Clear Channel has agreed to sell its 50% stake in Australian Radio Network (ARN) to APN News & Media Limited for approximately
We believe the bolstering of liquidity from these proceeds is favorable to the credit profile, despite the loss of annual distributions from ARN and increase in cash interest, which will further pressure free cash flow (FCF). Fitch expects FCF will be negative over the next few years. The ratings and Negative Rating Outlook reflect the limited room within the credit profile to endure any material deterioration in operations.
Fitch believes that Clear Channel has sufficient liquidity to cover its 2014 and 2015 maturities, totaling
An inability by Clear Channel to extend maturities would result in a rating downgrade. This inability may derive from a prolonged consolidated cash burn, whether driven by cyclical or secular pressures, reducing Clear Channel's ability to fund debt service and near-term maturities. Additionally, cyclical or secular pressures on operating results that further weaken credit metrics could result in negative rating pressure. Lastly, indications that a distressed debt exchange DDE is probable in the near term would also drive a rating downgrade.
Fitch expects Clear Channel will continue to explore asset sales (including monetization of repurchased and outstanding notes) and debt-funded dividends from
Additional information is available on www.fitchratings.com.
The above article originally appeared as a post on the Fitch Wire credit market commentary page. The original article, which may include hyperlinks to companies and current ratings, can be accessed at www.fitchratings.com. All opinions expressed are those of Fitch Ratings.
Source: Fitch Ratings
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