and covenants such that certain closing conditions would not be satisfied and such breach has not been cured within 30 days following delivery of written notice by Clear Channel, then Merger Sub will be required to pay Clear Channel a termination fee equal to $500 million. | ||
In the event that the merger agreement is terminated (i) 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 thereof or (ii) by the Fincos due to a willful or material breach of the merger agreement by Clear Channel, and a termination fee is not otherwise then payable by Clear Channel under the merger agreement, Clear Channel has agreed to pay reasonableout-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. |
Limited Guarantee of the Sponsors (See “The Merger Agreement — Limited Guarantees” on page 141) | In connection with Amendment No. 2, each of the Sponsors and Clear Channel entered into a substitute 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 limited guarantees entered into in connection with Amendment No. 2 superseded the limited guarantees previously delivered by Sponsors. |
Transaction Fees (See “The Merger Agreement — Transaction Fees” on page 136) | 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 Holding’s independent directors after the closing of the merger, 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 |
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Holdings Class A common stock are made whole for any portion of such fees paid by Holdings or any of its subsidiaries. |
Letter Agreements (See “The Merger Agreement — Letter Agreements” on page 141) | Concurrently with the execution of the Amendment No. 2, the Fincos and Lowry Mays, Mark P. Mays, Randall T. Mays and each other member of Clear Channel’s board of directors entered into a letter agreement pursuant to which each director has agreed to exchange all Clear Channel common stock, Clear Channel stock options and restricted stock awards (other than the shares and options held by directors and officers of Clear Channel who have agreed to convert such shares or options into equity securities of Holdings in the merger, which will not affect the number of shares of Holdings Class A common stock available for issuance as Stock Consideration) which they beneficially hold for Cash Consideration. |
Clear Channel’s Stock Price (See “Market Prices of Clear Channel Common Stock and Dividend Data” on page 142) | 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 , 2007, 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 143) | As of the record date, the directors and executive officers of Clear Channel beneficially owned approximately % 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 such shares or options into equity securities of Holdings in the merger, which will not affect the number of shares of Holdings Class A common stock available for issuance as Stock Consideration, each of L. Lowry Mays, Mark P. Mays, Randall T. Mays and each other member of Clear Channel’s board of directors has entered into a separate agreement with the Fincos whereby they each have agreed to convert in the merger all Clear Channel common stock, Clear Channel stock options and restricted stock awards which they beneficially hold for the Cash Consideration. |
Dissenters’ Rights of Appraisal (See “Dissenters’ Rights of Appraisal” on page 156) | 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 merger agreement is voted on at the special meeting and you must not |
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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 142) | 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 theOver-the-Counter Bulletin Board |
Resale of Holdings Class A Common Stock (See “Resale of Holdings Class A Common Stock” on page 117) | 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. |
Description of Holdings’ Capital Stock (See “Description of Holdings’ Capital Stock” on page 145) | Following the merger, we will have 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 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 shareholders 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, 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 149) | 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 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’ second amended and restated certificate of incorporation and bylaws. Upon completion of the merger, Clear Channel shareholders who receive Holdings Class A common stock will be shareholders of Holdings, and their rights will be governed by the DGCL and Holdings’ second amended and restated certificate of incorporation and bylaws. |
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Management of Holdings (See “Board of Directors and Management of Holdings” on page 49 and “The Merger — Voting Agreement” on page 98) | 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 as in this proxy statement/prospectus as the “independent directors.” However, since the unaffiliated shareholders and optionholders of Clear Channel that elect to receive shares of Holdings Class A Common Stock will hold at most 30% of the outstanding capital stock and voting power of Holdings after the merger, such holders will not have the voting power to elect the remaining 10 members of Holdings’ board of directors. Pursuant to a voting agreement entered into among the Fincos, Merger Sub and Highfields Capital I LP, a Delaware limited partnership, which we refer to as “Highfields I,” Highfields Capital II LP, a Delaware limited partnership which we refer to as “Highfields II,” Highfields Capital III LP, an exempted limited partnership organized under the laws of the Cayman Islands, B.W.I., which we refer to as “Highfields III,” and Highfields Capital Management LP, a Delaware limited partnership, which we refer to as “Highfields Management” and, together with Highfields I, Highfields II and Highfields III, as the “Highfields Funds,” immediately following the effective time of the merger one of the independent directors will be named by Highfields Management (which member will be named to Holdings’ nominating committee) and the other independent director will be selected by Holdings’ nominating committee after consultation with Highfields Management and any holder whose Stock Election is reasonably expected to result in such holder owning three percent (3%) or more of the total outstanding equity securities of Holdings. 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 and one candidate will be selected by Holdings’ nominating committee after consultation with Highfields Management and any public holder owning three percent (3%) or more of the total outstanding equity securities of Holdings. All shares of Holdings Class A common stock that may be issuable to the Highfields Funds as part of the merger are being registered on theS-4 registration statement of which this proxy statement/prospectus is a part. If the Highfields Funds make a Stock Election for all of the shares of Clear Channel common stock which they represented in the Voting Agreement that they beneficially owned as of May 26, 2007 (24,000,000 shares), the Highfields Funds will be subject to the Individual Cap and, as a result, will receive a maximum of 3,030,612 shares of Holdings Class A common stock, subject to proration. |
Holdings currently 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’sday-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 in the amount of either $200 million or $500 million, as well as legal, accounting and other fees of the Sponsors, up to a maximum of $45 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 our specific 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 $3.1 billion based on assumptions set forth under “Notes to Unaudited Pro Forma Condensed Consolidated Financial Data” beginning on page 39 of this proxy statement/prospectus and under “Contractual Obligations: Indebtedness and Dividend Policy Following the Merger” beginning on page 47 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; |
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• | 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; |
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• | 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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• | Clear Channel may need to seek new purchasers for the assets which will require additional time and expenses; | |
• | Clear Channel may not be able to sell its small market radio stations and television business on terms which are as favorable as the terms currently included in the definitive agreements; | |
• | management’s attention from Clear Channel’s day to day business may be diverted; and | |
• | uncertainties with regards to the asset sales may adversely affect Clear Channel’s relationships with its employees, vendors and customers. |
• | 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 are late in adopting that offer more attractive advertising, listening or viewing alternatives than what Clear Channel currently offers, which may lead to a loss of advertising customers or to lower advertising rates; | |
• | 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 | ||||||||||||||||||||||||||||
Year Ended December 31, | March 31, | |||||||||||||||||||||||||||
2006 | 2005 | 2004 | 2003 | 2002 | 2007 | 2006 | ||||||||||||||||||||||
(In thousands) | (Unaudited) | (Unaudited) | ||||||||||||||||||||||||||
Results of Operations Information: | ||||||||||||||||||||||||||||
Revenue | $ | 7,031,445 | $ | 6,546,539 | $ | 6,568,392 | $ | 6,185,654 | $ | 5,876,424 | $ | 1,608,315 | $ | 1,489,609 | ||||||||||||||
Operating expenses: | ||||||||||||||||||||||||||||
Direct operating expenses (excludes depreciation and amortization) | 2,639,412 | 2,446,534 | 2,311,583 | 2,123,834 | 1,924,692 | 669,271 | 623,302 | |||||||||||||||||||||
Selling, general and administrative expenses (excludes depreciation and amortization) | 1,950,636 | 1,884,947 | 1,876,801 | 1,835,525 | 1,771,199 | 461,177 | 448,658 | |||||||||||||||||||||
Depreciation and amortization | 631,263 | 625,370 | 625,412 | 604,163 | 552,534 | 147,377 | 150,066 | |||||||||||||||||||||
Corporate expenses (excludes depreciation and amortization) | 201,752 | 171,076 | 167,388 | 152,514 | 160,216 | 49,144 | 41,524 | |||||||||||||||||||||
Merger expenses | 7,633 | — | — | — | — | 1,686 | — | |||||||||||||||||||||
Gain on disposition of assets — net | 69,343 | 51,358 | 40,011 | 7,361 | 35,690 | 5,297 | 47,507 | |||||||||||||||||||||
Operating income (loss) | 1,670,092 | 1,469,970 | 1,627,219 | 1,476,979 | 1,503,473 | 284,957 | 273,566 | |||||||||||||||||||||
Interest expense | 483,974 | 443,245 | 367,503 | 392,215 | 430,890 | 118,074 | 114,376 | |||||||||||||||||||||
Gain (loss) on sale of assets related to mergers | — | — | — | — | 3,991 | — | — | |||||||||||||||||||||
Gain (loss) on marketable securities | 2,306 | (702 | ) | 46,271 | 678,846 | (3,096 | ) | 395 | (2,324 | ) | ||||||||||||||||||
Equity in earnings of nonconsolidated affiliates | 37,478 | 38,338 | 22,285 | 20,669 | 27,140 | 5,094 | 6,909 | |||||||||||||||||||||
Other income (expense) — net | (8,421 | ) | 11,267 | (30,293 | ) | 20,783 | 5,625 | 53 | (583 | ) | ||||||||||||||||||
Income before income taxes, minority interest, discontinued operations and cumulative effect of a change in accounting principle | 1,217,481 | 1,075,628 | 1,297,979 | 1,805,062 | 1,106,243 | 172,425 | 163,192 | |||||||||||||||||||||
Income tax benefit (expense) | (499,167 | ) | (424,873 | ) | (497,151 | ) | (774,064 | ) | (437,064 | ) | (72,936 | ) | (66,909 | ) | ||||||||||||||
Minority interest income (expense), net of tax | (31,927 | ) | (17,847 | ) | (7,602 | ) | (3,906 | ) | 1,778 | (276 | ) | 780 | ||||||||||||||||
Income before discontinued operations and cumulative effect of a change in accounting principle | 686,387 | 632,908 | 793,226 | 1,027,092 | 670,957 | 99,213 | 97,063 | |||||||||||||||||||||
Income (loss) from discontinued operations, net | 5,130 | 302,754 | 52,573 | 118,499 | 53,866 | 3,009 | (249 | ) | ||||||||||||||||||||
Income before cumulative effect of a change in accounting principle | 691,517 | 935,662 | 845,799 | 1,145,591 | 724,823 | 102,222 | 96,814 | |||||||||||||||||||||
Cumulative effect of a change in accounting principle, net of tax of, $2,959,003 in 2004 and $4,324,446 in 2002(1) | — | — | (4,883,968 | ) | — | (16,778,526 | ) | — | — | |||||||||||||||||||
Net income (loss) | $ | 691,517 | $ | 935,662 | $ | (4,038,169 | ) | $ | 1,145,591 | $ | (16,053,703 | ) | $ | 102,222 | $ | 96,814 | ||||||||||||
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Three Months Ended | ||||||||||||||||||||||||||||
Year Ended December 31, | March 31, | |||||||||||||||||||||||||||
2006 | 2005 | 2004 | 2003 | 2002 | 2007 | 2006 | ||||||||||||||||||||||
(In thousands) | (Unaudited) | (Unaudited) | ||||||||||||||||||||||||||
Net income (loss) per common share: | ||||||||||||||||||||||||||||
Basic: | ||||||||||||||||||||||||||||
Income (loss) before discontinued operations and cumulative effect of a change in accounting principle | $ | 1.37 | $ | 1.16 | $ | 1.33 | $ | 1.67 | $ | 1.11 | $ | .20 | $ | .19 | ||||||||||||||
Discontinued operations | .01 | .55 | .09 | .19 | .09 | .01 | (.00 | ) | ||||||||||||||||||||
Income (loss) before cumulative effect of a change in accounting principle | 1.38 | 1.71 | 1.42 | 1.86 | 1.20 | .21 | .19 | |||||||||||||||||||||
Cumulative effect of a change in accounting principle | — | — | (8.19 | ) | — | (27.65 | ) | — | — | |||||||||||||||||||
Net income (loss) | $ | 1.38 | $ | 1.71 | $ | (6.77 | ) | $ | 1.86 | $ | (26.45 | ) | $ | .21 | $ | .19 | ||||||||||||
Diluted: | ||||||||||||||||||||||||||||
Income (loss) before discontinued operations and cumulative effect of a change in accounting principle | $ | 1.37 | $ | 1.16 | $ | 1.33 | $ | 1.66 | $ | 1.10 | $ | .20 | $ | .19 | ||||||||||||||
Discontinued operations | .01 | .55 | .08 | .19 | .08 | .01 | (.00 | ) | ||||||||||||||||||||
Income (loss) before cumulative effect of a change in accounting principle | 1.38 | 1.71 | 1.41 | 1.85 | 1.18 | .21 | .19 | |||||||||||||||||||||
Cumulative effect of a change in accounting principle | — | — | (8.16 | ) | — | (26.74 | ) | — | — | |||||||||||||||||||
Net income (loss) | $ | 1.38 | $ | 1.71 | $ | (6.75 | ) | $ | 1.85 | $ | (25.56 | ) | $ | .21 | $ | .19 | ||||||||||||
Dividends declared per share | $ | .75 | $ | .69 | $ | .45 | $ | .20 | $ | — | $ | .1875 | $ | .1875 | ||||||||||||||
Three Months Ended | ||||||||||||||||||||||||
Year Ended December 31, | March 31, | |||||||||||||||||||||||
2006 | 2005 | 2004 | 2003 | 2002 | 2007 | |||||||||||||||||||
(In thousands) | (Unaudited) | |||||||||||||||||||||||
Balance Sheet Data: | ||||||||||||||||||||||||
Current assets | $ | 2,205,730 | $ | 2,398,294 | $ | 2,269,922 | $ | 2,185,682 | $ | 2,123,495 | $ | 2,065,806 | ||||||||||||
Property, plant and equipment — net | 3,205,943 | 3,221,168 | 3,292,192 | 3,439,272 | 3,455,070 | 3,163,615 | ||||||||||||||||||
Total assets | 18,901,792 | 18,721,298 | 19,948,055 | 28,352,693 | 27,672,153 | 18,686,330 | ||||||||||||||||||
Current liabilities | 1,663,846 | 2,107,313 | 2,184,552 | 1,892,719 | 3,010,639 | 1,815,182 | ||||||||||||||||||
Long-term debt, net of current maturities | 7,326,700 | 6,155,363 | 6,941,996 | 6,898,722 | 7,357,769 | 6,862,109 | ||||||||||||||||||
Shareholders’ equity | 8,042,341 | 8,826,462 | 9,488,078 | 15,553,939 | 14,210,092 | 8,128,722 |
(1) | We 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 TopicD-108,Use of the Residual Method to Value Acquired Assets other than Goodwill. We recorded a non-cash charge of $16.8 billion, net of deferred taxes of $4.3 billion, in 2002 as a result of the adoption of Financial Accounting Standards Statement 142,Goodwill and Other Intangible Assets. |
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• | the merger as if it had occurred on March 31, 2007, | |
• | radio stations subject to definitive sales agreements at March 31, 2007 recorded as assets from discontinued operations, | |
• | the definitive agreement to sell Clear Channel’s television business as if the agreement were entered into on March 31, 2007 and the business proposed to be sold under the agreement was recorded as assets and liabilities from discontinued operations, and | |
• | all definitive sales agreements to sell Clear Channel’s radio stations that were signed subsequent to March 31, 2007 through May 25, 2007 as if they were entered into on March 31, 2007 and the businesses proposed to be sold under the agreements were recorded as assets from discontinued operations. |
• | the merger as if it had occurred on January 1, 2006, | |
• | the definitive agreement to sell Clear Channel’s television business as if the agreement were entered into on January 1, 2004 with the results of operations for this business excluded from income from continuing operations, and | |
• | all definitive agreements to sell Clear Channel’s radio stations that were signed subsequent to March 31, 2007 through May 25, 2007 as if they were entered into on January 1, 2004 with the results of operations for these stations excluded from income from continuing operations. |
• | the definitive agreement to sell the Company’s television business as if it had occurred on January 1, 2004 and therefore the results of operations for this business are excluded from income from continuing operations, and |
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• | all definitive agreements to sell the Company’s radio stations that were signed subsequent to March 31, 2007 through May 25, 2007 as if they had occurred January 1, 2004 and therefore the results of operations for these stations are excluded from income from continuing operations. |
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AT MARCH 31, 2007
Pending Asset | ||||||||||||||||
Clear Channel | Sale | Merger | ||||||||||||||
Historical | Adjustments (A) | Adjustments | Pro Forma | |||||||||||||
(In thousands of dollars) | ||||||||||||||||
ASSETS | ||||||||||||||||
Current assets: | ||||||||||||||||
Cash and cash equivalents | $ | 107,605 | $ | 1,587 | $ | — | $ | 109,192 | ||||||||
Accounts receivable, net | 1,542,603 | (66,325 | ) | — | 1,476,278 | |||||||||||
Prepaid expenses | 135,925 | (1,127 | ) | 134,798 | ||||||||||||
Other current assets | 269,208 | (17,362 | ) | 60,298 | (C) | 312,144 | ||||||||||
Income taxes receivable | 10,465 | — | — | 10,465 | ||||||||||||
Current assets from discontinued operations | — | 83,227 | (L) | — | 83,227 | |||||||||||
Total Current Assets | 2,065,806 | — | 60,298 | 2,126,104 | ||||||||||||
Property, plant & equipment, net | 3,163,615 | (224,604 | )(L) | 154,147 | (B) | 3,093,158 | ||||||||||
Property, plant and equipment from discontinued operations, net | 25,303 | 224,604 | (L) | 55,185 | (B) | 305,092 | ||||||||||
Definite-lived intangibles, net | 505,046 | (283 | ) | 488,381 | (B) | 993,144 | ||||||||||
Indefinite-lived intangibles — Licenses | 4,316,006 | (122,589 | ) | 2,545,021 | (B) | 6,738,438 | ||||||||||
Indefinite-lived intangibles — Permits | 242,343 | — | 2,815,126 | (B) | 3,057,469 | |||||||||||
Goodwill | 7,434,320 | 5,930,176 | (B) | 13,364,496 | ||||||||||||
Goodwill and intangible assets from discontinued operations, net | 86,009 | 109,897 | (L) | 1,479,716 | (B) | 1,675,622 | ||||||||||
Other assets: | ||||||||||||||||
Notes receivable | 7,537 | (1,261 | ) | — | 6,276 | |||||||||||
Investments in, and advances to, nonconsolidated affiliates | 318,462 | (3,290 | ) | 319,301 | (B) | 634,473 | ||||||||||
Other assets | 283,682 | (20,785 | ) | 278,859 | (B), (C) | 541,756 | ||||||||||
Other investments | 238,201 | (675 | ) | — | 237,526 | |||||||||||
Other assets from discontinued operations | — | 26,012 | (L) | — | 26,012 | |||||||||||
Total Assets | $ | 18,686,330 | $ | (12,974 | ) | $ | 14,126,210 | $ | 32,799,566 | |||||||
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AT MARCH 31, 2007
Pending Asset | ||||||||||||||||
Clear Channel | Sale | Merger | ||||||||||||||
Historical | Adjustments (A) | Adjustments | Pro Forma | |||||||||||||
(In thousands of dollars, except share data) | ||||||||||||||||
LIABILITIES AND SHAREHOLDERS’ EQUITY | ||||||||||||||||
Current liabilities: | ||||||||||||||||
Accounts payable, accrued expenses and accrued interest | $ | 1,041,707 | $ | (8,550 | ) | $ | — | $ | 1,033,157 | |||||||
Current portion of long-term debt | 562,638 | — | (2,910 | )(B), (D) | 559,728 | |||||||||||
Deferred income | 193,677 | (7,905 | ) | 185,772 | ||||||||||||
Other current liabilities | 17,160 | (17,160 | ) | — | — | |||||||||||
Current liabilities from discontinued operations | — | 33,615 | (L) | — | 33,615 | |||||||||||
Total Current Liabilities | 1,815,182 | — | (2,910 | ) | 1,812,272 | |||||||||||
Long-term debt | 6,862,109 | — | 16,163,296 | (B), (D) | 23,025,405 | |||||||||||
Other long-term obligations | 73,165 | — | (73,165 | )(E) | — | |||||||||||
Deferred income taxes | 649,231 | (12,974 | ) | 2,335,783 | (B), (F) | 2,972,040 | ||||||||||
Other long-term liabilities | 795,069 | (23,565 | ) | (55,159 | )(B), (G) | 716,345 | ||||||||||
Other long-term liabilities of discontinued operations | — | 23,565 | (L) | — | 23,565 | |||||||||||
Minority interest | 362,852 | — | — | 362,852 | ||||||||||||
Shareholders’ equity | ||||||||||||||||
Clear Channel Common Stock | 49,632 | — | (49,632 | )(H) | — | |||||||||||
Class A common stock, par $.001 per share, 400 million shares authorized, 32.1 million shares issued and outstanding | — | — | 32 | (N) | 32 | |||||||||||
Classes B and C common stock, par $.001 per share, 250 million shares authorized, 69.9 million shares issued and outstanding | — | — | 70 | (N) | 70 | |||||||||||
Additional paid-in capital | 26,805,623 | — | (22,918,638 | )(H), (N) | 3,886,985 | |||||||||||
Retained deficit | (19,029,751 | ) | — | 19,029,751 | (H) | — | ||||||||||
Accumulated other comprehensive income | 306,767 | — | (306,767 | )(H) | — | |||||||||||
Cost of shares held in treasury | (3,549 | ) | — | 3,549 | (H) | — | ||||||||||
Total Shareholders’ Equity | 8,128,722 | — | (4,241,635 | )(N) | 3,887,087 | |||||||||||
Total Liabilities and Shareholders’ Equity | $ | 18,686,330 | $ | (12,974 | ) | $ | 14,126,210 | $ | 32,799,566 | |||||||
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THREE MONTH PERIOD ENDED MARCH 31, 2007
Pending Asset | ||||||||||||||||
Clear Channel | Sale | Merger | ||||||||||||||
Historical | Adjustments (A) | Adjustments | Pro Forma | |||||||||||||
(In thousands of dollars, except per share data) | ||||||||||||||||
Revenue | $ | 1,608,315 | $ | (119,470 | ) | $ | — | $ | 1,488,845 | |||||||
Operating expenses: | ||||||||||||||||
Direct operating expenses (excludes depreciation and amortization) | 669,271 | (45,575 | ) | — | 623,696 | |||||||||||
Selling, general and administrative expenses (excludes depreciation and amortization) | 461,177 | (51,390 | ) | — | 409,787 | |||||||||||
Depreciation and amortization | 147,377 | (8,627 | ) | 18,736 | (I) | 157,486 | ||||||||||
Corporate expenses (excludes depreciation and amortization) | 49,144 | (995 | ) | 1,937 | (O) | 50,086 | ||||||||||
Merger expenses | 1,686 | — | (1,686 | )(M) | — | |||||||||||
Gain on disposition of assets — net | 5,297 | 1,653 | — | 6,950 | ||||||||||||
Operating income (loss) | 284,957 | (11,230 | ) | (18,987 | ) | 254,740 | ||||||||||
Interest expense | 118,074 | — | 366,803 | (J) | 484,877 | |||||||||||
Gain (loss) on marketable securities | 395 | — | — | 395 | ||||||||||||
Equity in earnings of nonconsolidated affiliates | 5,094 | 169 | — | 5,263 | ||||||||||||
Other income — net | 53 | 715 | — | 768 | ||||||||||||
Income (loss) before income taxes and minority interest | 172,425 | (10,346 | ) | (385,790 | ) | (223,711 | ) | |||||||||
Income tax benefit (expense) | (72,936 | ) | 3,932 | 145,806 | (F) | 76,802 | ||||||||||
Minority interest expense, net of tax | 276 | — | — | 276 | ||||||||||||
Income (loss) from continuing operations | $ | 99,213 | $ | (6,414 | ) | $ | (239,984 | ) | $ | (147,185 | ) | |||||
Basic EPS:(K) | ||||||||||||||||
Income (loss) from continuing operations | $ | .20 | $ | (1.44 | ) | |||||||||||
Diluted EPS:(K) | ||||||||||||||||
Income (loss) from continuing operations | $ | .20 | $ | (1.44 | ) |
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YEAR ENDED DECEMBER 31, 2006
Pending Asset | ||||||||||||||||
Clear Channel | Sale | Merger | ||||||||||||||
Historical | Adjustments (A) | Adjustments | Pro Forma | |||||||||||||
(In thousands of dollars, except per share data) | ||||||||||||||||
Revenue | $ | 7,031,445 | $ | (542,872 | ) | $ | — | $ | 6,488,573 | |||||||
Operating expenses: | ||||||||||||||||
Direct operating expenses (excludes depreciation and amortization ) | 2,639,412 | (185,598 | ) | — | 2,453,814 | |||||||||||
Selling, general and administrative expenses (excludes depreciation and amortization) | 1,950,636 | (211,300 | ) | — | 1,739,336 | |||||||||||
Depreciation and amortization | 631,263 | (34,633 | ) | 74,943 | (I) | 671,573 | ||||||||||
Corporate expenses (excludes depreciation and amortization) | 201,752 | (5,432 | ) | 7,465 | (O) | 203,785 | ||||||||||
Merger expenses | 7,633 | — | (7,633 | )(M) | — | |||||||||||
Gain on disposition of assets — net | 69,343 | 2,347 | — | 71,690 | ||||||||||||
Operating income (loss) | 1,670,092 | (103,562 | ) | (74,775 | ) | 1,491,755 | ||||||||||
Interest expense | 483,974 | — | 1,468,533 | (J) | 1,952,507 | |||||||||||
Gain on marketable securities | 2,306 | — | — | 2,306 | ||||||||||||
Equity in earnings of nonconsolidated affiliates | 37,478 | 368 | — | 37,846 | ||||||||||||
Other income (expense) — net | (8,421 | ) | 2,677 | — | (5,744 | ) | ||||||||||
Income (loss) before income taxes and minority interest | 1,217,481 | (100,517 | ) | (1,543,308 | ) | (426,344 | ) | |||||||||
Income tax benefit (expense) | (499,167 | ) | 38,196 | 583,283 | (F) | 122,312 | ||||||||||
Minority interest expense, net of tax | 31,927 | — | — | 31,927 | ||||||||||||
Income (loss) from continuing operations | $ | 686,387 | $ | (62,321 | ) | $ | (960,025 | ) | $ | (335,959 | ) | |||||
Basic EPS: (K) | ||||||||||||||||
Income (loss) from continuing operations | $ | 1.37 | $ | (3.29 | ) | |||||||||||
Diluted EPS: (K) | ||||||||||||||||
Income (loss) from continuing operations | $ | 1.37 | $ | (3.29 | ) |
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YEAR ENDED DECEMBER 31, 2005
Pending Asset | ||||||||||||
Clear Channel | Sale | |||||||||||
Historical | Adjustments (A) | Pro Forma | ||||||||||
(In thousands of dollars, except per share data) | ||||||||||||
Revenue | $ | 6,546,539 | $ | (505,179 | ) | $ | 6,041,360 | |||||
Operating expenses: | ||||||||||||
Direct operating expenses (excludes depreciation and amortization) | 2,446,534 | (175,966 | ) | 2,270,568 | ||||||||
Selling, general and administrative expenses (excludes depreciation and amortization) | 1,884,947 | (200,986 | ) | 1,683,961 | ||||||||
Depreciation and amortization | 625,370 | (37,732 | ) | 587,638 | ||||||||
Corporate expenses (excludes depreciation and amortization) | 171,076 | (3,988 | ) | 167,088 | ||||||||
Gain on disposition of assets — net | 51,358 | (1,343 | ) | 50,015 | ||||||||
Operating income (loss) | 1,469,970 | (87,850 | ) | 1,382,120 | ||||||||
Interest expense | 443,245 | — | 443,245 | |||||||||
(Loss) on marketable securities | (702 | ) | — | (702 | ) | |||||||
Equity in earnings of nonconsolidated affiliates | 38,338 | — | 38,338 | |||||||||
Other income (expense) — net | 11,267 | (447 | ) | 10,820 | ||||||||
Income (loss) before income taxes and minority interest | 1,075,628 | (88,297 | ) | 987,331 | ||||||||
Income tax benefit (expense) | (424,873 | ) | 34,878 | (389,995 | ) | |||||||
Minority interest expense, net of tax | 17,847 | — | 17,847 | |||||||||
Income (loss) from continuing operations | $ | 632,908 | $ | (53,419 | ) | $ | 579,489 | |||||
Basic EPS: | ||||||||||||
Income (loss) from continuing operations | $ | 1.16 | $ | (.10 | ) | $ | 1.06 | |||||
Diluted EPS: | ||||||||||||
Income (loss) from continuing operations | $ | 1.16 | $ | (.10 | ) | $ | 1.06 |
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YEAR ENDED DECEMBER 31, 2004
Pending Asset | ||||||||||||
Clear Channel | Sale | |||||||||||
Historical | Adjustments (A) | Pro Forma | ||||||||||
(In thousands of dollars, except per share data) | ||||||||||||
Revenue | $ | 6,568,392 | $ | (529,007 | ) | $ | 6,039,385 | |||||
Operating expenses: | ||||||||||||
Direct operating expenses (excludes depreciation and amortization) | 2,311,583 | (172,061 | ) | 2,139,522 | ||||||||
Selling, general and administrative expenses (excludes depreciation and amortization) | 1,876,801 | (204,096 | ) | 1,672,705 | ||||||||
Depreciation and amortization | 625,412 | (38,261 | ) | 587,151 | ||||||||
Corporate expenses (excludes depreciation and amortization) | 167,388 | (4,125 | ) | 163,263 | ||||||||
Gain on disposition of assets — net | 40,011 | 2,784 | 42,795 | |||||||||
Operating income (loss) | 1,627,219 | (107,680 | ) | 1,519,539 | ||||||||
Interest expense | 367,503 | — | 367,503 | |||||||||
Gain on marketable securities | 46,271 | — | 46,271 | |||||||||
Equity in earnings of nonconsolidated affiliates | 22,285 | — | 22,285 | |||||||||
Other expense — net | 30,293 | 267 | 30,560 | |||||||||
Income (loss) before income taxes and minority interest | 1,297,979 | (107,947 | ) | 1,190,032 | ||||||||
Income tax benefit (expense) | (497,151 | ) | 41,343 | (455,808 | ) | |||||||
Minority interest expense, net of tax | 7,602 | — | 7,602 | |||||||||
Income (loss) from continuing operations | $ | 793,226 | $ | (66,604 | ) | $ | 726,622 | |||||
Basic EPS: | ||||||||||||
Income (loss) from continuing operations | $ | 1.33 | $ | (.11 | ) | $ | 1.22 | |||||
Diluted EPS: | ||||||||||||
Income (loss) from continuing operations | $ | 1.33 | $ | (.11 | ) | $ | 1.22 |
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Control Group Continuing Ownership | ||||||||||||||||||||
0.64% | 6.5% | 10% | 20% | 30%(1) | ||||||||||||||||
(In thousands) | ||||||||||||||||||||
Definite-lived intangibles | $ | 993,144 | 964,588 | 947,138 | 897,986 | 848,833 | ||||||||||||||
Indefinite-lived intangibles — Licenses | 6,738,438 | 6,589,620 | 6,498,690 | 6,242,548 | 5,986,407 | |||||||||||||||
Indefinite-lived intangibles — Permits | 3,057,469 | 2,892,856 | 2,792,276 | 2,508,950 | 2,225,624 | |||||||||||||||
Goodwill | 13,364,496 | 13,001,745 | 12,780,099 | 12,155,745 | 11,531,390 | |||||||||||||||
Total Assets | $ | 32,799,566 | $ | 31,996,866 | $ | 31,506,403 | $ | 30,124,819 | $ | 28,743,235 | ||||||||||
Total Shareholders’ Equity | $ | 3,887,087 | $ | 3,225,175 | $ | 2,820,736 | $ | 1,681,471 | $ | 542,207 | ||||||||||
Loss from Continuing Operations for the year ended December 31, 2006 | $ | (335,959 | ) | $ | (331,577 | ) | $ | (328,899 | ) | $ | (321,357 | ) | $ | (313,814 | ) | |||||
Loss from Continuing Operations for the three months ended March 31, 2007 | $ | (147,185 | ) | $ | (146,089 | ) | $ | (145,420 | ) | $ | (143,534 | ) | $ | (141,648 | ) |
(1) | The 30% continuing ownership assumes: (i) that the only unaffiliated shareholders that make a Stock Election are 5% shareholders of Clear Channel on March 31, 2007, and (ii) the assumption there are no Rollover Shares other than those detailed above for Messrs. Mark P. Mays and Randall T. Mays. To the extent that any unaffiliated shareholders, based on Clear Channel shareholdings as of March 31, 2007, make a Stock Election with respect to any material portion of their holdings, it would be unlikely that the control group would be greater than 30% of Holdings. |
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Consideration for Equity(i) | $ | 19,521,364 | ||
Estimated Transaction Costs | 405,230 | |||
Total Consideration | 19,926,594 | |||
Less: net assets acquired | 8,128,722 | |||
Less: adjustment for historical carryover basis per EITF88-16 | 72,916 | |||
Excess consideration to be allocated | $ | 11,724,956 | ||
Allocation: | ||||
Fair value adjustments: | ||||
Property, plant and equipment, net | $ | 154,147 | ||
Property, plant and equipment from discontinued operations, net | 55,185 | |||
Definite-lived intangibles (ii) | 488,381 | |||
Indefinite-lived intangibles — Licenses (iii) | 2,545,021 | |||
Indefinite-lived intangibles — Permits (iii) | 2,815,126 | |||
Intangible assets from discontinued operations, net | 1,479,716 | |||
Investments in, and advances to, nonconsolidated affiliates | 319,301 | |||
Other assets | (53,968 | ) | ||
Current portion of long term debt | 2,910 | |||
Long-term debt | 291,374 | |||
Deferred income taxes recorded for fair value adjustments to assets and liabilities | (2,335,783 | ) | ||
Other long term liabilities | 55,159 | |||
Termination of interest rate swaps | (21,789 | ) | ||
Goodwill (iv) | 5,930,176 | |||
Total adjustments | $ | 11,724,956 | ||
(i) | Consideration for equity: |
Total shares outstanding(1) | 497,994 | |||
Multiplied by: Price per share(2) | $ | 39.20 | ||
$ | 19,521,364 | |||
(1) | Total shares outstanding include 1.8 million equivalent shares subject to employee stock options. |
(2) | Price per Share is assumed to be the $39.20 per share to be paid as part of the Cash Consideration. |
(ii) | Identifiable intangible assets acquired subject to amortization includes contracts amortizable over a weighted average amortization period of approximately 7 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. |
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(iv) | The pro forma adjustment to goodwill consists of: |
Removal of historical goodwill | $ | (7,434,320 | ) | |
Goodwill arising from the merger | 13,364,496 | |||
$ | 5,930,176 | |||
Total Debt to be Redeemed(i) | $ | (2,415,959 | ) | |
Issuance of Debt in merger(ii) | 18,848,840 | |||
Fair value adjustment ($304,557 related to Clear Channel Senior Notes less $10,273 related to other fair value adjustments) | (294,284 | ) | ||
Less: termination of interest rate swaps in connection with the merger | 21,789 | |||
Debt Adjustment ($16,163,296 long-term less $2,910 current portion) | $ | 16,160,386 | ||
(i) | Total Debt to be Redeemed: |
Clear Channel Bank Credit Facilities | $ | 994,654 | ||
Clear Channel 7.650% Senior Notes due 2010 | 750,000 | |||
AMFM Operating, Inc. 8% Senior Notes due 2008 | 671,305 | |||
Total | $ | 2,415,959 | ||
Term | Amount Issued | |||||||
Senior Secured Credit Facilities: | ||||||||
Credit Facilities | 7.0 years | $ | 1,348,840 | |||||
Credit Facilities | 7.5 years | 14,150,000 | ||||||
Receivables Backed Credit Facility | 6.0 years | 750,000 | ||||||
Senior Bridge Facility (1) (or New Senior Notes) | 8.0 years | 2,600,000 | ||||||
Total | $ | 18,848,840 | ||||||
(1) | Initial maturity of one year, which is automatically extended to eight years if remaining outstanding after one year. |
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Year Ended | ||||||||
December 31, | Three Months Ended | |||||||
2006 | March 31, 2007 | |||||||
Interest expense on Debt redeemed in connection with the Merger | $ | (208,246 | ) | $ | (49,142 | ) | ||
Debt Issued in Merger: | ||||||||
Interest expense on Senior Secured Credit Facilities(1) | 1,274,340 | 318,585 | ||||||
Interest expense on Receivables Backed Credit Facility(2) | 52,388 | 13,097 | ||||||
Interest expense on Senior Bridge Facility(3) | 247,110 | 61,778 | ||||||
Amortization of fair value adjustments on Clear Channel Senior Notes | 38,696 | 9,674 | ||||||
Amortization of deferred financing fees from new debt issued in the Merger and Financing | 64,245 | 12,810 | ||||||
Pro forma interest adjustment(4) | $ | 1,468,533 | $ | 366,802 | ||||
(1) | Assumes LIBOR plus a weighted average margin of 2.73% (a range from 2.50% to 2.75% for LIBOR rate debt). Interest rates may be based upon a base rate or a LIBOR rate plus a margin. Also assumes a weighted average commitment fee of 0.69% on the unutilized portion of the Senior Secured Credit Facilities. Unutilized commitment fees are assumed to range from 0.50% to 1.00%. | |
(2) | Assumes LIBOR plus a margin of 1.50%. Interest rates may be based upon a base rate or a LIBOR rate plus a margin. Also assumes a commitment fee of 0.375% on the unutilized portion of the Receivables Backed Credit Facility. | |
(3) | Assumes LIBOR plus a weighted average margin of 4.14% (a range from 4.00% to 4.25% for LIBOR rate debt). Interest rates are anticipated to be based upon a LIBOR rate plus a margin. Also assumes entire amount of Senior Bridge Facility is funded in lieu of issuance of New Senior Notes. If New Senior Notes or other debt |
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securities are not issued to refinance the Senior Bridge Facility, interest rates may increase on a periodic basis, which could result in maximum annual interest expense of $283.3 million. |
(4) | Assumes a weighted average interest rate of 8.9% excluding interest expense on debt repaid or redeemed in connection with merger. For each 0.25% increase (or decrease) in interest rate, the annual interest expense would increase (or decrease) by approximately $47.1 million. |
(In thousands) | ||||||||
Fair value of Shareholders’ equity at March 31, 2007 | $ | 19,521,364 | ||||||
Net increase in debt due to merger(i) | (15,561,364 | ) | ||||||
Fair value of equity after merger | $ | 3,960,000 | ||||||
Pro forma Shareholder’s equity under EITF88-16 | ||||||||
Fair value of equity after merger | $ | 3,960,000 | ||||||
Less: 0.64% of Fair value of equity after merger ($3,960,000 multiplied by 0.64%) | (25,344 | ) | ||||||
Plus: 0.64% of Shareholders’ historical carryover basis (8,128,722 multiplied by 0.64%) | 52,024 | |||||||
Less: Deemed dividend (15,561,364 multiplied by 0.64%) | (99,593 | ) | ||||||
Adjustment for Historical Carryover Basis per EITF88-16 | (72,913 | ) | ||||||
Total pro forma Shareholders’ equity under EITF88-16(ii) | $ | 3,887,087 | ||||||
(i) | Net increase in debt in merger transaction: |
Issuance of debt in merger transaction | $ | 18,848,840 | ||
Total debt redeemed | (2,415,959 | ) | ||
Estimated transaction and loan costs | (871,517 | ) | ||
Total increase in debt in merger transaction | $ | 15,561,364 | ||
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(ii) | Total pro forma Shareholders’ equity under EITF 88-16: |
Class A common stock | $ | 32 | ||
Classes B and C common stock | 70 | |||
Additional paid in capital | 3,886,985 | |||
$ | 3,887,087 | |||
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THE MERGER
Payment Due by Period | ||||||||||||||||||||
(in thousands) | ||||||||||||||||||||
Less Than | More Than | |||||||||||||||||||
Contractual Obligations | Total | 1 Year | 1 to 3 Years | 3 to 5 Years | 5 Years | |||||||||||||||
Long-term Debt(1) | ||||||||||||||||||||
Existing notes and new debt | $ | 23,748,840 | $ | 500,000 | $ | 937,500 | $ | 4,795,000 | $ | 17,516,340 | ||||||||||
Other debt | 140,850 | 62,638 | 71,886 | 2,414 | 3,912 | |||||||||||||||
Interest payments on debt | 12,389,873 | 1,844,542 | 3,675,607 | 3,540,551 | 3,329,173 | |||||||||||||||
Non-Cancelable Operating | ||||||||||||||||||||
Leases | 2,311,128 | 281,035 | 586,870 | 426,042 | 1,017,181 | |||||||||||||||
Non-Cancelable Contracts | 2,896,292 | 601,788 | 1,033,482 | 509,429 | 751,593 | |||||||||||||||
Employment/Talent Contracts | 449,660 | 189,361 | 207,710 | 41,788 | 10,801 | |||||||||||||||
Capital Expenditures | 178,964 | 80,223 | 76,307 | 15,754 | 6,680 | |||||||||||||||
Other long-term obligations | 240,036 | — | 23,829 | 112,772 | 103,435 | |||||||||||||||
Total | $ | 42,355,643 | $ | 3,559,587 | $ | 6,613,191 | $ | 9,443,750 | $ | 22,739,115 | ||||||||||
(1) | Long-term Debt excludes $304.6 million of fair value purchase accounting adjustments made in the pro forma balance sheet. |
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Name | Age | Position | ||||
Scott M. Sperling | 49 | President and Director | ||||
Steve Barnes | 47 | Director | ||||
Richard J. Bressler | 49 | Director | ||||
Charles A. Brizius | 38 | Director | ||||
John Connaughton | 41 | Director | ||||
Ed Han | 32 | Director | ||||
Ian K. Loring | 41 | Director | ||||
Kent R. Weldon | 39 | Director |
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Name | Age | Position | ||||
Mark P. Mays | 43 | Director and Chief Executive Officer | ||||
Randall T. Mays | 41 | Director and President | ||||
Scott M. Sperling | 49 | Director | ||||
Steve Barnes | 47 | Director | ||||
Richard J. Bressler | 49 | Director | ||||
Charles A. Brizius | 38 | Director | ||||
John Connaughton | 41 | Director | ||||
Ed Han | 32 | Director | ||||
Ian K. Loring | 41 | Director | ||||
Kent R. Weldon | 39 | Director | ||||
L. Lowry Mays | 71 | Chairman Emeritus | ||||
Paul J. Meyer | 64 | Global President and Chief Operating Officer — Clear Channel Outdoor, Inc. | ||||
John E. Hogan | 50 | 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 and, for most executives, individual performance during the prior fiscal year; |
• | long-term incentive compensation, delivered in the form of stock options grants and restricted stock awards that are awarded based on the prior year’s performance and other factors described below, and that are designed to align executive officers’ interests 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 the our chief executive officer (except in the case of his own compensation). |
• | At the outset of the fiscal year: |
• | After the end of the fiscal year: |
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L. Lowry Mays |
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Operating | Non-cash | Depreciation | Gain on | |||||||||||||||||
income | compensation | and | Disposition of | |||||||||||||||||
(loss) | expense | amortization | assets — net | OIBDAN | ||||||||||||||||
Radio Broadcasting | $ | 260,133 | $ | 4,464 | $ | 31,585 | $ | — | $ | 296,182 | ||||||||||
Outdoor | 73,448 | 1,367 | 95,670 | — | 170,485 | |||||||||||||||
Other | 1,256 | 397 | 15,775 | — | 17,428 | |||||||||||||||
Gain on disposition of assets — net | 5,297 | — | — | (5,297 | ) | — | ||||||||||||||
Corporate and Merger costs | (55,177 | ) | 2,414 | 4,347 | — | (48,416 | ) | |||||||||||||
Consolidated | $ | 284,957 | $ | 8,642 | $ | 147,377 | $ | (5,297 | ) | $ | 435,679 | |||||||||
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Value of | ||||||||||||||||||||
Name | Base Salary | Bonus | Benefits(1) | Other | Total | |||||||||||||||
L. Lowry Mays | $ | 750,000 | (2) | $ | 4,000,000 | (3) | $ | 33,584 | — | $ | 4,783,584 | |||||||||
Mark P. Mays | $ | 2,685,000 | (4) | $ | 19,875,000 | (5) | $ | 20,150 | — | $ | 22,580,150 | |||||||||
Randall T. Mays | $ | 2,604,999 | (4) | $ | 19,875,000 | (5) | $ | 18,666 | — | $ | 22,498,665 | |||||||||
Paul J. Meyer | $ | 650,000 | (6) | — | — | — | $ | 650,000 | ||||||||||||
John E. Hogan | $ | 750,000 | (6) | — | (7) | — | $ | 1,600,000 | (8) | $ | 2,350,000 |
(1) | The values associated with the continued provision of health benefits are based on the total 2007 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 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 L. Lowry Mays under the terms of his employment agreement (i.e., four years of Mr. Mays’ annual bonus). | |
(4) | Represents three times the annual base salary for the year ended December 31, 2006 for each of Mark P. Mays and Randall T. Mays, respectively. | |
(5) | Represents three times the annual incentive bonus for the year ended December 31, 2006 for each of Mark P. Mays and Randall T. Mays, respectively. | |
(6) | Represents one year’s annual base salary for each of Paul J. Meyer and John E. Hogan, respectively. | |
(7) | Cannot be estimated as Mr. Hogan’s annual incentive bonus is determined and awarded based upon his performance at the end of each year. | |
(8) | Not payable if Mr. Hogan terminates his employment. |
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(1) | One or more new entities controlled by private equity funds sponsored by Bain Capital Partners, LLC and Thomas H. Lee Partners, L.P., or their affiliates will acquire between approximately 70% and 99% of the voting power and economic interests of Holdings (see footnote 3). Bain and THL will each have fifty percent control of each such new entity. The equity interests of the new entities will be owned by Bain, THL, their affiliates and/or coinvestors. | |
(2) | Messrs. Lowry, Mark and Randall Mays have committed to roll over into Holdings shares of Clear Channel common stock, Clear Channel restricted stock and/or “in the money” Clear Channel stock options with a value equal to $20 million in the aggregate, which will result in the issuance of approximately .64% of the outstanding capital stock and voting power of Holdings after the merger (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; however, no agreements, arrangements or understandings have been entered into with respect to such arrangements (see “Interests of Clear Channel’s Directors and Executive Officers in the Merger — Equity Rollover”). | |
(3) | Combination of Strong Voting Class B Common Stock and Nonvoting Class C Common Stock (with aggregate votes equal to 1 vote per share, e.g., if “strong voting stock” has 10 votes, each share of Strong Voting Class B Common Stock will be issued with 9 shares of Nonvoting Class C Common Stock. Note the numbers are for illustration purposes only). Each share of Voting Class A Common Stock, Nonvoting Class C Common Stock and Strong Voting Common Stock will have the same value. The number of shares of outstanding capital stock issued to Bain and THL in the merger will vary based on (i) the number of shareholders who elect to receive Stock Consideration and (ii) the number of shares issued to management pursuant to the equity rollover (see footnote 4). | |
(4) | Common Stock with aggregate voting power equal to 1 vote per share. Messrs. Lowry, Mark and Randall Mays have committed to roll over into Holdings shares of Clear Channel common stock, Clear Channel restricted stock and/or “in the money” Clear Channel stock options with a value equal to $20 million in the aggregate, |
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which will result in the issuance of approximately .64% of the outstanding capital stock and voting power of Holdings after the merger (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; however, no agreements, arrangements or understandings have been entered into with respect to such arrangements (see “Interests of Clear Channel’s Directors and Executive Officers in the Merger — Equity Rollover”). | ||
(5) | Voting Class A Common Stock. The percentage will vary 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 will be 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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• | The Clear Channel 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 23. 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 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. After giving consideration to management’s projections, the financial analyses provided by Goldman Sachs 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 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 |
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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 the21-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 merger agreement was fair from a financial point of view, to such holders as described under “Opinion of Clear Channel’s Financial Advisor.” 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 full text of the Goldman Sachs opinion is attached to this proxy statement/prospectus as Annex E. |
• | 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 merger agreement and the related agreements, including: |
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• | The modifications to the employment agreements of Messrs. Mark, Randall 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 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 |
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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. | |
• | 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 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 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 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 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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• | 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. |
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Weighted | Weighted | |||||||||||||||||||||||
Number of | Average | Average | ||||||||||||||||||||||
Aggregate | Shares | Exercise | Exercise Price | Value of | ||||||||||||||||||||
Shares | Underlying | Price of | Value of | of Vested and | Vested and | |||||||||||||||||||
Subject to | Unvested | Unvested | Unvested | Unvested | Unvested | |||||||||||||||||||
Name | Options | Options | Options | Options | Options | Options | ||||||||||||||||||
Alan D. Feld | 7,833 | 1,567 | $ | 38.08610 | $ | 1,745 | $ | 38.08610 | $ | 8,725 | ||||||||||||||
Perry J. Lewis | 51,681 | 1,567 | $ | 38.08610 | $ | 1,745 | $ | 30.40824 | $ | 454,367 | ||||||||||||||
L. Lowry Mays | 749,693 | — | — | — | $ | 32.43055 | $ | 5,075,010 | ||||||||||||||||
Mark P. Mays | 499,691 | 499,691 | $ | 32.78604 | $ | 3,204,997 | $ | 32.78604 | $ | 3,204,997 | ||||||||||||||
Randall T. Mays | 499,691 | 499,691 | $ | 32.78604 | $ | 3,204,997 | $ | 32.78604 | $ | 3,204,997 | ||||||||||||||
B. J. McCombs | 38,166 | 24,267 | $ | 32.02353 | $ | 174,154 | $ | 32.91242 | $ | 239,972 | ||||||||||||||
Phyllis B. Riggins | 7,833 | 1,567 | $ | 38.08610 | $ | 1,745 | $ | 38.08610 | $ | 8,725 | ||||||||||||||
Theodore H. Strauss | 7,833 | 1,567 | $ | 38.08610 | $ | 1,745 | $ | 38.08610 | $ | 8,725 | ||||||||||||||
J. C. Watts | 7,833 | 1,567 | $ | 38.08610 | $ | 1,745 | $ | 38.08610 | $ | 8,725 | ||||||||||||||
John H. Williams | 7,833 | 1,567 | $ | 38.08610 | $ | 1,745 | $ | 38.08610 | $ | 8,725 | ||||||||||||||
John B. Zachry | 22,500 | 18,000 | $ | 31.72000 | $ | 134,640 | $ | 31.72000 | $ | 168,300 | ||||||||||||||
Paul J. Meyer | — | — | — | — | — | — | ||||||||||||||||||
John E. Hogan | 244,268 | 199,878 | $ | 30.28494 | $ | 1,781,925 | $ | 31.15280 | $ | 1,965,673 | ||||||||||||||
Herbert W. Hill, Jr. | 15,626 | 11,830 | $ | 32.97996 | $ | 73,583 | $ | 33.48541 | $ | 89,296 | ||||||||||||||
Andrew W. Levin | 40,717 | 29,807 | $ | 32.67544 | $ | 189,780 | $ | 33.35672 | $ | 237,921 | ||||||||||||||
Donald D. Perry | 9,870 | 9,870 | $ | 30.72442 | $ | 83,654 | $ | 30.72442 | $ | 83,654 |
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Aggregate Shares of | Value of Shares of | |||||||
Clear Channel | Clear Channel | |||||||
Name | Restricted Stock | Restricted Stock | ||||||
Alan D. Feld | 7,900 | $ | 309,680 | |||||
Perry J. Lewis | 7,900 | $ | 309,680 | |||||
L. Lowry Mays | 137,000 | $ | 5,370,400 | |||||
Mark P. Mays | 340,000 | $ | 13,328,000 | |||||
Randall T. Mays | 340,000 | $ | 13,328,000 | |||||
B. J. McCombs | 2,500 | $ | 98,000 | |||||
Phyllis B. Riggins | 8,500 | $ | 333,200 | |||||
Theodore H. Strauss | 7,900 | $ | 309,680 | |||||
J. C. Watts | 7,900 | $ | 309,680 | |||||
John H. Williams | 7,900 | $ | 309,680 | |||||
John B. Zachry | 2,500 | $ | 98,000 | |||||
Paul J. Meyer | 12,000 | $ | 470,400 | |||||
John E. Hogan | 105,000 | $ | 4,116,000 | |||||
Herbert W. Hill, Jr. | 15,750 | $ | 617,400 | |||||
Andrew W. Levin | 31,932 | $ | 1,251,734 | |||||
Donald D. Perry | 18,750 | $ | 735,000 |
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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. | $ | 390,251 | ||
Andrew W. Levin | $ | 873,626 | ||
Donald D. Perry(2) | $ | 966,250 |
(1) | Messrs. L. Lowry Mays, Mark P. Mays, Randall T. Mays, Paul J. Meyer and John Hogan are all employed pursuant to employment agreements and not covered by this severance policy. In addition, each of the employment agreements of Messrs. L. Lowry Mays, Mark P. Mays and Randall T. Mays will be terminated or modified, as applicable, and replaced with new or amended employment agreements which terms will be as described below under “New Employment Agreements.” | |
(2) | In connection with a divestiture of certain radio and television assets, Clear Channel’s severance policy provides that if a corporate officer, except for any corporate officer who is collectively bargained or party to an employment or other agreement with Clear Channel or any of its subsidiaries that provides for severance, is involuntarily terminated without “cause,” not offered comparable employment with the successor entity, or resigns for “good reason” in connection with the divestiture, the corporate officer will be entitled to 24 months of his or her “base pay” plus 24 months of his or her “monthly bonus” as severance. |
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• | the provision of the new option grants as summarized above; | |
• | severance upon termination in a lump sum amount equal to three times the executive’s annual base salary plus the executive’s prior year’s annual cash bonus; | |
• | a five-year term, automatically extended for consecutive one year periods unless 12 months prior notice of non-renewal is provided by the terminating party; |
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• | salary consistent with current salary in effect; |
• | annual bonus not less than $6,625,000, in the case of Mr. Mark P. Mays, and $6,625,000, in the case of Mr. Randall T. Mays, so long as the surviving corporation reaches certain performance goals; and |
• | certain benefits and perquisites consistent with those provided by the executive’s current employment agreements (including“gross-up” payments for excise taxes that may be payable as a result of the proposed merger). |
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• | cause the 24 million shares of Common Stock they owned as of the date of the Voting Agreement (the “Covered Shares”) and any shares of Clear Channel common stock they acquire after that time (the “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 the Covered Shares and any After Acquired Shares that the Highfields Funds are entitled to vote, |
• | 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 one member of which will be a United States citizen and will be selected by Holdings’ nominating committee after consultation with Highfields Management and any holder whose Stock Election is reasonably expected to result in such holder owning three percent (3%) or more of the total outstanding equity securities of Holdings (these two directors, “Public Directors”); | |
• | until the Highfields Funds beneficially own (as defined under the Exchange Act) less than 5% of the outstanding shares of voting securities of Holdings issued as Stock Consideration (“Required Percentage”), |
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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 Funds 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. | |
• | until the Highfields Funds 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 Holdings. |
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• | the consummation of the merger in accordance with the merger agreement; | |
• | the absence of any amendments or waivers to the merger agreement which are materially adverse to the lenders and which have not been approved by the lead arrangers under the Debt Commitment Letter; | |
• | the absence of any “Material Adverse Effect on Clear Channel” (as defined below under “The Merger Agreement — Representations and Warranties”); | |
• | the receipt by Merger Sub of cash equity contributions, when taken together with the proceeds of the Debt Financing and available cash, in an amount required to consummate the Transactions; | |
• | the execution of definitive documentation consistent with the term sheets for the Debt Financing; | |
• | the receipt of specified financial statements of Clear Channel; and | |
• | the receipt of customary closing documents and deliverables. |
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• | the merger agreement; |
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• | annual reports to shareholders and Annual Reports onForm 10-K of Clear Channel for the five years ended December 31, 2006; | |
• | annual reports to shareholders and Annual Reports onForm 10-K of Clear Channel Outdoor for the two years ended December 31, 2006; | |
• | Clear Channel Outdoor’s Registration Statement onForm 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 Form10-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 (the “Management Forecasts”), which included certain assessments with respect to the likelihood of achieving such forecasts for Clear Channel, and financial analyses and forecasts for Clear Channel Outdoor and which are pro forma to give effect to estimated television and small market radio asset sales by Clear Channel. |
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Closing Date | Illustrative Present Value | |||
September 30, 2007 | $ | 38.18-$38.72 | ||
November 15, 2007 | $ | 37.73-$38.43 | ||
December 31, 2007 | $ | 37.46-$38.34 |
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�� | ||||||||||||
$37.81 per | $39.20 per | |||||||||||
Share | Share | |||||||||||
Pro Forma Adjusted Enterprise Value/Revenue | 2007E | 3.6 | x | 3.7x | ||||||||
2008E | 3.5 | x | 3.6x | |||||||||
Pro Forma Adjusted Enterprise Value/EBITDA | 2007E | 10.9 | x | 11.2x | ||||||||
2008E | 10.4 | x | 10.7x | |||||||||
Adjusted Equity Value/Adjusted FCF | 2007E | 17.5 | x | 18.2x | ||||||||
2008E | 15.2 | x | 15.8x |
$37.81 per | $39.20 per | |||||||
Share | Share | |||||||
Premium to market price of $37.81 per share (as of May 15, 2007) | 0.0 | % | 3.7 | % | ||||
Premium to undisturbed price of $30.02 per share (as of October 6, 2006) | 25.9 | % | 30.6 | % | ||||
Premium to undisturbed price of $29.05 per share (as of September 22, 2006) | 30.2 | % | 34.9 | % | ||||
Premium to high price of $35.48 per share for the two-year and52-week period ended November 14, 2006 | 6.6 | % | 10.5 | % | ||||
Premium to low price of $27.41 per share for the two-year and52-week period ended November 14, 2006 | 37.9 | % | 43.0 | % |
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Estimated | ||||
One-Year Forward | ||||
EBITDA Multiple | ||||
as of May 15, 2007 | ||||
CBS Corporation | 8.5 | x | ||
Citadel Broadcasting Corporation | 9.5 | x | ||
Cox Radio, Inc. | 9.4 | x | ||
Cumulus Media Inc. | 7.7 | x | ||
Emmis Communications Corporation | 11.6 | x | ||
Entercom Communications Corporation | 10.3 | x | ||
J.C. Decaux S.A. | 10.7 | x | ||
Lamar Advertising Company | 16.7 | x | ||
Radio One, Inc. | 9.1 | x |
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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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• | a date during the Marketing Period specified by the Fincos on no less than three business days’ written notice to Clear Channel; and | |
• | the final day of the Marketing Period, or at such other time, date or place as is agreed to in writing by the Fincos, Holdings, Merger Sub and Clear Channel. |
• | The Fincos and the Merger Sub have agreed to use their reasonable best efforts to arrange and obtain the financing on the terms and conditions described in the financing commitments, negotiate and finalize definitive agreements with respect to the financing on the terms and conditions contained in the financing commitments, satisfy on a timely basis all conditions applicable to the Fincos or Merger Sub in the definitive agreements that are within their control, consummate the financing no later than the closing, and enforce their rights under the financing commitments; and | |
• | If any portion of the financing becomes unavailable on the terms and conditions contemplated in the financing commitments, the Fincos have agreed to promptly notify Clear Channel and the Fincos and Merger Sub have agreed to use their reasonable best efforts to obtain alternative financing from alternative sources, on terms, taken as a whole, that are no more adverse to Clear Channel, as promptly as practicable following the occurrence of such event, but in no event later than the last day of the Marketing Period, including entering into definitive agreements with respect thereto. |
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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. |
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• | the pro rata portion, based upon the number of days elapsed since January 1, 2008, of $39.20 multiplied by 8% per annum, or | |
• | an amount equal to (a) the operating cash flow for Clear Channel and its subsidiaries for the period from and including January 1, 2008 through and including the last day of the last month preceding the closing date of the merger for which financial statements are available at least ten (10) calendar days prior to the closing date of the merger less dividends paid or declared with respect to the foregoing period and amounts committed or paid to purchase equity interests in Clear Channel or derivatives thereof with respect to that period (but only to the extent that those dividends or amounts are not deducted from the operating cash flow for Clear Channel and its subsidiaries for any prior period) divided by (b) the sum of the number of outstanding shares of Clear Channel common stock (including outstanding shares of Clear Channel restricted stock) plus the number of shares of Clear Channel common stock issuable pursuant to convertible securities of Clear Channel outstanding at the closing date of the merger with exercise prices less than the Merger Consideration. |
• | an amount determined in accordance with generally accepted accounting principles equal to the sum of net income, excluding therefrom any amount described in one or more of the following clauses (but only to the extent included in net income): |
• | to the extent net income has been reduced thereby and without duplication, amortization of deferred financing fees included in interest expense, depreciation and amortization (including amortization of film contracts) and other non-cash charges that are (a) not attributable to subsidiaries whose net income is subject |
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to clause (v) or (vi) of the first bullet above and (b) not in the nature of provisions for future cash payments, minus |
• | the amount of cash taxes paid or accrued with respect to such period (including provision for taxes payable in future periods) to the extent exceeding the amount of tax expense deducted in determining net income, minus | |
• | dividends paid or declared with respect to such period and amounts committed or paid to purchase equity interests in Clear Channel or derivatives thereof with respect to such period, minus | |
• | capital expenditures made in cash or accrued with respect to such period, minus | |
• | with respect to any income realized outside of the United States, any amount of taxes that would be required to be paid in order to repatriate such income to the United States, minus | |
• | cash payments made or scheduled to be made with respect to film contracts. |
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• | a pro-rata number of shares of Holdings Class A common stock determined in the following manner: |
• | 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 Sharesand/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 (x) the proration factor times (y) the total number of Stock Election Shares reflected on such form of election; 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. |
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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 and Amendment No. 2, and to consummate the transactions contemplated by the merger agreement and perform its obligations under Amendment No. 1 and Amendment No. 2; | |
• | the approval and recommendation of the merger agreement, Amendment No. 1 and Amendment No. 2, 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; |
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• | 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 the 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; | |
• | the receipt by the board of directors of a fairness opinion from Goldman Sachs and the receipt by the special advisory committee of the board of directors of an opinion from Lazard (except that the fairness opinion delivered in connection with Amendment No. 2 was an opinion from Goldman Sachs and did not opine on the shares held by the members of the board of directors of Clear Channel, which shares are subject to separate agreements with the Fincos described in the section titled “The Merger Agreement — Treatment of Common Stock and Other Securities — Clear Channel Common Stock”); 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; | |
• | 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). |
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• | their due organization, valid existence and good standing; | |
• | their certificate of incorporation, bylaws and other organizational documents; | |
• | their power and authority to enter into the merger agreement, Amendment No. 1 and Amendment No. 2, and to consummate the transactions contemplated by the merger agreement and perform their obligations under Amendment No. 1 and Amendment No. 2; | |
• | 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. |
• | Clear Channel and its subsidiaries will conduct business in the ordinary course and consistent with past practice in all material respects; and |
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• | 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; | |
• | adjust, recapitalize, reclassify, combine, split, subdivide, redeem, purchase or otherwise acquire any equity securities or convertible securities of Clear Channel or its subsidiaries; | |
• | other than with respect to the payment by Clear Channel of a regular quarterly dividend, as and when normally paid, not to exceed $0.1875 per share, 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; | |
• | create, incur, guarantee or assume any indebtedness except for indebtedness: (i) incurred under Clear Channel’s or a subsidiary’s existing credit facilities, (ii) for borrowed money incurred pursuant to agreements in effect prior to the execution of the merger agreement, (iii) 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; | |
• | 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; | |
• | 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 |
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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. | |
• | make any capital expenditure in excess of $50 million individually, or $100 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 $25 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; | |
• | 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 |
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hand, of the type that would be required to be disclosed under Item 404 ofRegulation 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. |
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• | 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; | |
• | 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 byRules 14e-2(a) and14d-9 under the Exchange Act; and |
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• | 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. |
• | 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 arrange and obtain the financing on the terms and conditions described in the financing commitments, negotiate and finalize definitive agreements with respect to the financing on the terms and conditions contained in the financing commitments, satisfy on a timely basis all conditions applicable to the Fincos or Merger Sub in the definitive agreements that are within their control, consummate the financing no later than the closing date of the merger, and enforce their rights under the financing commitments; |
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• | The Fincos and Merger Sub have agreed that if any portion of the financing becomes unavailable on the terms and conditions contemplated in the commitments, to promptly notify Clear Channel and use their reasonable best efforts to obtain alternative financing from alternative sources, on terms, taken as a whole, that are no more adverse to Clear Channel, as promptly as practicable, but in no event later than the last day of the Marketing Period, including entering into definitive agreements with respect thereto; | |
• | The Fincos and Merger Sub have agreed that if all or any portion of the debt financing structured as a high yield financing has not been consummated, the conditions to closing the merger contained in the merger agreement (except limited specified exceptions) have been satisfied or waived and the bridge financing contemplated by the financing commitments is available on the terms and conditions contemplated in the debt financing commitments, and Merger Sub has agreed to use the bridge financing contemplated in the debt financing commitments, if necessary, to replace the high yield financing no later than the last day of the Marketing Period; and | |
• | The Fincos have agreed to keep Clear Channel reasonably informed of the status of their efforts to arrange the debt financing, to provide Clear Channel with copies of the definitive documents related to the debt financing promptly upon execution and to give Clear Channel prompt notice of any material breach of or termination of any financing commitment. |
• | preparing business, financial and other pertinent information and data of the type required byRegulation S-X andRegulation 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 of debt securities contemplated by the debt financing commitments, including delivery of financial statements, compliant with applicable requirements ofRegulation S-K andRegulation S-X and a registration statement onForm S-1 under the Securities Act; | |
• | 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; | |
• | otherwise reasonably cooperating in connection with the consummation of the debt financing and the syndication and marketing thereof. |
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• | 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. |
• | 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. | |
• | 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. |
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• | Representations and Warranties. The accuracy of Clear Channel’s representations and warranties set forth in the original merger agreement as of the date of the execution of the original merger agreement, the accuracy of Clear Channel’s representations and warranties set forth in Amendment No. 1 as of the date of such amendment and the accuracy of Clear Channel’s representations and warranties set forth in Amendment No. 2 as of the date of such amendment, as applicable, and, in each case, as of the effective time of the merger (except for representations and warranties made as of a specific date, which need only be true and correct as of such date or time), except where the failure of such representations and warranties (in general, without giving effect to materiality qualifiers) to be so true and correct would not, individually or in the aggregate, have a Material Adverse Effect on Clear Channel and, except for Clear Channel’s representation regarding its capitalization, which will be correct except for inaccuracies which are de minimis. | |
• | Performance of Obligations. The performance or compliance, in all material respects, by Clear Channel of its agreements and covenants in the merger agreement. | |
• | Closing Certificate. Clear Channel’s delivery to the Fincos at the closing of a certificate with respect to the satisfaction of the conditions relating to Clear Channel’s representations, warranties, covenants and agreements. | |
• | No Material Adverse Affect. There will not have occurred, since November 16, 2006, any Material Adverse Effect on Clear Channel. |
• | Representations and Warranties. The accuracy of the Fincos’ and Merger Sub’s representations and warranties set forth in the original merger agreement as of the date of execution of the original merger agreement, the accuracy of the Fincos’ and Merger Sub’s representations and warranties set forth in Amendment No. 1 as of the date of such amendment and the accuracy of the Fincos’, Holdings’ and Merger Sub’s representations and warranties set forth in Amendment No. 2 as of the date of such amendment, and, in each case, as of the effective time of the merger (except for representations and warranties made as of a specific date, which need only be true and correct as of such date or time), except where the failure of such representations and warranties (in general, without giving effect to materiality qualifiers) to be so true and correct would not, individually or in the aggregate, have a Holdings Material Adverse Effect. | |
• | Performance of Obligations. The performance or compliance, in all material respects, by the Fincos, Holdings and Merger Sub of their agreements and covenants in the merger agreement. | |
• | Solvency Certificate. The Fincos’ delivery to Clear Channel at the closing of a solvency certificate. | |
• | Closing Certificate. The Fincos’ delivery to Clear Channel at the closing of a certificate with respect to the satisfaction of the conditions relating to the Fincos’ representations, warranties, covenants and agreements. |
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• | by either the Fincos or Clear Channel, if: |
• | the closing of the merger has not occurred on or before December 12, 2007, the date that is 12 months from the FCC Filing Date (such date, as may be extended in accordance with this paragraph, the “Termination Date”), except that, if, as of the Termination Date, all conditions to the merger agreement have been satisfied or waived, other than the expiration or termination of any applicable waiting period under the HSR Act and any applicable foreign antitrust laws and receipt of the FCC Consent, the Termination Date may be extended to the date that is 18 months from the FCC Filing Date by Clear Channel or the Fincos; | |
• | 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 of the special meeting; or | |
• | there is a material breach by the non-terminating party of any of its representations, warranties, 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 on or prior to the last day of the Marketing Period none of Merger Sub, Holdings or the surviving corporation has received the proceeds of the financings sufficient to consummate the merger; | |
• | 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; | |
• | by the Fincos, if the board of directors fails to reconfirm Company Recommendation within five business days of receipt of a written request from the Fincos, provided that the Fincos will only be entitled to one such request; 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 Company Recommendation, or fails to include the Company Recommendation in this proxy statement/prospectus, |
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such termination fee 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 representations, warranties, 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). |
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• | (i) by either Clear Channel or the Fincos, if the effective time of the merger has not occurred on or before the Termination Date and 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, or (ii) by Clear Channel, if Clear Channel is not in material breach of its obligations under the merger agreement and the Fincos, Holdings and Merger Sub have willfully and materially breached or failed to perform in any material respect any of their representations, warranties, covenants or other agreements 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 obligation to consummate the merger have been satisfied, other than conditions relating to the expiration or termination of any applicable waiting period under the HSR Act or the receipt of the FCC Consent, in which case Merger Sub will pay to Clear Channel a termination fee of $600 million in cash; provided, however, if the only condition that has not been satisfied is the receipt of the FCC Consent and Merger Sub, Holdings, the Fincos and each attributable investor have carried out their respective obligations relating to obtaining that consent, the termination fee will be $300 million in cash; or | |
• | by Clear Channel if (i) on or prior to the last day of the Marketing Period neither Merger Sub nor the surviving corporation has received the proceeds of the financings sufficient to consummate the merger or (ii) the Fincos have, due to a willful and material breach by Merger Sub, Holdingsand/or the Fincos, breached or failed to perform in any material respect any of their representations, warranties, covenants or other agreements under the merger agreement such that certain closing conditions would not be satisfied, and such breach has not been cured within 30 days following delivery of written notice by Clear Channel, and in each case of (i) or (ii) the first bullet above is not applicable, in which case Merger Sub will pay Clear Channel a termination fee of $500 million in cash. |
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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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Cash Dividend | ||||||||||||
High | Low | Declared | ||||||||||
2005 | ||||||||||||
First Quarter | $ | 35.07 | $ | 31.14 | $ | 0.125 | ||||||
Second Quarter | $ | 34.81 | $ | 28.75 | $ | 0.188 | ||||||
Third Quarter | $ | 34.26 | $ | 30.31 | $ | 0.188 | ||||||
Fourth Quarter | $ | 33.44 | $ | 29.60 | $ | 0.188 | ||||||
2006 | ||||||||||||
First Quarter | $ | 32.84 | $ | 27.82 | $ | 0.188 | ||||||
Second Quarter | $ | 31.54 | $ | 27.34 | $ | 0.188 | ||||||
Third Quarter | $ | 31.64 | $ | 27.17 | $ | 0.188 | ||||||
Fourth Quarter | $ | 35.88 | $ | 28.83 | $ | 0.188 | ||||||
2007 | ||||||||||||
First Quarter | $ | 37.55 | $ | 34.54 | $ | 0.188 | ||||||
Second Quarter | $ | 38.58 | $ | 34.90 | $ | 0.188 | ||||||
Third Quarter (through July 27, 2006) | $ | 38.24 | $ | 36.32 | — |
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OWNERS AND MANAGEMENT
Amount and | ||||||||
Nature of | Percent | |||||||
Beneficial | of | |||||||
Name | Ownership(1) | Class | ||||||
Alan D. Feld | 75,996 | (2) | * | |||||
Perry J. Lewis | 195,971 | (3) | * | |||||
L. Lowry Mays | 31,563,419 | (4) | 6.3 | % | ||||
Mark P. Mays | 2,366,281 | (5) | * | |||||
Randall T. Mays | 1,976,059 | (6) | * | |||||
B. J. McCombs | 4,844,169 | (7) | 1.0 | % | ||||
Phyllis B. Riggins | 17,241 | (8) | * | |||||
Theodore H. Strauss | 206,942 | (9) | * | |||||
J. C. Watts | 21,224 | (10) | * | |||||
John H. Williams | 73,967 | (11) | * | |||||
John B. Zachry | 4,500 | (12) | * | |||||
John E. Hogan | 403,440 | (13) | * | |||||
Paul J. Meyer | 21,874 | (14) | * | |||||
Herb Hill | 144,432 | (15) | ||||||
Andy Levin | 77,889 | (16) | ||||||
Don Perry | 27,104 | (17) | ||||||
FMR Corp (18) | 48,216,851 | 9.7 | % | |||||
Highfields Capital Management LP (19) | 24,854,400 | 5.0 | % | |||||
All Directors and Executive Officers as a Group (16 persons) | 42,020,508 | (20) | 8.5 | % |
* | Percentage of shares beneficially owned by such person does not exceed one percent of the class so owned. | |
(1) | Pursuant toRule 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 powerand/or investment power or as to which such person has the right to acquire such votingand/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 votingand/or investment power within 60 days. Unless otherwise indicated, the number of shares shown includes outstanding shares of common stock owned as of November 30, 2006 by the person indicated and shares underlying options owned by such person on November 30, 2006 that are exercisable within 60 days of that date. | |
(2) | Includes 48,042 shares subject to options held by Mr. Feld and 9,000 shares owned by Mr. Feld’s wife, as to which Mr. Feld disclaims beneficial ownership. |
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(3) | Includes 125,314 shares subject to options held by Mr. Lewis, 39,953 of which are held in a margin account and 3,000 shares owned by Mr. Lewis’ wife, as to which Mr. Lewis disclaims beneficial ownership. | |
(4) | Includes 2,890,866 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 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 757,243 shares subject to options held by Mr. M. Mays, 343,573 shares held by trusts of which Mr. M. Mays is the trustee, but not a beneficiary, and 1,022,293 shares held by the MPM Partners, Ltd. Mr. M. Mays controls the sole general partner of MPM Partners, Ltd. Also includes 6,727 shares and 1,054 shares, which represent shares in LLM Partners. | |
(6) | Includes 757,243 shares subject to options held by Mr. R. Mays, 359,517 shares held by trusts of which Mr. R. Mays is the trustee, but not a beneficiary, and 619,761 shares held by RTM Partners, Ltd. Mr. R. Mays controls the sole general partner of RTM Partners, Ltd. Also includes 4,484 shares and 1,054 shares, which represent shares in LLM Partners. | |
(7) | Includes 53,586 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 27,500 shares held by Mr. McCombs’ wife, as to which Mr. McCombs disclaims beneficial ownership. | |
(8) | Includes 6,266 shares subject to options held by Ms. Riggins. | |
(9) | Includes 48,042 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 14,099 shares subject to options held by Mr. Watts. | |
(11) | Includes 45,953 shares subject to options held by Mr. Williams and 9,300 shares held by Mr. Williams’ wife, as to which Mr. Williams disclaims beneficial ownership. | |
(12) | Includes 4,500 shares subject to options held by Mr. Zachry. | |
(13) | Includes 295,062 shares subject to options held by Mr. Hogan. | |
(14) | Includes 21,874 shares subject to options held by Mr. Meyer. | |
(15) | Includes 35,128 shares subject to options held by Mr. Hill, and 5,920 shares held by trusts | |
(16) | Includes 53,409 shares subject to options held by Mr. Levin. | |
(17) | Includes 8,354 shares subject to options held by Mr. Perry. | |
(18) | Address: 1585 Broadway, New York, New York 10036. | |
(19) | Address: John Hancock Tower, 200 Clarendon Street, 51st Floor, Boston, Massachusetts 02116 | |
(20) | Includes 5,143,107 shares subject to options held by such persons, 600,576 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. |
• | up to 30% of Holdings’ outstanding capital stock and voting power 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 |
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• | the remaining shares of outstanding capital stock of Holdings (approximately 70% assuming that Clear Channel shareholders elect to receive the maximum permitted amount of Stock Consideration in the merger and subject to reduction on account of rollover investments by certain directors of Clear Channel described below) 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 and to L. Lowry Mays, Mark P. Mays, Randall T. Mays and B.J. McCombs as Rollover Shares. |
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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 | |
• | 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 affiliate 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, 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. |
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• | 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 and your intention to exercise your right to dissent in the event that the merger is effected and setting forth the address at which notice shall be delivered 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. |
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New York, NY 10005
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• | Clear Channel’s Annual Report onForm 10-K for the year ended December 31, 2006; | |
• | Clear Channel’s Quarterly Report onForm 10-Q for the quarter ended March 31, 2007 |
• | Clear Channel’s Current Reports onForm 8-K filed January 18, 2007, March 14, 2007, April 5, 2007, April 19, 2007, April 26, 2007, May 1, 2007, May 4, 2007, May 7, 2007, May 9, 2007, May 18, 2007, July 17, 2007, and July 27, 2007; and |
• | Clear Channel’s proxy statement relating to its 2007 annual meeting of shareholders. |
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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 |
Agreement and Plan of Merger
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* | Pursuant to Item 601(b)(2) ofRegulation S-K, the Registrant hereby agrees to furnish supplementally a copy of the Company Disclosure Schedule to the Agreement and Plan of Merger to the Securities and Exchange Commission upon request. |
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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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200 Clarendon Street
Boston, MA 02117
Attn: Joseph F. Mazzella
Phone:(617) 850-7500
Facsimile:(617) 850-7620
Exchange Place
Boston, Massachusetts
02109 Attn: Joseph L.
Johnson III
Phone:(617) 570-1633
Facsimile:(617) 523-1231
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111 Huntington Avenue
Boston, MA 02199
Phone:(617) 516-2000
Fax:(617) 516-2010
Attention: 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
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By: | Highfields Associates LLC, its General Partner | |
By: | /s/ Joseph F. Mazzella |
Title: | Authorized Signatory |
By: | Highfields Associates LLC, its General Partner | |
By: | /s/ Joseph F. Mazzella |
Title: | Authorized Signatory |
By: | Highfields Associates LLC, its General Partner | |
By: | /s/ Joseph F. Mazzella |
Title: | Authorized Signatory |
By: | /s/ Joseph F. Mazzella |
Title: | Managing Director |
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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: | Bain Capital Partners, IX, L.P., its General Partner | |
By: | Bain Capital Investors, LLC, its General Partner |
By: | /s/ John P. Connaughton |
Title: | Managing Director |
By: | THL Equity Advisors VI, LLC, its general partner | |
By: | Thomas H. Lee Partners, L.P., its sole member | |
By: | Thomas H. Lee Advisors, LLC, its general partner |
By: | /s/ Scott M. Sperling |
Title: | Co-President |
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Item 20. | Indemnification of Directors and Officers. |
Item 21. | Exhibits and Financial Statement Schedules. |
Exhibit | Description | |||
2 | .1*† | Agreement and Plan of Merger, dated as of November 16, 2006, among the 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 the 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 the 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). | ||
3 | .1* | Second Amended and Restated Certificate of Incorporation of BT Triple Crown Capital Holdings III, Inc. to be in effect as of the effective time of the Merger. | ||
3 | .2** | Certificate of Amendment to the Second Amended and Restated Certificate of Incorporation of BT Triple Crown Capital Holdings III, Inc. |
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Exhibit | Description | |||
3 | .3* | 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* | Voting Agreement, dated as of May 26, 2007, by and among BT Triple Crown Merger Co., 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 D 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** | Second Amended and Restated Commitment Letter, dated May 17, 2007, from Citigroup Global Markets Inc., Deutsche Bank AG New York Branch, Deutsche Bank AG Cayman Islands Branch, Deutsche Bank Securities 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 and Wachovia Capital Markets, LLC. | ||
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 to this registration statement). | ||
24 | .1* | Powers of Attorney of Directors and Officers of the registrant (included on registration statement signature page). | ||
99 | .1* | Form of Clear Channel Communications, Inc. Proxy Card | ||
99 | .2** | Form of Election (for use by holders of Clear Channel common stock) | ||
99 | .3** | Consent of Goldman, Sachs & Co. |
* | Previously filed. | |
** | Filed herewith. | |
† | Pursuant to Item 601(b)(2) ofRegulation S-K, the Registrant hereby agrees to furnish supplementally a copy of any omitted schedule to the Securities and Exchange Commission upon request. |
Item 22. | Undertakings. |
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By: | /s/ Scott M. Sperling |
Title: | President |
Signature | Title | Date | ||||
/s/ Scott M. Sperling Scott M. Sperling | President and Director (Principal Executive Officer) | July 31, 2007 | ||||
/s/ Scott M. Sperling Scott M. Sperling | President and Director (Principal Accounting Officer) | July 31, 2007 | ||||
/s/ Scott M. Sperling Scott M. Sperling | President and Director (Principal Financial Officer) | July 31, 2007 | ||||
* John Connaughton | Director | July 31, 2007 | ||||
* Steve Barnes | Director | July 31, 2007 | ||||
**Richard J. Bressler | Director | July 31, 2007 | ||||
/s/ Charles A. Brizius Charles A. Brizius | Director | July 31, 2007 | ||||
/s/ Ed Han Ed Han | Director | July 31, 2007 | ||||
* Ian K. Loring | Director | July 31, 2007 | ||||
**Kent R. Weldon | Director | July 31, 2007 | ||||
*By: /s/ Ed Han Ed Han Attorney-in-Fact | July 31, 2007 | |||||
**By: /s/ Charles A. Brizius Charles A. Brizius Attorney-in-Fact | July 31, 2007 |
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Exhibit | Description | |||
2 | .1*† | Agreement and Plan of Merger, dated as of November 16, 2006, among the 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 the 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 the 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). | ||
3 | .1* | Second Amended and Restated Certificate of Incorporation of BT Triple Crown Capital Holdings III, Inc. to be in effect as of the effective time of the Merger. | ||
3 | .2** | Certificate of Amendment to the Second Amended and Restated Certificate of Incorporation of BT Triple Crown Capital Holdings III, Inc. | ||
3 | .3* | 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* | Voting Agreement, dated as of May 26, 2007, by and among BT Triple Crown Merger Co., 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 D 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** | Second Amended and Restated Commitment Letter, dated May 17, 2007, from Citigroup Global Markets Inc., Deutsche Bank AG New York Branch, Deutsche Bank AG Cayman Islands Branch, Deutsche Bank Securities 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 and Wachovia Capital Markets, LLC. | ||
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 to this registration statement). | ||
24 | .1* | Powers of Attorney of Directors and Officers of the registrant (included on registration statement signature page). | ||
99 | .1* | Form of Clear Channel Communications, Inc. Proxy Card | ||
99 | .2** | Form of Election (for use by holders of Clear Channel common stock) | ||
99 | .3** | Consent of Goldman, Sachs & Co. |
* | Previously filed. | |
** | Filed herewith. | |
† | Pursuant to Item 601(b)(2) ofRegulation S-K, the Registrant hereby agrees to furnish supplementally a copy of any omitted schedule to the Securities and Exchange Commission upon request. |
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