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AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON MARCH 13, 1998
REGISTRATION NO. 333-47367
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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AMENDMENT NO. 1
TO
FORM S-3
REGISTRATION STATEMENT
Under The Securities Act of 1933
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CLEAR CHANNEL COMMUNICATIONS, INC.
(Exact name of Registrant as specified in its charter)
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TEXAS 74-1787539
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
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CCCI CAPITAL TRUST I
CCCI CAPITAL TRUST II
CCCI CAPITAL TRUST III
(Exact name of Registrant as specified in its charter)
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74-6456072
74-6456074
DELAWARE 74-6456077
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
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L. LOWRY MAYS
200 CONCORD PLAZA, SUITE 600 CLEAR CHANNEL COMMUNICATIONS, INC.
SAN ANTONIO, TEXAS 78216 200 CONCORD PLAZA, SUITE 600
(210) 822-2828 SAN ANTONIO, TEXAS 78216
(Address, including zip code, and telephone (210) 822-2828
number, including area code, of registrant's (Name, address, including zip code, and
principal executive offices for each telephone number, including area code, of
registrant) agent for service for each registrant)
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Copies to:
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STEPHEN C. MOUNT, ESQ. JOHN W. WHITE, ESQ.
AKIN, GUMP, STRAUSS, HAUER & FELD, L.L.P. CRAVATH, SWAINE & MOORE
1500 NATIONSBANK PLAZA WORLDWIDE PLAZA
300 CONVENT STREET 825 EIGHTH AVENUE
SAN ANTONIO, TEXAS 78205 NEW YORK, NEW YORK 10019
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APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: From time
to time after this Registration Statement becomes effective.
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. [ ]
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, check the following box. [X]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, check the following box and
list the Securities Act registration statement number of earlier effective
registration statement for the same offering. [ ]
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If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
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If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [X]
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THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF
THE SECURITIES ACT OF 1933, AS AMENDED, OR UNTIL THE REGISTRATION STATEMENT
SHALL BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID
SECTION 8(a), MAY DETERMINE.
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INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY
OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES
EFFECTIVE. THIS PROSPECTUS SUPPLEMENT AND THE ACCOMPANYING PROSPECTUS SHALL NOT
CONSTITUTE AN OFFER TO SELL OR THE SOLICITATION OF AN OFFER TO BUY NOR SHALL
THERE BE ANY SALE OF THESE SECURITIES IN ANY STATE IN WHICH SUCH OFFER,
SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION
UNDER THE SECURITIES LAWS OF ANY SUCH STATE.
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PROSPECTUS SUPPLEMENT TO PROSPECTUS
SUBJECT TO COMPLETION SUBJECT TO COMPLETION
DATED MARCH 12, 1998 DATED MARCH 12, 1998
[CLEAR CHANNEL LOGO] 5,500,000 SHARES
CLEAR CHANNEL COMMUNICATIONS, INC.
COMMON STOCK
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All of the 5,500,000 shares of Common Stock, $0.10 par value per share (the
"Common Stock") offered hereby (the "Offering") are being sold by Clear Channel
Communications, Inc. (the "Company"). The Common Stock of the Company is traded
on the New York Stock Exchange under the symbol "CCU". On March 11, 1998, the
last reported sale price of the Common Stock on the New York Stock Exchange was
$93.4375 per share. See "Price Range of Common Stock".
Concurrent with the Offering, the Company is offering $500,000,000
aggregate principal amount of % Senior Convertible Notes due April 1, 2003
(the "Notes") to the public (the "Note Offering"). Consummation of the Offering
is not contingent upon consummation of the Note Offering, and consummation of
the Note Offering is not contingent upon consummation of the Offering.
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SEE "RISK FACTORS" BEGINNING ON PAGE S-8 FOR A DISCUSSION OF CERTAIN
MATTERS THAT SHOULD BE CONSIDERED BY PROSPECTIVE INVESTORS.
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THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION PASSED UPON
THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS SUPPLEMENT OR THE PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
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UNDERWRITING
PRICE TO DISCOUNTS AND PROCEEDS TO THE
PUBLIC(1) COMMISSIONS COMPANY(1)(2)
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Per Share................................... $ $ $
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Total....................................... $ $ $
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(1) Before deduction of expenses payable by the Company, estimated at $250,000.
(2) The Company has granted to the Underwriters a 30 day option to purchase up
to 825,000 additional shares of Common Stock solely to cover
over-allotments, if any. If such option is exercised in full, the total
Price to Public, Underwriting Discounts and Commissions, and Proceeds to
Company will be $ , $ , and $ , respectively. See
"Underwriting".
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The shares of Common Stock are offered by the several Underwriters, subject
to prior sale, when, as and if delivered to and accepted by them and subject to
the right of the Underwriters to reject any order in whole or in part. It is
expected that delivery of the shares of Common Stock will be made at the offices
of BT Alex. Brown Incorporated, Baltimore, Maryland, on or about March , 1998.
BT ALEX. BROWN
CREDIT SUISSE FIRST BOSTON
FURMAN SELZ
GOLDMAN, SACHS & CO.
LEHMAN BROTHERS
MERRILL LYNCH & CO.
MORGAN STANLEY DEAN WITTER
NATIONSBANC MONTGOMERY SECURITIES
LLC
SALOMON SMITH BARNEY
SCHRODER & CO. INC.
PROSPECTUS SUPPLEMENT DATED MARCH , 1998.
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CERTAIN PERSONS PARTICIPATING IN THIS OFFERING MAY ENGAGE IN TRANSACTIONS
THAT STABILIZE, MAINTAIN, OR OTHERWISE AFFECT THE PRICE OF THE COMMON STOCK. THE
UNDERWRITERS MAY OVER-ALLOT OR EFFECT TRANSACTIONS WHICH STABILIZE OR MAINTAIN
THE MARKET PRICE OF THE COMMON STOCK OF THE COMPANY AT A LEVEL ABOVE THAT WHICH
MIGHT OTHERWISE PREVAIL IN THE OPEN MARKET. FOR A DESCRIPTION OF THESE
ACTIVITIES, SEE "UNDERWRITING".
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PROSPECTUS SUPPLEMENT SUMMARY
The following information is qualified in its entirety by the more detailed
information and financial statements, including notes thereto, appearing in this
Prospectus Supplement, the accompanying Prospectus and the documents
incorporated by reference into this Prospectus Supplement and the accompanying
Prospectus. All information set forth herein has been adjusted to reflect
five-for-four stock splits effected in February 1993 and February 1994, and
two-for-one stock splits effected in November 1995 and December 1996. Unless the
context otherwise requires, references herein to the "Company" are to Clear
Channel Communications, Inc. and its consolidated subsidiaries. Unless otherwise
indicated, the information herein does not give effect to the Note Offering.
Unless otherwise indicated, the information in this Prospectus Supplement
assumes no exercise of the Underwriters' over-allotment option. See
"Underwriting."
THE COMPANY
The Company, which began operations in 1972, is a diversified media company
that owns or programs radio and television stations and is one of the largest
domestic outdoor advertising companies based on its total advertising display
inventory. In addition, the Company currently owns a 50% equity interest in the
Australian Radio Network Pty. Ltd., which operates radio stations in Australia;
a one-third equity interest in the New Zealand Radio Network, which operates
radio stations throughout New Zealand; a 28.7% non-voting equity interest in
Heftel Broadcasting Corporation (Nasdaq: HBCCA) ("Heftel"), a leading domestic
Spanish-language radio broadcaster; and a 30% equity interest in American Tower
Corporation, a leading domestic provider of wireless transmission sites.
The radio stations currently owned or programmed by the Company are
principally located in the South, Southeast, Southwest, Northeast and Midwest.
These radio stations employ a wide variety of programming formats, such as
News/Talk/Sports, Country, Adult Contemporary, Urban and Album Rock. The
television stations currently owned or programmed by the Company are located in
the South, Southeast, Northeast and Midwest. These television stations are
affiliated with various television networks, including the FOX television
network, the UPN television network, the ABC television network, the NBC
television network and the CBS television network. Additionally, the Company
operates radio networks serving Oklahoma, Texas, Iowa, Kentucky, Virginia,
Alabama, Tennessee, Florida and Pennsylvania. The Company's outdoor advertising
properties are located primarily in the South, Southeast, Midwest, and West.
During 1997, the Company derived approximately 48% of its net revenue from radio
operations, approximately 22% from television operations, and approximately 30%
from outdoor advertising operations. The foregoing percentages would be
different had the Company's acquisitions described below in "Recent
Developments" been consummated as of January 1, 1997. See "Recent Developments"
in the Prospectus Supplement Summary.
The Company has its principal executive offices at 200 Concord Plaza, Suite
600, San Antonio, Texas 78216 (telephone: 210-822-2828).
COMPANY STRATEGY
The Company's overall strategy is to acquire and develop a diverse array of
media assets which enable the Company to assist its customers in employing the
most effective and cost-efficient methods to market their products and services.
Accordingly, the Company has assembled a diversified portfolio of assets
encompassing radio broadcasting, television broadcasting and outdoor
advertising. The Company plans to use this diversified collection of assets,
along with the operating expertise of its management, to continue generating
substantial internal growth. The Company believes it can augment this internal
growth with the opportunistic acquisition of additional media assets. Such
potential acquisitions will be evaluated based on their strategic value to the
Company and their potential to deliver attractive rates of return to the
Company's shareholders and to add revenue and cash flow to its operating results
as well as to improve the performance of the Company's existing assets.
Historically, the Company has been able to generate significant returns for its
investors while maintaining financial flexibility through the prudent use of
leverage. The Company believes that this prudent
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use of leverage has also contributed to the Company's relatively low cost of
capital. The Company believes that focusing on its clients' goals, creating a
sales-intensive operating organization, and maintaining a conservative financial
position are synergistic aspects of its operating strategy.
The Company believes that the potential exists for cooperation between its
various business segments and that it can help its customers market their
products and services more effectively and efficiently by offering greater
flexibility in the choice of media outlets for marketing messages. The Company
is now able to offer additional advertising solutions for its customers in those
markets where it simultaneously operates radio stations with television stations
or outdoor advertising displays. In this way, the Company believes that its
combination of assets will allow it to offer greater value to its customers.
Additionally, the Company intends to use its various business segments to
cross-promote one another when possible.
Broadcast Strategy. The Company's broadcast strategy is to identify and
acquire under-performing stations on favorable terms and to utilize management's
extensive operating experience to improve the performance of such stations
through effective programming, reduction of costs and aggressive promotion,
marketing and sales. In addition, the Company employs a marketing strategy that
emphasizes direct sales to local customers rather than through advertising
agencies and other intermediaries. The Company believes that this focus has
enabled its stations to achieve market revenue shares exceeding their audience
shares.
The Company believes that clustering broadcasting assets together in
markets leads to substantial operating advantages. The Company attempts to
cluster radio stations in each of its principal markets, and believes that by
controlling a larger share of the total advertising inventory in a particular
market, it can offer advertisers more attractive packages of advertising
options. The Company also believes that its cluster approach will allow it to
operate its stations with more highly skilled local management teams and
eliminate duplicative operating and overhead expenses. Within its television
group, the Company's goal is to own and program one station in each of its
markets and to program an additional station under a Local Marketing Agreement
("LMA") in each such market. In seven of its television markets, the Company
already programs an additional television station under an LMA.
Outdoor Advertising Strategy. The Company's outdoor advertising strategy is
to expand its market presence in the outdoor advertising business and improve
its operating results by (i) managing the advertising rates and occupancy levels
of its displays to maximize market revenues; (ii) attracting new categories of
advertisers to the outdoor medium through significant investments in sales and
marketing resources; (iii) increasing focus on local advertising sales; (iv)
constructing new displays and upgrading its existing displays; (v) taking
advantage of technological advances which increase both sales force productivity
and production department efficiency; (vi) acquiring additional displays in its
existing markets and expanding into additional markets where the Company already
has a broadcasting presence as well as into the country's largest media markets
and their surrounding regional areas; and (vii) making opportunistic
acquisitions of displays in new markets. The Company believes this strategy
enhances its ability to effectively respond to advertisers' needs.
To support this outdoor advertising operating strategy, the Company has
decentralized its operating structure related to outdoor advertising in order to
place authority, autonomy and accountability at the market level and provide
local management with the tools necessary to oversee sales, display development,
administration and production and to identify suitable acquisition candidates.
The Company also maintains a fully-staffed sales and marketing office in New
York which services national outdoor advertising accounts and supports the
Company's local sales force in each market. The Company believes that one of its
strongest competitive advantages is its unique blend of highly experienced
corporate and local market management.
RECENT DEVELOPMENTS
GRUPO ACIR ACQUISITION
On March 12, 1998, the Company entered into a definitive agreement to
acquire 40% of the equity of Grupo Acir Communicationes, S.A. de C.V. ("Grupo
Acir") for $57,500,000 (the "Grupo Acir Acquisition"). Grupo Acir is one of the
largest radio broadcasters in Mexico. It owns and or programs through
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affiliations 164 stations serving 72 markets in Mexico. Of the 164 stations, 65
are owned and operated by Grupo Acir and 99 are affiliated with one of its eight
national digital networks. Seven of these owned stations are located in Mexico
City, Mexico's largest media market.
Due to constraints under Mexican Law, the Company's investment is being
made through a Mexican trustee which will vote the Company's shares.
Consummation of the Grupo Acir Acquisition is subject to numerous closing
conditions, including, without limitation, receiving all required regulatory
approvals of the Mexican government. The Grupo Acir Acquisition, if consummated,
will not be consummated prior to the consummation of this Offering. See "Risk
Factors -- Grupo Acir Acquisition."
MORE GROUP ACQUISITION
On March 5, 1998, the Company agreed to make a cash offer (the "More Group
Acquisition") for all of the issued and to be issued shares of More Group Plc,
an outdoor advertising company organized under the laws of the United Kingdom
(the "More Group"), for L10.425 per share (approximately $17.20 per share on
March 5, 1998). As of such date, the aggregate consideration for all of such
shares was approximately $735.7 million. This offer was recommended to More
Group shareholders by More Group's board of directors. More Group operates in 22
countries and has approximately 90,000 display faces, including approximately
50,000 street furniture panels and approximately 40,000 billboards.
Consummation of the More Group Acquisition is subject to acceptance by the
holders of at least 90% of the total shares of More Group or such lesser
percentage as the Company may decide. This condition will not be satisfied
unless the Company shall have acquired or agreed to acquire More Group shares
carrying in aggregate more than 50% of the voting rights then exercisable at a
general meeting of More Group. The More Group Acquisition is also subject to the
receipt of all necessary approvals, including regulatory approvals, there being
no material adverse change in the business of More Group and its subsidiaries
taken as a whole, and numerous other conditions. The More Group Acquisition, if
consummated, will not be consummated prior to the consummation of the Offering.
See "Risk Factors -- More Group Acquisition".
UNIVERSAL OUTDOOR MERGER
On October 23, 1997, the Company and Universal Outdoor Holdings, Inc.
("Universal") entered into a Merger Agreement (the "Merger Agreement").
Universal is a leading outdoor advertising company operating approximately
34,000 advertising display faces predominantly in the Midwest, Northeast and
Southeast. Pursuant to the Merger Agreement, a wholly-owned subsidiary of the
Company will be merged with and into Universal, with Universal continuing as the
surviving corporation and a wholly owned subsidiary of the Company (the
"Universal Merger"). On February 6, 1998, the stockholders of Universal voted to
approve the Universal Merger.
Subject to the terms and conditions of the Merger Agreement, each share of
Universal common stock outstanding immediately prior to the consummation of the
Universal Merger will be converted into 0.67 shares of the Company's Common
Stock. Outstanding warrants and options to acquire shares of Universal common
stock held by certain senior level employees of Universal will be canceled in
exchange for shares of the Company's Common Stock. It is anticipated that
approximately 19.3 million shares of the Company's Common Stock will be issued
in the Universal Merger, representing approximately 16.4% of the shares of the
Company's Common Stock expected to be outstanding after the Universal Merger
(15.7% assuming the completion of the Offering).
In connection with the Universal Merger, Daniel L. Simon, the current
President and Chief Executive Officer of Universal, entered into an employment
agreement with the Company pursuant to which he will become, upon consummation
of the Universal Merger, the Vice Chairman and Chief Operating Officer of
Universal, Eller Media Corporation, a subsidiary of the Company ("Eller Media"),
their respective subsidiaries and affiliate companies and any successor company
or affiliates of the Company which are in the business of outdoor advertising.
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Consummation of the Universal Merger is subject to numerous closing
conditions, including the receipt of all regulatory approvals and other
necessary approvals. The Universal Merger, if consummated, is not likely to be
consummated prior to the closing of the Offering. See "Risk Factors -- The
Universal Merger".
PAXSON RADIO ACQUISITION
On October 1, 1997, the Company acquired six radio news and sports networks
and approximately 350 outdoor advertising display faces from Paxson
Communications Corp. ("Paxson"). On December 8, 1997, the Company acquired 43
radio stations from Paxson and certain affiliates of Paxson (the "Paxson Radio
Acquisition"). The total purchase price for such acquisitions was approximately
$629 million in cash. Prior to the consummation of the acquisition of the radio
stations on December 8, 1997, the Company entered into a commercial time
brokerage agreement with respect to most of such radio stations and commercial
time sales agreements with respect to certain other radio stations. All of the
radio stations and display faces referred to above are located in Florida except
for four radio stations located in Tennessee.
In connection with the acquisitions of seven of the radio stations from
Paxson in the Jacksonville, Florida and the Mobile, Alabama/Pensacola, Florida
markets, the Company received temporary waivers of the Federal Communications
Commission's ("FCC") one-to-a-market rule which generally prohibits the common
ownership of radio and television stations in the same market. Such waivers are
conditioned upon the outcome of the FCC's pending ownership attribution
rulemaking proceeding. Some divestitures could be required at the conclusion of
the rulemaking proceeding. Should divestitures be necessary, the Company will be
required to submit applications to the FCC seeking consent to sell any
nonconforming stations within six months following finality of the rulemaking.
On December 8, 1997, the Company acquired options from Paxson to purchase a
radio station in Tampa, Florida and a radio station in Pensacola, Florida for a
total of approximately $3 million in cash. The Company and Paxson are parties to
commercial time sales agreements with respect to such stations. The Company
presently intends to exercise its option to acquire the radio station in Tampa,
Florida for approximately $1 million and has divested an existing radio station
it owned in Tampa in order to obtain FCC approval of the exercise of such
option.
ELLER MEDIA ACQUISITION
On April 10, 1997, the Company acquired approximately 93% of the then
outstanding stock of Eller Media for a total consideration of approximately $627
million, consisting of approximately $329 million in cash and 6,643,636 shares
of the Company Common Stock (approximately $298 million in the Company Common
Stock based on a price per share of $44.8625 per share) (the "Eller Media
Acquisition"). Immediately following the consummation of the Eller Media
Acquisition, the Company retired approximately $417 million of Eller Media's
outstanding bank debt through borrowings under the Credit Facility. In addition,
the Company issued options (with an estimated fair value of approximately $51
million) to purchase 1,468,182 shares of the Company Common Stock in connection
with the assumption of Eller Media's outstanding stock options. The Company also
agreed to issue 147,858 shares of Common Stock pursuant to certain phantom stock
plan obligations assumed by the Company as part of the Eller Media Acquisition.
The holders of the approximately 7% of the then outstanding capital stock of
Eller Media not purchased by the Company have the right to require the Company
to acquire such stock for 1,081,469 shares of the Company's Common Stock until
April 10, 2002. From and after April 10, 2004 (or before such date upon the
occurrence of certain events), the Company will have the right to acquire this
minority interest stake in Eller Media for 1,081,469 shares of Common Stock. On
April 29, 1997, Karl Eller, the Chief Executive Officer of Eller Media, was
appointed to the Company's Board of Directors. Mr. Eller currently is employed
by the Company to run Eller Media as a subsidiary of the Company pursuant to an
employment contract which is due to expire on August 18, 1999. In addition, Mr.
Eller and other members of the Eller Media management team have a significant
stake in the Company's stock options through the conversion of existing Eller
Media stock options into options to purchase the Company's Common Stock.
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OTHER COMPLETED AND PENDING ACQUISITIONS
Since December 31, 1997, the Company has completed the acquisition of 21
additional radio stations for approximately $110.7 million in five markets and
completed the acquisition of or obtained the rights to lease 4,592 display faces
for approximately $103.5 million in nine markets.
Since December 31, 1997, in addition to the pending Universal Merger and
More Group Acquisition, the Company has entered into definitive agreements to
purchase 16 display faces for approximately $2.2 million in four markets. In
addition, acquisitions to purchase four additional radio stations for
approximately $9.8 million in two markets are pending pursuant to definitive
agreements executed prior to December 31, 1997. All of these acquisitions of
broadcast properties are subject to the approval of the FCC and, in some cases,
the Federal Trade Commission (the "FTC") and the Antitrust Division of the
United States Department of Justice (the "Antitrust Division"), as well as
certain other closing conditions.
THE OFFERING
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Common Stock to be offered by the Company................... 5,500,000 shares
Common Stock to be outstanding after the Offering........... 103,732,893 shares(1)
Use of Proceeds............................................. To repay indebtedness under the Credit
Facility, to fund acquisitions and for
general corporate purposes.
New York Stock Exchange symbol.............................. CCU
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(1) Excludes approximately 19,287,586 shares of Common Stock issuable upon
consummation of the Universal Merger, 3,205,147 shares of Common Stock
currently issuable upon exercise of options to purchase shares of the
Company's Common Stock at prices ranging from $4.16 to $92.40 per share,
109,787 shares of Common Stock issuable pursuant to phantom stock plan
obligations assumed by the Company as part of the Eller Media Acquisition,
and 1,081,469 shares of the Common Stock issuable upon exercise of the
right of the holders of the minority interest stake in Eller Media to
require the Company to acquire such minority interest stake.
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RISK FACTORS
Prospective purchasers of the Common Stock should consider carefully the
factors set forth below, as well as the other information contained in this
Prospectus Supplement and the Prospectus. The Company cautions the reader,
however, that this list of factors may not be exhaustive.
UNIVERSAL MERGER
Consummation of the Universal Merger is subject to numerous conditions,
including the receipt of all regulatory approvals. The combined enterprise may
be required to divest assets or submit to various operating restrictions in
order to obtain the authorizations and approvals necessary to consummate the
Universal Merger or to ensure that governmental authorities do not seek to block
the Universal Merger. Such divestitures could be material to the business of the
combined enterprise or have a material adverse effect on the results of
operations of the combined entity. There can be no assurance that the
consummation of any such divestiture could be effected at a fair market price or
that the reinvestment of the proceeds or exchange of assets therefrom would
produce for the combined enterprise either an operating profit at the same level
as the divested product lines or a commensurate rate of return on the amount of
its investment. There also can be no assurance that any operating restrictions
imposed would not adversely affect the value of the combined enterprise. On
March 10, 1998, the Antitrust Division tentatively agreed to the early
termination of the waiting period under the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, as amended, if the Company makes divestitures of
certain display faces in certain of its markets. The Company is currently
negotiating a definitive agreement with a third party with respect to such
divestitures. The Company believes that such divestitures will not be material.
However, there can be no assurance that a definitive agreement will be executed
with such party or that the transactions contemplated therein will be
consummated. Therefore, there can be no assurance that the Universal Merger will
be consummated in a timely manner or on the terms described herein, if at all.
See "Recent Developments -- Universal Merger" in the Prospectus Supplement
Summary.
MORE GROUP ACQUISITION
Consummation of the More Group Acquisition is subject to numerous closing
conditions, including the acceptance by the holders of at least 90% of the total
shares of More Group, the receipt of all necessary approvals including
regulatory approvals, and there being no material adverse change in the business
of the More Group and its subsidiaries taken as a whole. Therefore, there can be
no assurance that the More Group Acquisition will be consummated in a timely
manner or on the terms described herein, if at all. See "Recent
Developments -- More Group Acquisition" in the Prospectus Supplement Summary.
GRUPO ACIR ACQUISITION
Consummation of the Grupo Acir Acquisition is subject to numerous closing
conditions, including, without limitation, receiving all required regulatory
approvals of the Mexican government. Therefore, there can be no assurance that
the Grupo Acir Acquisition will be consummated in a timely manner or on the
terms described herein, if at all. See "Recent Developments -- Grupo Acir
Acquisition" in the Prospectus Supplement Summary.
INTEGRATION OF THE BUSINESSES OF CLEAR CHANNEL, UNIVERSAL AND MORE GROUP
As a result of the Universal Merger and the More Group Acquisition, the
management of the Company will be required to assimilate the operations of
Universal and More Group into the operations of the Company. However, there can
be no assurance that the management of the Company will be able to integrate
successfully the operations of Universal or More Group with those of the Company
or that all of the benefits expected from such integration will be realized. Any
delays or unexpected costs incurred in connection with such integration could
have an adverse effect on the Company's business, operating results or financial
position. Moreover, the Universal Bonds (as defined herein) and Universal's
credit facility, to the extent they remain outstanding following consummation of
the Universal Merger, contain restrictive covenants which may limit the ability
of the Company to integrate the separate operations. See "-- Restrictions
Imposed by
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Universal's Indebtedness". Additionally, there can be no assurance that the
operations, management and personnel of the Company, Universal and More Group
will be compatible or that a loss of key personnel will not occur.
SIGNIFICANT SHAREHOLDERS
The two principal shareholders of the Company, L. Lowry Mays, Chairman,
Chief Executive Officer and a director of the Company, and B. J. McCombs, a
director of the Company, beneficially own approximately 26.9% of the outstanding
shares of the Company's Common Stock (25.5% assuming completion of the Offering
and 21.5% assuming consummation of both the Offering and the Universal Merger).
As a result, Messrs. Mays and McCombs will be able to exert significant
influence over the outcome of elections of the Company's directors and other
matters requiring the vote or consent of the shareholders of the Company. The
Company and Messrs. Mays and McCombs are parties to a Buy-Sell Agreement
restricting the disposition of shares of the Common Stock owned by Messrs. Mays
and McCombs.
FINANCIAL LEVERAGE
At December 31, 1997, the Company had borrowings under its Credit Facility
(the "Credit Facility") and other long term debt outstanding of approximately
$1,540.4 million and shareholders' equity of $1,746.8 million and had $497.5
million available for borrowings under the Credit Facility. As of December 31,
1997, Universal had approximately $507.6 million of long-term debt outstanding.
As of December 31, 1997, More Group had approximately $95.3 million (based on
the exchange rate as of such date) of long-term debt outstanding as set forth in
accordance with the generally accepted accounting principles of the United
Kingdom. The Company has borrowed and expects to continue borrowing to finance
acquisitions of broadcasting and other media-related and outdoor advertising
properties and for other corporate purposes. The Company expects to borrow under
the Credit Facility to consummate the purchase of shares in the More Group
Acquisition. On April 10, 1997, in connection with the Eller Media Acquisition,
the Company amended its Credit Facility, increasing the amount it may borrow to
$1.750 billion at floating rates (currently LIBOR plus 0.325%). Future
acquisitions of radio and television stations and other media-related and
outdoor advertising properties are expected to be financed from increased
borrowings under the Credit Facility, other debt or equity financing and cash
flow from operations. See "-- Risk of Acquisition Strategy; Capital
Requirements".
Because of the amount of the Company's indebtedness, a significant portion
of the Company's operating income is required for debt service. The degree of
the Company's leverage could make it vulnerable to an increase in interest rates
or a downturn in the operating performance of its media assets or in general
economic conditions. The Credit Facility contains certain financial and
operational covenants and other restrictions with which the Company must comply,
including limitations on capital expenditures, the incurrence of additional
indebtedness, payment of cash dividends, and requirements to maintain certain
financial ratios.
GOVERNMENT REGULATION
Broadcasting. The domestic broadcasting industry is subject to extensive
federal regulation which, among other things, requires approval by the FCC for
the issuance, renewal, transfer and assignment of broadcasting station operating
licenses and limits the number of broadcasting properties the Company may own.
The Telecommunications Act of 1996 (the "1996 Act"), which became law on
February 8, 1996, creates significant new opportunities for broadcasting
companies but also creates uncertainties as to how the FCC and the courts will
enforce and interpret the 1996 Act.
The Company's broadcasting business will continue to be dependent upon
maintaining broadcasting licenses issued by the FCC, which are issued for a
maximum term of eight years. There can be no assurance that future renewal
applications will be approved, or that renewals will not include conditions or
qualifications that could adversely affect the Company's operations. Moreover,
governmental regulations and policies may change over time and there can be no
assurance that such changes would not have a material adverse impact upon the
Company's business, financial condition and results of operations. For example,
the FCC currently is
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<PAGE> 11
considering whether to revise its policy with regard to television LMAs and
there can be no guarantee that the Company will be able to program stations
under existing LMAs for the remainder of their current terms, extend existing
LMAs beyond their current terms, or enter into LMAs in other markets in which
the Company owns and operates television stations.
Outdoor Advertising. The outdoor advertising industry is subject to
governmental regulation at the federal, state and local level. Federal law,
principally the Highway Beautification Act of 1965, encourages states, by the
threat of withholding federal appropriations for the construction and
improvement of highways within such states, to implement legislation to restrict
billboards located within 660 feet of, or visible from, interstate and primary
highways except in commercial or industrial areas. All of the states have
implemented regulations at least as restrictive as the Highway Beautification
Act, including the prohibition on the construction of new billboards adjacent to
federally-aided highways and the removal at the owner's expense and without any
compensation of any illegal signs on such highways. The Highway Beautification
Act, and the various state statutes implementing it, require the payment of just
compensation whenever governmental authorities require legally erected and
maintained billboards to be removed from federally-aided highways.
The states and local jurisdictions have, in some cases, passed additional
and more restrictive regulations on the construction, repair, upgrading, height,
size and location of, and, in some instances, content of advertising copy being
displayed on outdoor advertising structures adjacent to federally-aided highways
and to other thoroughfares. Such regulations, often in the form of municipal
building, sign or zoning ordinances, specify minimum standards for the height,
size and location of billboards. In some cases, the construction of new
billboards or relocation of existing billboards is prohibited. Some
jurisdictions also have restricted the ability to enlarge or upgrade existing
billboards, such as converting from wood to steel or from non-illuminated to
illuminated structures. From time to time governmental authorities order the
removal of billboards by the exercise of eminent domain.
Amortization of billboards has also been adopted in varying forms in
certain jurisdictions. Amortization permits the billboard owner to operate its
billboard as a non-conforming use for a specified period of time, after which it
must remove or otherwise conform its billboards to the applicable regulations at
its own cost without any compensation. Amortization and other regulations
requiring the removal of billboards without compensation have been subject to
litigation in state and federal courts and cases have reached differing
conclusions as to the constitutionality of these regulations. Some local
jurisdictions, within the Company's existing markets (Houston and San Francisco)
have adopted amortization ordinances. The Houston ordinance has been the subject
of litigation for over five years and is currently not being enforced. The
Company believes that its operations will not be materially effected by this
ordinance even if it is enforced. The Company's operations have not been
materially affected by the San Francisco amortization ordinances since its signs
conform to effective ordinances and state law currently prevents the
effectiveness of other ordinances which require removal of signs without
compensation. There can be no assurance that the Company will be successful in
negotiating acceptable arrangements in circumstances in which its displays are
subject to removal or amortization, and what effect, if any, such regulations
may have on the Company's operations.
In addition, the Company is unable to predict what additional regulations
may be imposed on outdoor advertising in the future. Legislation regulating the
content of billboard advertisements and additional billboard restrictions have
been introduced in Congress from time to time in the past. Changes in laws and
regulations affecting outdoor advertising at any level of government could have
a material adverse effect on the Company.
Tobacco and Alcohol Advertising. In August 1996, the U.S. Food and Drug
Administration ("FDA") issued final regulations governing certain marketing
practices in the tobacco industry, including a prohibition of tobacco product
billboard advertisements within 1,000 feet of schools and playgrounds and a
requirement that all tobacco product advertisements on billboards be in black
and white and contain only text. These regulations, which were due to become
effective in August 1997, were challenged by members of the tobacco and
advertising industry in a lawsuit brought in North Carolina federal district
court. In that case, the court upheld the authority of the FDA to regulate
tobacco products by limiting access of such products to persons under 18 years
of age and by requiring tobacco manufacturers to label such products in
accordance with FDA
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<PAGE> 12
regulations. Nevertheless, the court struck down the FDA restrictions on the
promotion and advertising of tobacco products. Both industry and the FDA have
appealed this decision. Arguments before the Fourth Circuit were heard on August
11, 1997, and it is unclear what action an appellate court will take in this
matter. To date, the FDA's regulations covering promotion and advertising of
tobacco products have not become effective and no decision by the court has been
reached. On a pro forma basis assuming the Eller Media Acquisition occurred on
January 1, 1997, less than 12% and 5% of the Company's outdoor advertising 1997
net revenues were derived from tobacco and alcohol advertising, respectively.
Regardless of whether the FDA is found to have jurisdiction over promotion
and advertising of tobacco, and thus have the ability to place limits on
billboard advertising, it appears that the FTC has begun to take regulatory
action in this area. The FTC has wide-ranging authority over advertising
practices, and it is within its regulatory authority to investigate unfair and
deceptive trade practices, including advertising, pertaining to FDA-regulated
products. In May 1997, the FTC charged the R.J. Reynolds Company ("R.J.
Reynolds") with unfair trade practices regarding the promotion of tobacco
products to children through the use of the "Joe Camel" advertising campaign.
The FTC sought an order that would, among other things, prohibit R.J. Reynolds
from using the "Joe Camel" campaign to advertise to children and require R.J.
Reynolds to institute corrective advertising to discourage persons under age 18
from smoking. In July 1997, it was reported that R.J. Reynolds decided to
terminate the "Joe Camel" campaign. The remaining issues in the litigation are
still pending. While the action against R.J. Reynolds was not focused directly
on billboard advertising, because of increasing regulatory and political
pressure it is possible that the FTC will take further action to limit the
content and placement of outdoor advertising, including, without limitation, the
content and placement of outdoor advertising relating to the sale of tobacco
products to children.
Outdoor advertising of tobacco products also may be affected by state law
or city regulations. For example, California and Texas have passed legislation
to restrict tobacco billboard advertising near locations frequented by children.
The Texas law levies a tax on tobacco billboards to raise money for tobacco
education programs. As a result of law suits brought in Texas and Florida,
several tobacco companies have entered settlement agreements with these
respective state governments. Part of the settlement agreement in Texas includes
the elimination of billboard and other outdoor advertising of tobacco products.
This agreement may be superseded by the national settlement agreement pending
before Congress. The settlement agreement in Florida also calls for the
discontinuation of all billboard advertising for tobacco products in the state.
The Florida ban on billboard advertising reportedly went into effect on February
9, 1998. Other states are considering state-wide bans on tobacco billboard
advertising or may do so in the future.
With regard to city governments, in 1995, the Court of Appeals for the
Fourth Circuit upheld the validity of a Baltimore, Maryland city ordinance
prohibiting the placement of outdoor advertisements of cigarettes in publicly
visible locations, such as billboards, signboards and sides of buildings.
Subsequently, the United States Supreme Court declined to review an appeal of
this case. Following the Baltimore ordinance, several city governments have
introduced legislation to ban outdoor tobacco advertising near schools and other
locations where children are likely to assemble or to ban tobacco billboard
advertising citywide. The City of Chicago, Illinois where the Company transacts
business, has recently enacted a ban on tobacco and alcohol billboard
advertising in certain parts of the city. The Chicago ordinance is being
challenged in court on constitutional free-speech grounds. In addition, the City
Council of New York City, New York recently passed a bill which bars outdoor
tobacco advertising within 1,000 feet of schools, playgrounds, day care centers,
youth centers and amusement arcades.
Some cities are proposing even broader restrictions. For instance, a San
Francisco, California Board of Supervisors committee recently proposed a
complete ban on outdoor tobacco advertising, including a ban on billboards,
kiosks and even private business window displays. Milwaukee, Wisconsin has
proposed an ordinance that would ban outdoor advertising for tobacco products in
most public places, except interstate highways, industrial areas, and sport and
convention sites. The Milwaukee ordinance also would prohibit convenience stores
from displaying tobacco-related posters in windows and would limit
tobacco-related signs inside stores to black and white ads with no artwork.
S-11
<PAGE> 13
County governments also have taken action in this area. A local council in
Anne Arundel County, Maryland voted to ban most tobacco billboard advertising in
the county. Similarly, Clark and Skamania counties in Washington State have
issued regulations prohibiting tobacco billboard advertising from areas that
youths frequent, such as schools and parks. Finally, King County, Washington and
a company that owns almost all of the billboard display faces in the county have
entered into an agreement whereby the company will voluntarily discontinue all
tobacco advertising on billboards throughout the county. It is likely that other
state, city, or local governments have or will pass similar ordinances to limit
outdoor advertising of tobacco products in the future.
In addition to the decisions mentioned above, certain cigarette
manufacturers who are defendants in numerous class action suits throughout the
U.S. have proposed an out of court settlement with respect to such suits that
includes restrictions on billboard advertising by these and other cigarette
manufacturers. It has been reported that, as a part of the proposed settlement,
the tobacco industry will agree to a complete ban on all outdoor advertising,
such as on billboards, in stadiums, and in store window displays. The proposed
settlement agreement is pending before Congress. President Clinton and
Congressional leaders have met to discuss bipartisan cooperation on tobacco
control legislation in an effort to work out a compromise. It appears that
restrictions on tobacco billboard advertising may be implemented through
legislation, although some have argued that it would be unconstitutional for
Congress to impose such restrictions without the consent of the tobacco
industry. If legislation is not enacted, it is likely that restrictions on
billboard advertising nevertheless will be achieved through consensual agreement
between the tobacco industry and state and federal governments.
There can be no assurance as to the effect of these regulations, potential
legislation or settlement discussions on the Company's business and on their net
revenues and financial position. A reduction in billboard advertising by the
tobacco industry would cause an immediate reduction in the Company's direct
revenue from such advertisers and would simultaneously increase the available
space on the existing inventory of billboards in the outdoor advertising
industry. This could in turn result in a lowering of outdoor advertising rates
in each of the Company's outdoor advertising markets or limit the ability of
industry participants to increase rates for some period of time.
Any regulatory change or settlement agreement restricting the Company's or
the tobacco industry's ability to utilize outdoor advertising for tobacco
products could have a material adverse effect on the Company.
Antitrust. An important element of the Company's growth strategy involves
the acquisition of additional radio stations and other media-related and outdoor
advertising properties, many of which are likely to require antitrust review by
the FTC and the Antitrust Division prior to such acquisition. Following passage
of the 1996 Act, the Antitrust Division has become more aggressive in reviewing
proposed acquisitions of radio stations and radio station networks, particularly
in instances where the proposed acquiror already owns one or more radio station
properties in a particular market and the acquisition involves another radio
station in the same market. Recently, the Antitrust Division has obtained
consent decrees requiring radio station divestitures in a particular market
based on allegations that acquisitions would lead to unacceptable concentration
levels. The Antitrust Division has also been active in reviewing proposed
acquisitions of outdoor advertising properties. There can be no assurance that
the Antitrust Division or the FTC will not seek to bar the Company from
acquiring additional radio or television stations or other media-related and
outdoor advertising properties in any market where the Company already has a
significant position. In addition, to the extent the Company makes acquisitions
of international broadcasting properties or display faces, the Company will also
be subject to the antitrust laws of foreign jurisdictions.
Environmental. As the owner, lessee or operator of various real properties
and facilities, the Company is subject to various federal, state and local
environmental laws and regulations. Historically, compliance with such laws and
regulations has not had a material adverse effect on the Company's business.
There can be no assurance, however, that compliance with existing or new
environmental laws and regulations will not require the Company to make
significant expenditures in the future.
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RISK OF ACQUISITION STRATEGY; CAPITAL REQUIREMENTS
The Company intends to pursue growth through the opportunistic acquisition
of domestic and international broadcasting companies, radio and television
station groups, individual radio and television stations, outdoor advertising
companies, individual outdoor advertising display faces, or other assets that
the Company believes are best suited to the purpose of assisting its customers
in marketing their products and services. The Company routinely reviews
potential acquisitions. It is likely that the Company will continue to
experience significant expansion in the future. As a result, the Company's
management will be required to effectively manage a rapidly expanding and
significantly larger portfolio of broadcasting and outdoor advertising
properties. The Company's acquisition strategy involves numerous other risks,
including difficulties in the integration of operations and systems, the
diversion of management's attention from other business concerns and the
potential loss of key employees of acquired companies or stations. There can be
no assurance such acquisitions will benefit the Company. See "Company Strategy"
in the Prospectus Supplement Summary.
The Company will face competition from other broadcasting and outdoor
advertising companies for available acquisition opportunities. If the prices
sought by sellers of broadcasting and outdoor advertising properties increase
significantly, the Company may find fewer acceptable acquisition opportunities.
In addition, payment of the purchase price of possible acquisitions could
require the Company to incur additional debt or seek to obtain equity financing.
The incurrence of additional debt could increase the Company's leverage, make
the Company more vulnerable to economic downturns and limit its ability to
withstand competitive pressures. See "--Financial Leverage". Additional equity
financing could result in dilution to the existing holders of the Common Stock.
There can be no assurance that the Company will have sufficient capital
resources to complete acquisitions, that acquisitions can be completed on terms
acceptable to the Company or that any businesses or assets that are acquired can
be integrated successfully into the Company.
The Company continually evaluates strategic opportunities both within and
outside its existing lines of business. The Company expects from time to time to
pursue additional acquisitions and may decide to dispose of certain businesses.
Such acquisitions or dispositions could be material.
COMPETITION; BUSINESS
The Company's three business segments are in highly competitive industries.
The Company's radio and television stations and outdoor advertising properties
compete for audiences and advertising revenues with other radio and television
stations and outdoor advertising companies, as well as with other media, such as
newspapers, magazines, cable television, and direct mail, within their
respective markets. Audience ratings and market shares are subject to change and
any adverse change in a particular market could have a material adverse effect
on the Company's revenue in that market. Future operations are subject to many
variables which could have an adverse effect upon the Company's financial
performance, including economic conditions, both general and relative to the
broadcasting industry; shifts in population and other demographics; the level of
competition for advertising dollars; fluctuations in operating costs;
technological changes and innovations; changes in labor conditions; and changes
in governmental regulations and policies and actions of federal regulatory
bodies. There can be no assurance that the Company will be able to maintain or
increase its current audience ratings and advertising revenues.
NEW TECHNOLOGIES
The FCC is considering ways to introduce new technologies to the radio
broadcast industry, including satellite and terrestrial delivery of digital
audio broadcasting and the standardization of available technologies which
significantly enhance the sound quality of AM broadcasts. The Company is unable
to predict the effect any such new technology will have on the Company's
financial condition or results of operations. On April 3, 1997, the FCC
announced that it had adopted rules that will allow television broadcasters to
provide digital television ("DTV") to consumers. The FCC also adopted a table of
allotments for DTV, which will provide eligible existing broadcasters with a
second channel on which to provide DTV service. On February 23, 1998, in
response to numerous petitions for reconsideration, the FCC announced its
adoption of orders affirming, with some modifications, the FCC's April 3, 1997
decisions. The FCC's DTV allotment plan is based on the
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<PAGE> 15
use of a "core" DTV spectrum between channels 2-51. Ultimately, the FCC plans to
recover the channels currently used for analog broadcasting and will decide at a
later date the use of the spectrum ultimately recovered. Television broadcasters
will be allowed to use their channels according to their best business judgment.
Such uses can include multiple standard definition program channels, data
transfer, subscription video, interactive materials, and audio signals, although
broadcasters will be required to provide a free digital video programming
service that is at least comparable to today's analog service. Broadcasters will
not be required to air "high definition" programming or, initially, to simulcast
their analog programming on the digital channel. Affiliates of ABC, CBS, NBC and
FOX in the top 10 television markets will be required to be on the air with a
digital signal by May 1, 1999. Affiliates of those networks in markets 11-30
will be required to be on the air with a digital signal by November 1, 1999, and
remaining commercial broadcasters by May 1, 2002. The FCC stated that
broadcasters will remain public trustees and that it will issue a notice to
determine the extent of broadcasters' future public interest obligations. The
Company will incur considerable expense in the conversion to DTV and is unable
to predict the extent or timing of consumer demand for any such DTV services.
RESTRICTIONS IMPOSED BY UNIVERSAL'S INDEBTEDNESS
The indentures (the "Universal Indentures") governing Universal's 9 3/4%
Senior Subordinated Notes due 2006 and 9 3/4% Series B Senior Subordinated Notes
due 2006 (the "Universal Bonds") contain restrictions on the ability of
Universal Outdoor, Inc., the wholly-owned operating subsidiary of Universal
("UOI"), to incur additional indebtedness, create liens, pay dividends, sell
assets and make acquisitions and enter into transactions with affiliated
entities. UOI currently has approximately $325 million aggregate principal
amount of Universal Bonds outstanding. Under the Universal Indentures governing
the Universal Bonds, the Universal Merger will constitute a Change of Control
(as defined therein) requiring Universal to permit holders of such Bonds to put
them to Universal for consideration equal to 101% of the face amount thereof
(plus accrued and unpaid interest). In the event that all of the Universal Bonds
were put, the Company would have to provide the funding necessary to satisfy
such obligations. There can be no assurance that the Company would have the
funds available to satisfy such obligations. In the event that such put rights
are not exercised in full, the remaining outstanding Universal Bonds would
continue to contain restrictive covenants that may limit the ability of the
Company to integrate the separate outdoor advertising businesses. If the Company
were to attempt to repurchase the Universal Bonds, the holders of such Bonds
would likely require the Company to pay a substantial premium over the face
value. There can be no assurance that the Company would have adequate funds to
repurchase the Universal Bonds or that the bondholders would tender their
Universal Bonds in response to any offer. There can be no assurance that UOI and
its subsidiaries will be able to comply with the provisions of the Indentures,
and such provisions may restrict the ability of Universal to dividend its
earnings to the Company or any of its subsidiaries and may restrict the ability
of Universal and the Company to integrate their operations. In addition, if upon
consummation of the Universal Merger, the Company does not refinance Universal's
existing credit facility, Universal would continue to be subject to the
restrictive covenants set forth therein. See "-- Integration of the Businesses
of Clear Channel, Universal and More Group".
INTERNATIONAL BUSINESS RISKS
The Company currently derives a portion of its earnings from international
operations. The risks of doing business in foreign countries include potential
adverse changes in the diplomatic relations of foreign countries with the United
States, hostility from local populations, adverse effects of currency exchange
controls, restrictions on the withdrawal of foreign investment and earnings,
government policies against businesses owned by non-nationals, expropriations of
property, the potential instability of foreign governments and the risk of
insurrections that could result in losses against which the Company is not
insured. The Company's international operations also are subject to economic
uncertainties, including, among others, risks of renegotiation or modification
of existing agreements or arrangements with governmental authorities, foreign
exchange restrictions and changes in taxation structure.
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EXCHANGE RATE RISK
A portion of the Company's earnings are derived from international
operations and a portion of the Company's assets are invested overseas.
Accordingly, fluctuations in the values of foreign currencies and in the value
of the U.S. dollar may cause currency translation losses for the Company or
reduced earnings, or both. The Company cannot predict the effect of exchange
rate fluctuations upon future operating results.
CERTAIN FORWARD-LOOKING STATEMENTS
This Prospectus Supplement and the Prospectus, including the documents
incorporated by reference, contain forward-looking statements within the meaning
of Section 27A of the Securities Act of 1933, as amended (the "1933 Act").
Discussions containing such forward-looking statements may be found in the
material set forth under "The Company," as well as within the Prospectus
Supplement and the Prospectus generally. In addition, when used in this
Prospectus Supplement or the Prospectus, the words "believes," "anticipates,"
"expects" and similar expressions are intended to identify forward-looking
statements. Such statements are subject to a number of risks and uncertainties.
Actual results in the future could differ materially from those described in the
forward-looking statements as a result of the risk factors set forth herein and
the matters set forth in the Prospectus Supplement or the Prospectus generally.
The Company undertakes no obligation to publicly release the results of any
revisions to these forward-looking statements that may be made to reflect any
future events or circumstances.
USE OF PROCEEDS
The net proceeds to the Company from the sale of the Common Stock offered
hereby (at an assumed offering price of $93.4375) are estimated to be $498.2
million. The Company will use the net proceeds to repay borrowings outstanding
under the Credit Facility, to finance acquisitions and for general corporate
purposes. As of December 31, 1997, a total of approximately $1,215.2 million in
borrowings was outstanding under the Credit Facility and the effective interest
rate thereon was approximately 6.3%. Borrowings under the Credit Facility, which
must be paid in full by June 2005, bear interest as of December 31, 1997 at a
floating rate based on the LIBOR plus 0.325%. Upon repayment of such borrowings,
the amount repaid will become immediately available to the Company for
re-borrowing under the Credit Facility, subject to the satisfaction of certain
conditions. The Company expects that amounts available for re-borrowing under
the Credit Facility as a result of the application of the net proceeds of the
Offering, together with additional amounts that become available for borrowing
under the Credit Facility, will be used to finance acquisitions, which may
include the More Group Acquisition. The purchase price of the More Group
Acquisition is estimated to be approximately $735.7 million. Future acquisitions
of radio and television stations and other media-related properties effected in
connection with the implementation of the Company's acquisition strategy are
expected to be financed from increased borrowings under the Credit Facility,
other debt or equity financings and cash flow from operations.
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<PAGE> 17
PRICE RANGE OF COMMON STOCK
The Company's Common Stock is listed on the New York Stock Exchange
("NYSE") under the symbol "CCU". The following table sets forth, for the periods
indicated, the high and low closing sale prices per share (as adjusted for all
stock splits to date) as reported on the NYSE.
<TABLE>
<CAPTION>
HIGH LOW
------ ------
<S> <C> <C>
YEAR ENDED DECEMBER 31, 1996
First Quarter............................................. $29.13 $20.50
Second Quarter............................................ 43.00 27.00
Third Quarter............................................. 44.56 36.56
Fourth Quarter............................................ 44.38 31.00
YEAR ENDED DECEMBER 31, 1997
First Quarter............................................. $49.63 $34.25
Second Quarter............................................ 63.38 42.75
Third Quarter............................................. 68.75 58.63
Fourth Quarter............................................ 79.44 60.00
YEAR ENDED DECEMBER 31, 1998
First Quarter (through March 11, 1998).................... $94.25 $73.44
</TABLE>
As of March 6, 1998, there were 466 shareholders of record of the Company's
Common Stock. However, the Company believes that the number of beneficial owners
is significantly greater.
DIVIDEND POLICY
The Company currently expects to retain its earnings for the development
and expansion of its business. Any future decision by the Board of Directors to
pay cash dividends will depend upon, among other factors, the Company's
earnings, financial position and capital requirements. The Company's Credit
Facility restricts the Company's ability to pay dividends, other than dividends
payable wholly in capital stock of the Company.
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<PAGE> 18
CAPITALIZATION
The following table sets forth the current portion of long-term debt and
capitalization of the Company as of December 31, 1997, and as adjusted to give
effect to the sale of the 5,500,000 shares of Common Stock offered hereby at an
assumed price of $93.4375 per share. The following table is not adjusted to give
effect to the Note Offering.
<TABLE>
<CAPTION>
DECEMBER 31, 1997
---------------------------
ACTUAL AS ADJUSTED(1)
---------- --------------
(IN THOUSANDS)
<S> <C> <C>
Current portion of long-term debt.......................... $ 13,294 $ 13,294
========== ==========
Credit Facility(2)......................................... $1,215,221 $ 716,982
7.25% Debentures due October 15, 2027.................... 300,000 300,000
Other long-term debt(3).................................... 25,200 25,200
Shareholders' equity:
Preferred Stock, $1.00 par value, 2,000,000 shares
authorized, no shares issued or outstanding........... -- --
Common Stock, $.10 par value, 150,000,000 shares
authorized, 98,232,893 shares issued and outstanding
(103,732,893 shares as adjusted)...................... 9,823 10,373
Additional paid-in capital............................... 1,541,865 2,039,554
Retained earnings........................................ 169,631 169,631
Other equity............................................. 2,398 2,398
Unrealized gain on investments........................... 23,754 23,754
Cost of shares (38,207) held in treasury................. (687) (687)
---------- ----------
Total shareholders' equity............................ 1,746,784 2,245,023
---------- ----------
Total capitalization............................. $3,287,205 $3,287,205
========== ==========
</TABLE>
- ---------------
(1) As adjusted to give effect to the Offering and the application of the
estimated net proceeds therefrom of $498.2 million (at an assumed offering
price of $93.4375 per share).
(2) The Company may incur additional indebtedness of up to approximately $735.7
million in connection with the More Group Acquisition. See "Recent
Developments -- More Group Acquisition" in the Prospectus Supplement
Summary.
(3) As of December 31, 1997, Universal had approximately $507.6 of long-term
debt outstanding. As of December 31, 1997, More Group had approximately
$95.3 million (based on the exchange rate as of such date) of long-term debt
outstanding as set forth in accordance with the generally accepted
accounting principles of the United Kingdom.
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SELECTED FINANCIAL INFORMATION
The selected historical financial information presented below for the five
years ended December 31, 1997 has been derived from the historical consolidated
financial statements of the Company, which have been audited by Ernst & Young
LLP, independent auditors. The following selected financial information should
be read in conjunction with the historical consolidated financial statements and
notes thereto of the Company, which are incorporated herein by reference.
<TABLE>
<CAPTION>
PRO FORMA ELLER
MEDIA &
PRO FORMA ELLER PAXSON RADIO
MEDIA & ACQUISITIONS &
PAXSON RADIO UNIVERSAL
ACQUISITIONS MERGER YEAR
YEAR ENDED DECEMBER 31, YEAR ENDED ENDED
-------------------------------------------------------- DECEMBER 31, DECEMBER 31,
1993 1994 1995 1996 1997 1997(1) 1997(2)
-------- -------- -------- ---------- ---------- --------------- ----------------
(IN THOUSANDS EXCEPT PER SHARE AMOUNTS)
<S> <C> <C> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA(3):
Net revenue....................... $121,118 $178,053 $250,059 $ 351,739 $ 697,068 $ 831,814 $1,041,453
Operating expenses................ 78,925 105,380 137,504 198,332 394,404 490,324 591,937
Depreciation and amortization..... 17,447 24,669 33,769 45,790 114,207 152,206 243,064
-------- -------- -------- ---------- ---------- ---------- ----------
Operating income.................. 24,746 48,004 78,786 107,617 188,457 189,284 206,452
Corporate expenses................ 3,464 5,100 7,414 8,527 20,883 23,201 23,201
-------- -------- -------- ---------- ---------- ---------- ----------
Operating income.................. 21,282 42,904 71,372 99,090 167,574 166,083 183,251
Interest expense.................. 5,390 7,669 20,752 30,080 75,076 116,805 163,205
Other income (expense)............ (196) 1,161 (803) 2,230 11,579 6,463 3,842
-------- -------- -------- ---------- ---------- ---------- ----------
Income before income taxes........ 15,696 36,396 49,817 71,240 104,077 55,741 23,888
Income taxes...................... 6,573 14,387 20,292 28,386 47,116 32,465 32,465
-------- -------- -------- ---------- ---------- ---------- ----------
Income before equity in net income
(loss) of, and other income from
nonconsolidated affiliates...... 9,123 22,009 29,525 42,854 56,961 23,276 (8,577)
Equity in net income (loss) of,
and other income from,
nonconsolidated affiliates...... -- -- 2,489 (5,158) 6,615 6,615 6,615
-------- -------- -------- ---------- ---------- ---------- ----------
Net income (loss)................. $ 9,123 $ 22,009 $ 32,014 $ 37,696 $ 63,576 $ 29,891 $ (1,962)
======== ======== ======== ========== ========== ========== ==========
Net income per common share (loss)
(basic)......................... $ .15 $ .32 $ .46 $ .51 $ .72 $ .33 $ (0.02)
======== ======== ======== ========== ========== ========== ==========
Net income per common share
(loss) (diluted)................ $ .15 $ .32 $ .46 $ .51 $ .67 $ .28 $ (0.05)
======== ======== ======== ========== ========== ========== ==========
OTHER DATA:
After-tax cash flow(4)............ $ 26,638 $ 46,866 $ 71,140 $ 107,318 $ 213,445 $ 217,759 $ 276,764
======== ======== ======== ========== ========== ========== ==========
After-tax cash flow per share
(diluted)(5).................... $ .43 $ .68 $ 1.01 $ 1.44 $ 2.33 $ 2.33 $ 2.45
======== ======== ======== ========== ========== ========== ==========
EBITDA(6)......................... $ 38,533 $ 68,734 $106,827 $ 141,952 $ 299,975 $ 331,367 $ 436,772
</TABLE>
<TABLE>
<CAPTION>
DECEMBER 31,
-------------------------------------------------------------------------
1997 AS
1993 1994 1995 1996 1997 ADJUSTED(7)
-------- -------- -------- ---------- ---------- --------------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C> <C>
BALANCE SHEET DATA(3):
Cash and cash equivalents.......... $ 5,517 $ 6,818 $ 5,391 $ 16,701 $ 24,657 $ 24,657
Total assets....................... 227,577 411,594 563,011 1,324,711 3,455,637 3,455,637
Long-term debt, net of
current(8)....................... 87,815 238,204 334,164 725,132 1,540,421 1,042,182
Shareholders' equity............... 98,343 130,533 163,713 513,431 1,746,784 2,245,023
</TABLE>
- ---------------
(1) As adjusted to give effect to the Eller Media Acquisition and the Paxson
Radio Acquisition as if such acquisitions had been consummated on January 1,
1997.
(2) As adjusted to give effect to the Eller Media and Paxson Radio Acquisitions
and the Universal Merger as if such transactions had been consummated on
January 1, 1997.
(3) The comparability of results of operations and balance sheet data is
affected by acquisitions consummated in each of the periods presented.
(4) Defined as net income before unusual items plus depreciation, amortization
of intangibles (including non-consolidated affiliates) and deferred taxes.
After-tax cash flow is not presented as a measure of operating results and
does not purport to represent cash provided by operating activities.
After-tax cash flow should not be considered in isolation or as a substitute
for measures of performance prepared in accordance with generally accepted
accounting principles.
(5) Defined as after-tax cash flow divided by weighted average common shares and
common share equivalents outstanding assuming dilution.
(6) Defined as income from continuing operations before interest expense, income
taxes and depreciation and amortization. EBITDA is not a calculation based
upon generally accepted accounting principles; however, the amounts included
in the EBITDA calculation are derived from amounts included in the Statement
of Operations. In addition, EBITDA should not be considered as an
alternative to net income or operating income, as an indicator of operating
performance, or as an alternative to operating cash flows as a measure of
liquidity.
(7) As adjusted to give effect to the sale of the 5,500,000 shares of Common
Stock offered hereby at an assumed offering price of $93.4375 and the
application of the net proceeds therefrom as described in "Use of Proceeds".
(8) The Company may incur additional indebtedness of up to approximately $803.0
million in connection with the various pending acquisitions excluding
acquired company debt. See "Recent Developments" in the Prospectus
Supplement Summary.
S-18
<PAGE> 20
BUSINESS
The Company consists of three principal business segments -- radio
broadcasting, television broadcasting and outdoor advertising. The radio segment
includes both stations for which the Company is the licensee and stations for
which the Company programs and/or sells air time under LMAs or Joint Sales
Agreements ("JSA"). The radio segment also operates eleven networks. The
television segment includes both television stations for which the Company is
the licensee and stations programmed under LMAs. The outdoor advertising segment
has advertising display faces in 15 major domestic markets.
INDUSTRY SEGMENTS
For the year ended December 31, 1997, the Company derived approximately 48%
of its net revenue from radio operations, approximately 22% from television
operations, and approximately 30% from outdoor advertising operations.
Selected information relating to radio and television broadcasting for
1995, 1996 and 1997 is presented in the following table:
<TABLE>
<CAPTION>
1995 1996 1997
-------- -------- --------
(IN THOUSANDS)
<S> <C> <C> <C>
RADIO
Net revenue.......................................... $144,244 $217,189 $332,571
Operating expenses................................... 87,531 126,628 201,182
Depreciation......................................... 6,974 8,916 13,252
Amortization of intangibles.......................... 13,007 18,840 35,215
-------- -------- --------
Operating income before corporate expenses........... $ 36,732 $ 62,805 $ 82,922
======== ======== ========
TELEVISION
Net revenue.......................................... $105,815 $134,550 $157,062
Operating expenses................................... 49,973 71,704 85,132
Depreciation......................................... 8,406 10,420 11,563
Amortization of intangibles.......................... 5,382 7,614 6,353
-------- -------- --------
Operating income before corporate expenses........... $ 42,054 $ 44,812 $ 54,014
======== ======== ========
OUTDOOR*
Net revenue.......................................... -- -- $207,435
Operating expenses................................... -- -- 108,090
Depreciation......................................... -- -- 26,885
Amortization of intangibles.......................... -- -- 20,939
-------- -------- --------
Operating income before corporate expenses........... -- -- $ 51,521
======== ======== ========
CONSOLIDATED
Net revenue.......................................... $250,059 $351,739 $697,068
Operating expenses................................... 137,504 198,332 394,404
Depreciation......................................... 15,380 19,336 51,700
Amortization of intangibles.......................... 18,389 26,453 62,507
-------- -------- --------
Operating income before corporate expenses........... $ 78,786 $107,617 $188,457
======== ======== ========
</TABLE>
- ---------------
* Eller Media was purchased by the Company in April 1997. See "Recent
Developments -- Eller Media Acquisition" in the Prospectus Supplement Summary.
S-19
<PAGE> 21
RADIO BROADCASTING
The following table sets forth certain selected information with regard to
each of the Company's 56 AM and 117 FM radio stations which it owned or
programmed, or for which it sold airtime, as of December 31, 1997.
<TABLE>
<CAPTION>
AM FM
MARKET STATIONS STATIONS TOTAL
------ -------- -------- -----
<S> <C> <C> <C>
ARKANSAS
Little Rock................................................ -- 5 5
CALIFORNIA
Monterrey.................................................. 2(a) 4(a) 6
CONNECTICUT
New Haven.................................................. 2 1 3
FLORIDA
Florida Keys............................................... -- 3 3
Ft. Myers/Naples........................................... 1 4 5
Jacksonville............................................... 2 4 6
Miami/Ft. Lauderdale....................................... 3 5 8
Orlando.................................................... 2 4 6
Panama City................................................ 1 4 5
Pensacola.................................................. -- 2(b) 2
Tallahassee................................................ 1 4 5
Tampa/St. Petersburg....................................... 4(c) 5 9
West Palm Beach............................................ 1 2 3
KENTUCKY
Louisville................................................. 3 4 7
LOUISIANA
New Orleans................................................ 2 5 7
MASSACHUSETTS
Springfield................................................ 1 1 2
MICHIGAN
Grand Rapids............................................... 2 4 6
NEW YORK
Albany..................................................... 1(d) 3(d) 4
NORTH CAROLINA
Winston-Salem.............................................. 1 2 3
Raleigh.................................................... 1 4 5
OHIO
Cleveland.................................................. 1 2 3
Dayton..................................................... 1(a) 2(a) 3
OKLAHOMA
Oklahoma City.............................................. 3(c) 4 7
Tulsa...................................................... 2(c) 4(b)(c) 6
PENNSYLVANIA
Lancaster.................................................. 1 1 2
Reading.................................................... 1 1 2
RHODE ISLAND
Providence................................................. -- 2 2
SOUTH CAROLINA
Columbia................................................... 1 3 4
TENNESSEE
Cookeville................................................. 2 2 4
Memphis.................................................... 3 4 7
</TABLE>
S-20
<PAGE> 22
<TABLE>
<CAPTION>
AM FM
MARKET STATIONS STATIONS TOTAL
------ -------- -------- -----
<S> <C> <C> <C>
TEXAS
Austin..................................................... 1 3 4
El Paso.................................................... 1 2 3
Houston.................................................... 3(e) 4(c) 7
San Antonio................................................ 2 3(b) 5
VIRGINIA
Norfolk.................................................... -- 4 4
Richmond................................................... 3 3 6
WISCONSIN
Milwaukee.................................................. 1 3 4
-- --- ---
Total............................................ 56 117 173
== === ===
</TABLE>
- ---------------
(a) Stations programmed pursuant to an LMA (FCC licenses not owned by the
Company).
(b) Includes one station for which the Company sells airtime pursuant to a JSA
(FCC license not owned by the Company).
(c) Includes one station programmed pursuant to an LMA (FCC license not owned
by the Company).
(d) Stations owned by Radio Enterprises, Inc., in which the Company owns an 80%
interest.
(e) Includes two stations which are owned by CCC-Houston AM, Ltd., in which the
Company owns an 80% interest.
The Company also owns the Kentucky News Network based in Louisville,
Kentucky, the Virginia News Network based in Richmond, Virginia, the Oklahoma
News Network based in Oklahoma City, Oklahoma, the Voice of Southwest
Agriculture Network based in San Angelo, Texas, the Clear Channel Sports Network
based both in College Station, Texas, and Des Moines, Iowa, the Alabama Radio
Network based in Birmingham, Alabama, the Tennessee Radio Network based in
Nashville, Tennessee, the University of Miami Sports Network based in Miami,
Florida, the Florida Radio Network based in Maitland, Florida, the University of
Florida Sports Network based in Gainesville, Florida and Orlando, Florida, and
the Penn State Sports Network based in West Palm Beach, Florida.
TELEVISION BROADCASTING
The following table sets forth certain selected information with regard to
each of the Company's 18 television stations and one satellite station which it
owned or programmed as of December 31, 1997.
<TABLE>
<CAPTION>
NETWORK
MARKET AFFILIATION
------ -----------
<S> <C>
ALBANY/SCHENECTADY/TROY, NEW YORK
WXXA-TV..................................................... FOX
HARRISBURG/LEBANON/LANCASTER/YORK, PENNSYLVANIA
WHP-TV...................................................... CBS
WLYH-TV(a).................................................. UPN
JACKSONVILLE, FLORIDA
WAWS-TV..................................................... FOX
WTEV-TV(a).................................................. UPN
LITTLE ROCK, ARKANSAS
KLRT-TV..................................................... FOX
KASN-TV(a).................................................. UPN
</TABLE>
S-21
<PAGE> 23
<TABLE>
<CAPTION>
NETWORK
MARKET AFFILIATION
------ -----------
<S> <C>
MEMPHIS, TENNESSEE
WPTY-TV..................................................... ABC
WLMT-TV(a).................................................. UPN
MINNEAPOLIS, MINNESOTA
WFTC-TV..................................................... FOX
MOBILE, ALABAMA/PENSACOLA, FLORIDA
WPMI-TV..................................................... NBC
WJTC-TV(a).................................................. UPN
PROVIDENCE/NEW BEDFORD, RHODE ISLAND
WPRI-TV..................................................... CBS
WNAC-TV(a).................................................. FOX
TUCSON, ARIZONA
KTTU-TV(b).................................................. UPN
TULSA, OKLAHOMA
KOKI-TV..................................................... FOX
KTFO-TV(a).................................................. UPN
WICHITA, KANSAS
KSAS-TV..................................................... FOX
SALINA, KANSAS
KAAS-TV(c).................................................. FOX
</TABLE>
- ---------------
(a) LMA (FCC license not owned by the Company).
(b) Station programmed by another party pursuant to an LMA.
(c) Satellite station of KSAS-TV in Wichita, Kansas.
S-22
<PAGE> 24
OUTDOOR ADVERTISING
The following table sets forth certain selected information with regard to
each of the Company's outdoor advertising display faces as of December 31, 1997.
<TABLE>
<CAPTION>
TOTAL
DISPLAY
MARKET FACES(A)
------ --------
<S> <C>
ARIZONA:
Phoenix..................................................... 359
CALIFORNIA:
Los Angeles(b).............................................. 7,863
San Francisco/Oakland(c).................................... 10,355
MIDWEST:
Chicago..................................................... 6,838
Cleveland(d)................................................ 2,258
Milwaukee................................................... 1,187
SOUTHEAST:
Atlanta..................................................... 1,628
Miami....................................................... 2,052
Tampa(e).................................................... 2,362
TEXAS:
Dallas/Fort Worth........................................... 3,110
El Paso..................................................... 1,353
Houston..................................................... 5,214
San Antonio................................................. 3,463
CONVENIENCE STORES:
Various................................................... 5,921
UNION PACIFIC SOUTHERN PACIFIC(F):
Various................................................... 3,697
------
Total............................................. 57,660
======
</TABLE>
- ---------------
(a) Display faces primarily include 20(#)x60(#) bulletins, 14(#)x48(#)
bulletins, 12(#)x25(#) Premier Panels(TM), 25(#)x25(#) Premier Plus
Panels(TM) 12(#)x25(#) 30-sheet posters, 6(#)x12(#) 8-sheet posters, and
various transit displays.
(b) Includes Los Angeles, San Diego, Orange, Riverside, San Bernardino and
Ventura counties.
(c) Includes San Francisco, Oakland, San Jose, Santa Cruz, Sacramento and
Solano counties.
(d) Includes Akron and Canton.
(e) Includes Sarasota, Orlando and Bradenton.
(f) Represents licenses managed under Union Pacific Southern Pacific License
Management Agreement.
S-23
<PAGE> 25
UNDERWRITING
Subject to the terms and conditions of the Underwriting Agreement (the
"Underwriting Agreement"), the Underwriters named below (the "Underwriters")
have severally agreed to purchase from the Company the following respective
number of shares of Common Stock at the public offering price less the
underwriting discounts and commissions set forth on the cover page of this
Prospectus Supplement:
<TABLE>
<CAPTION>
UNDERWRITER NUMBER OF SHARES
----------- ----------------
<S> <C>
BT Alex. Brown Incorporated.................................
Credit Suisse First Boston Corporation......................
Furman Selz LLC.............................................
Goldman, Sachs & Co.........................................
Lehman Brothers Inc.........................................
Merrill Lynch, Pierce, Fenner & Smith
Incorporated...................................
Morgan Stanley & Co. Incorporated...........................
NationsBanc Montgomery Securities LLC.......................
Smith Barney Inc............................................
Schroder & Co. Inc..........................................
---------
Total....................................................... 5,500,000
=========
</TABLE>
The Underwriting Agreement provides that the obligations of the
Underwriters are subject to certain conditions precedent and that the
Underwriters will purchase all shares of Common Stock offered hereby if any of
such shares are purchased.
The Company has been advised by the Underwriters that the Underwriters
propose to offer the shares of Common Stock to the public at the public offering
price set forth on the cover page of this Prospectus Supplement, and to certain
dealers at such price less a concession not in excess of $ per share. The
Underwriters may allow, and such dealers may reallow, a concession not in excess
of $ per share to certain other dealers. After the Offering, the offering
price and other selling terms may be changed by the Underwriters.
The Company has granted to the Underwriters an option, exercisable not
later than 30 days after the date of this Prospectus Supplement, to purchase up
to 825,000 additional shares of Common Stock at the public offering price less
the underwriting discounts and commissions set forth on the cover page of this
Prospectus Supplement. To the extent that the Underwriters exercise such option,
each of the Underwriters will have a firm commitment to purchase approximately
the same percentage thereof that the number of shares of Common Stock to be
purchased by it shown in the above table bears to 5,500,000, and the Company
will be obligated, pursuant to the option, to sell such shares to the
Underwriters. The Underwriters may exercise such option only to cover
over-allotments made in connection with the sale of Common Stock offered hereby.
If purchased, the Underwriters will offer such additional shares on the same
terms as those in which the 5,500,000 shares are being offered.
The Underwriting Agreement contains covenants of indemnity and contribution
among the Company and the Underwriters with respect to certain liabilities,
including liabilities under the Securities Act.
To facilitate the offering of the Common Stock, the Underwriters may engage
in transactions that stabilize, maintain or otherwise affect the market price of
the Common Stock. Specifically, the Underwriters may over-allot shares of the
Common Stock in connection with the offering, thereby creating a short position
in the Underwriters' account. Additionally, to cover such over-allotments or to
stabilize the market price of the Common Stock, the Underwriters may bid for,
and purchase, shares of the Common Stock at a level above that which might
otherwise prevail in the open market. The Underwriters are not required to
engage in these activities, and, if commenced, any such activities may be
discontinued at any time. The Underwriters
S-24
<PAGE> 26
also may reclaim selling concessions allowed to an Underwriter or dealer, if the
Underwriters repurchase shares distributed by that Underwriter or dealer.
The Company and Messrs. L. Lowry Mays and B.J. McCombs have agreed that
they will not, directly or indirectly, offer, sell or otherwise dispose of, any
equity securities of the Company or any securities convertible into or
exchangeable for, or any rights to purchase or acquire, equity securities of the
Company (other than employee stock options granted by the Company in the
ordinary course of business) for a period of 30 days after the date of this
Prospectus Supplement without the prior written consent of BT Alex. Brown
Incorporated. Furthermore, Mr. Simon has entered into a Resale Agreement with
the Company (the "Resale Agreement") restricting his ability to sell Common
Stock for a period beginning on the date the Universal Merger is consummated and
ending on the earlier of (i) the date Mr. Simon is no longer an officer or
director of the Company or any of its subsidiaries and (ii) two years following
the date the Universal Merger is consummated. The Resale Agreement also
restricts the ability of Mr. Simon to buy or sell shares of Common Stock prior
to the consummation of the Universal Merger.
The Underwriters and their respective affiliates may be customers of,
lenders to, engage in transactions with, and perform services for the Company
and its subsidiaries in the ordinary course of business.
LEGAL OPINIONS
The validity of the Common Stock offered hereby will be passed upon for the
Company by its special counsel, Akin, Gump, Strauss, Hauer & Feld, L.L.P. (a
partnership including professional corporations), San Antonio, Texas, and for
the Underwriters by Cravath, Swaine & Moore, New York, New York. Alan D. Feld,
the sole shareholder of a professional corporation which is a partner of Akin,
Gump, Strauss, Hauer & Feld, L.L.P., is a director of the Company and owns
approximately 90,000 shares of Common Stock (including presently exercisable
nonqualified options to acquire approximately 51,000 shares).
S-25
<PAGE> 27
======================================================
NO DEALER, SALESPERSON OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATION NOT CONTAINED IN THIS PROSPECTUS
SUPPLEMENT OR THE ACCOMPANYING PROSPECTUS AND, IF GIVEN OR MADE, SUCH
INFORMATION OR REPRESENTATION MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED
BY THE COMPANY OR ANY UNDERWRITER. THIS PROSPECTUS SUPPLEMENT AND THE PROSPECTUS
DO NOT CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF AN OFFER TO BUY ANY OF
THE SECURITIES OFFERED HEREBY IN ANY JURISDICTION TO ANY PERSON TO WHOM IT IS
UNLAWFUL TO MAKE SUCH AN OFFER OR SOLICITATION. NEITHER THE DELIVERY OF THIS
PROSPECTUS SUPPLEMENT OR THE PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL, UNDER
ANY CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THE INFORMATION HEREIN IS CORRECT
AS OF ANY TIME SUBSEQUENT HEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT TO THE
DATE HEREOF.
---------------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
PROSPECTUS SUPPLEMENT
Prospectus Supplement Summary.......... S-3
Risk Factors........................... S-8
Use Of Proceeds........................ S-15
Price Range of Common Stock............ S-16
Dividend Policy........................ S-16
Capitalization......................... S-17
Selected Financial Information......... S-18
Business............................... S-19
Underwriting........................... S-24
Legal Opinions......................... S-25
PROSPECTUS
Available Information.................. 3
Incorporation of Certain Documents by
Reference............................ 3
The Company............................ 4
The CCCI Trusts........................ 4
Ratio of Earnings to Combined Fixed
Charges and Preferred Stock
Dividends............................ 5
Use of Proceeds........................ 5
Holding Company Structure.............. 6
General Description of Securities and
Risk Factors......................... 6
Description of Debt Securities......... 6
Description of Junior Subordinated Debt
Securities........................... 16
Description of Preferred Stock......... 24
Description of Common Stock............ 24
Description of Warrants................ 26
Description of Stock Purchase Contracts
and Stock Purchase Units............. 27
Description of Preferred Securities.... 28
Description of Guarantees.............. 30
ERISA Matters.......................... 33
Plan of Distribution................... 33
Legal Opinions......................... 34
Experts................................ 35
</TABLE>
======================================================
======================================================
5,500,000 SHARES
[CLEAR CHANNEL LOGO]
CLEAR CHANNEL
COMMUNICATIONS, INC.
COMMON STOCK
($0.10 PAR VALUE)
PROSPECTUS SUPPLEMENT
BT ALEX. BROWN
CREDIT SUISSE FIRST BOSTON
FURMAN SELZ
GOLDMAN, SACHS & CO.
LEHMAN BROTHERS
MERRILL LYNCH & CO.
MORGAN STANLEY DEAN WITTER
NATIONSBANC MONTGOMERY SECURITIES LLC
SALOMON SMITH BARNEY
SCHRODER & CO. INC.
======================================================
<PAGE> 28
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY
OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES
EFFECTIVE. THIS PROSPECTUS SUPPLEMENT AND THE ACCOMPANYING PROSPECTUS SHALL NOT
CONSTITUTE AN OFFER TO SELL OR THE SOLICITATION OF AN OFFER TO BUY NOR SHALL
THERE BE ANY SALE OF THESE SECURITIES IN ANY STATE IN WHICH SUCH OFFER,
SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION
UNDER THE SECURITIES LAWS OF ANY SUCH STATE.
<TABLE>
<S> <C>
SUBJECT TO COMPLETION PROSPECTUS SUPPLEMENT TO PROSPECTUS
DATED MARCH 12, 1998 SUBJECT TO COMPLETION
DATED MARCH 12, 1998
[CLEAR CHANNEL LOGO] $500,000,000
CLEAR CHANNEL COMMUNICATIONS, INC.
% SENIOR CONVERTIBLE NOTES DUE APRIL 1, 2003
Interest payable April 1 and October 1
</TABLE>
---------------------
The % Senior Convertible Notes due April 1, 2003, (the "Notes") are
convertible into Common Stock, $0.10 par value per share (the "Common Stock") of
Clear Channel Communications, Inc. (the "Company") at any time following the
date of original issuance thereof, unless previously redeemed, at a conversion
price of $ per share, subject to adjustment in certain events. On March
11, 1998, the last reported sale price of the Common Stock on the New York Stock
Exchange was $93.4375 per share.
Interest on the Notes is payable semiannually on each April 1 and October
1, beginning October 1, 1998. The Notes will mature on April 1, 2003. The Notes
are redeemable, in whole or in part, at the option of the Company at any time on
or after April 1, 2001 at the redemption prices set forth herein plus accrued
interest. See "Description of Notes -- Optional Redemption." The Notes are
unsecured general obligations of the Company. Subject to certain restrictions
and conditions, in the event of a Change in Control (as defined herein) each
holder of the Notes may require the Company to repurchase all or a portion of
such holder's Notes at 100% of the principal amount thereof, together with
accrued interest to the date of repurchase. See "Description of
Notes -- Repurchase at Option of Holders Upon Change in Control."
The Notes will be represented by one or more Global Securities (as defined
herein) registered in the name of the nominee of The Depository Trust Company
(the "Depositary"). Except as provided herein and in the accompanying
Prospectus, Notes in definitive form will not be issued. See "Description of
Notes -- Book-Entry System".
Concurrent with the Offering, the Company is offering 5,500,000 shares of
its Common Stock to the public (the "Stock Offering"). Consummation of the
Offering is not contingent upon consummation of the Stock Offering and
consummation of the Stock Offering is not contingent upon consummation of the
Offering.
---------------------
SEE "RISK FACTORS" BEGINNING ON PAGE S-10 FOR A DISCUSSION OF CERTAIN
RISKS THAT SHOULD BE CONSIDERED IN CONNECTION WITH AN INVESTMENT IN THE NOTES
OFFERED HEREBY.
---------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION PASSED UPON
THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS SUPPLEMENT OR THE PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
<TABLE>
<CAPTION>
=======================================================================================================================
UNDERWRITING
PRICE TO DISCOUNTS AND PROCEEDS TO THE
PUBLIC(1) COMMISSIONS COMPANY(1)(2)(3)
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Per Note.................................... % % %
- -----------------------------------------------------------------------------------------------------------------------
Total....................................... $ $ $
=======================================================================================================================
</TABLE>
(1) Plus accrued interest, if any, from March , 1998.
(2) Before deduction of expenses payable by the Company, estimated at $250,000.
(3) The Company has granted to the Underwriters a 30 day option to purchase up
to $75,000,000 aggregate principal amount of the Notes solely to cover
over-allotments, if any. If such option is exercised in full, the total
Price to Public, Underwriting Discounts and Commissions, and Proceeds to the
Company will be $ , $ , and $ , respectively. See
"Underwriting."
The Notes are being offered by the Underwriters when, as and if issued by
the Company, delivered to and accepted by the Underwriters and subject to their
right to reject orders in whole or in part. It is expected that delivery of the
Notes in book-entry form will be made through the facilities of the Depositary
on or about March , 1998, against payment in immediately available funds.
---------------------
BT ALEX. BROWN
CREDIT SUISSE FIRST BOSTON
FURMAN SELZ
GOLDMAN, SACHS & CO.
LEHMAN BROTHERS
MERRILL LYNCH & CO.
MORGAN STANLEY DEAN WITTER
NATIONSBANC MONTGOMERY SECURITIES LLC
SALOMON SMITH BARNEY
SCHRODER & CO. INC.
PROSPECTUS SUPPLEMENT DATED MARCH , 1998.
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CERTAIN PERSONS PARTICIPATING IN THIS OFFERING MAY ENGAGE IN TRANSACTIONS
THAT STABILIZE, MAINTAIN, OR OTHERWISE AFFECT THE PRICE OF THE SECURITIES
OFFERED HEREBY INCLUDING OVER-ALLOTMENT, STABILIZING TRANSACTIONS, SYNDICATE
SHORT COVERING TRANSACTIONS AND PENALTY BIDS. FOR A DESCRIPTION OF THESE
ACTIVITIES, SEE "UNDERWRITING."
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PROSPECTUS SUPPLEMENT SUMMARY
The following information is qualified in its entirety by the more detailed
information and financial statements, including notes thereto, appearing in this
Prospectus Supplement, the accompanying Prospectus and the documents
incorporated by reference into this Prospectus Supplement and the accompanying
Prospectus. All information set forth herein has been adjusted to reflect
five-for-four stock splits effected in February 1993 and February 1994, and
two-for-one stock splits effected in November 1995 and December 1996. Unless the
context otherwise requires, references herein to the "Company" are to Clear
Channel Communications, Inc. and its consolidated subsidiaries. Unless otherwise
indicated, the information set forth herein does not give effect to the Stock
Offering. Unless otherwise indicated, the information in this Prospectus
Supplement assumes no exercise of the Underwriters' over-allotment option. See
"Underwriting."
THE COMPANY
The Company, which began operations in 1972, is a diversified media company
that owns or programs radio and television stations and is one of the largest
domestic outdoor advertising companies based on its total advertising display
inventory. In addition, the Company currently owns a 50% equity interest in the
Australian Radio Network Pty. Ltd., which operates radio stations in Australia;
a one-third equity interest in the New Zealand Radio Network, which operates
radio stations throughout New Zealand; a 28.7% non-voting equity interest in
Heftel Broadcasting Corporation (Nasdaq: HBCCA) ("Heftel"), a leading domestic
Spanish-language radio broadcaster; and a 30% equity interest in American Tower
Corporation, a leading domestic provider of wireless transmission sites.
The radio stations currently owned or programmed by the Company are
principally located in the South, Southeast, Southwest, Northeast and Midwest.
These radio stations employ a wide variety of programming formats, such as
News/Talk/Sports, Country, Adult Contemporary, Urban and Album Rock. The
television stations currently owned or programmed by the Company are located in
the South, Southeast, Northeast and Midwest. These television stations are
affiliated with various television networks, including the FOX television
network, the UPN television network, the ABC television network, the NBC
television network and the CBS television network. Additionally, the Company
operates radio networks serving Oklahoma, Texas, Iowa, Kentucky, Virginia,
Alabama, Tennessee, Florida and Pennsylvania. The Company's outdoor advertising
properties are located primarily in the South, Southeast, Midwest, and West.
During 1997, the Company derived approximately 48% of its net revenue from radio
operations, approximately 22% from television operations, and approximately 30%
from outdoor advertising operations. The foregoing percentages would be
different had the Company's acquisitions described below in "Recent
Developments" been consummated as of January 1, 1997. See "Recent Developments"
in the Prospectus Supplement Summary.
The Company has its principal executive offices at 200 Concord Plaza, Suite
600, San Antonio, Texas 78216 (telephone: 210-822-2828).
COMPANY STRATEGY
The Company's overall strategy is to acquire and develop a diverse array of
media assets which enable the Company to assist its customers in employing the
most effective and cost-efficient methods to market their products and services.
Accordingly, the Company has assembled a diversified array of assets
encompassing radio broadcasting, television broadcasting and outdoor
advertising. The Company plans to use this diversified collection of assets,
along with the operating expertise of its management, to continue generating
substantial internal growth. The Company believes it can augment this internal
growth with the opportunistic acquisition of additional media assets. Such
potential acquisitions will be evaluated based on their strategic value to the
Company and their potential to deliver attractive rates of return to the
Company's shareholders and to add revenue and cash flow to its operating results
as well as to improve the performance of the Company's existing assets.
Historically, the Company has been able to generate significant returns for its
investors while maintaining financial flexibility through the prudent use of
leverage. The Company believes that this prudent use of leverage has also
contributed to the Company's relatively low cost of capital. The Company
believes
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that focusing on its clients' goals, creating a sales-intensive operating
organization, and maintaining a conservative financial position are synergistic
aspects of its operating strategy.
The Company believes that the potential exists for cooperation between its
various business segments and that it can help its customers market their
products and services more effectively and efficiently by offering greater
flexibility in the choice of media outlets for marketing messages. The Company
is now able to offer additional advertising solutions for its customers in those
markets where it simultaneously operates radio stations with television stations
or outdoor advertising displays. In this way, the Company believes that its
combination of assets will allow it to offer greater value to its customers.
Additionally, the Company intends to use its various business segments to
cross-promote one another when possible.
Broadcast Strategy. The Company's broadcast strategy is to identify and
acquire under-performing stations on favorable terms and to utilize management's
extensive operating experience to improve the performance of such stations
through effective programming, reduction of costs and aggressive promotion,
marketing and sales. In addition, the Company employs a marketing strategy that
emphasizes direct sales to local customers rather than through advertising
agencies and other intermediaries. The Company believes that this focus has
enabled its stations to achieve market revenue shares exceeding their audience
shares.
The Company believes that clustering broadcasting assets together in
markets leads to substantial operating advantages. The Company attempts to
cluster radio stations in each of its principal markets, believes that by
controlling a larger share of the total advertising inventory in a particular
market, it can offer advertisers more attractive packages of advertising
options. The Company also believes that its cluster approach will allow it to
operate its stations with more highly skilled local management teams and
eliminate duplicative operating and overhead expenses. Within its television
group, the Company's goal is to own and program one station in each of its
markets and to program an additional station under a Local Marketing Agreement
("LMA") in each such market. In seven of its television markets, the Company
already programs an additional television station under an LMA.
Outdoor Advertising Strategy. The Company's outdoor advertising strategy is
to expand its market presence in the outdoor advertising business and improve
its operating results by (i) managing the advertising rates and occupancy levels
of its displays to maximize market revenues; (ii) attracting new categories of
advertisers to the outdoor medium through significant investments in sales and
marketing resources; (iii) increasing focus on local advertising sales; (iv)
constructing new displays and upgrading its existing displays; (v) taking
advantage of technological advances which increase both sales force productivity
and production department efficiency; (vi) acquiring additional displays in its
existing markets and expanding into additional markets where the Company already
has a broadcasting presence as well as into the country's largest media markets
and their surrounding regional areas; and (vii) making opportunistic
acquisitions of displays in new markets. The Company believes this strategy
enhances its ability to effectively respond to advertisers' needs.
To support this outdoor advertising operating strategy, the Company has
decentralized its operating structure related to outdoor advertising in order to
place authority, autonomy and accountability at the market level and provide
local management with the tools necessary to oversee sales, display development,
administration and production and to identify suitable acquisition candidates.
The Company also maintains a fully-staffed sales and marketing office in New
York which services national outdoor advertising accounts and supports the
Company's local sales force in each market. The Company believes that one of its
strongest competitive advantages is its unique blend of highly experienced
corporate and local market management.
RECENT DEVELOPMENTS
GRUPO ACIR ACQUISITION
On March 12, 1998, the Company entered into a definitive agreement to
acquire 40% of the equity of Grupo Acir Communicationes, S.A. de C.V. ("Grupo
Acir") for $57,500,000 (the "Grupo Acir Acquisition"). Grupo Acir is one of the
largest radio broadcasters in Mexico. It owns and or programs through
affiliations 164 stations serving 72 markets in Mexico. Of the 164 stations, 65
are owned and operated by
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Grupo Acir and 99 are affiliated with one of its eight national digital
networks. Seven of these owned stations are located in Mexico City, Mexico's
largest media market.
Due to constraints under Mexican Law, the Company's investment is being
made through a Mexican trustee which will vote the Company's shares.
Consummation of the Grupo Acir Acquisition is subject to numerous closing
conditions, including, without limitation, receiving all required regulatory
approvals of the Mexican government. The Grupo Acir Acquisition, if consummated,
will not be consummated prior to the consummation of this Offering. See "Risk
Factors -- Grupo Acir Acquisition."
MORE GROUP ACQUISITION
On March 5, 1998, the Company agreed to make a cash offer (the "More Group
Acquisition") for all of the issued and to be issued shares of More Group Plc,
an outdoor advertising Company organized under the laws of the United Kingdom
("More Group"), for L10.425 per share (approximately $17.20 per share on March
5, 1998). As of such date, the aggregate consideration for all of such shares
was approximately $735.7 million. This offer was recommended to More Group
shareholders by More Group's board of directors. More Group operates in 22
countries and has approximately 90,000 display faces, including approximately
50,000 street furniture panels and approximately 40,000 billboards.
Consummation of the More Group Acquisition is subject to acceptance by the
holders of at least 90% of the total shares of More Group or such lesser
percentage as the Company may decide. This condition will not be satisfied
unless the Company shall have acquired or agreed to acquire More Group shares
carrying in aggregate more than 50% of the voting rights then exercisable at a
general meeting of More Group. The More Group Acquisition is also subject to the
receipt of all necessary approvals, including regulatory approvals, there being
no material adverse change in the business of More Group and its subsidiaries
taken as a whole and numerous other conditions. The More Group Acquisition, if
consummated, will not be consummated prior to the consummation of the Offering.
See "Risk Factors -- More Group Acquisition."
UNIVERSAL OUTDOOR MERGER
On October 23, 1997, the Company and Universal Outdoor Holdings, Inc.
("Universal") entered into a Merger Agreement (the "Merger Agreement").
Universal is a leading outdoor advertising company operating approximately
34,000 advertising display faces predominantly in the Midwest, Northeast and
Southeast. Pursuant to the Merger Agreement, a wholly-owned subsidiary of the
Company will be merged with and into Universal, with Universal continuing as the
surviving corporation and a wholly owned subsidiary of the Company (the
"Universal Merger"). On February 6, 1998, the stockholders of Universal voted to
approve the Universal Merger.
Subject to the terms and conditions of the Merger Agreement, each share of
Universal common stock outstanding immediately prior to the consummation of the
Universal Merger will be converted into 0.67 shares of the Company's Common
Stock. Outstanding warrants and options to acquire shares of Universal common
stock held by certain senior level employees of Universal will be canceled in
exchange for shares of the Company's Common Stock. It is anticipated that
approximately 19.3 million shares of the Company's Common Stock will be issued
in the Universal Merger, representing approximately 16.4% of the shares of the
Company's Common Stock expected to be outstanding after the Universal Merger,
excluding the Stock Offering.
In connection with the Universal Merger, Daniel L. Simon, the current
President and Chief Executive Officer of Universal, entered into an employment
agreement with the Company pursuant to which he will become, upon consummation
of the Universal Merger, the Vice Chairman and Chief Operating Officer of
Universal, Eller Media Corporation, a subsidiary of the Company ("Eller Media"),
their respective subsidiaries and affiliate companies and any successor company
or affiliates of the Company which are in the business of outdoor advertising.
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Consummation of the Universal Merger is subject to numerous closing
conditions, including the receipt of all regulatory approvals and other
necessary approvals. The Universal Merger, if consummated, is not likely to be
consummated prior to the closing of the Offering. See "Risk Factors -- Universal
Merger."
PAXSON RADIO ACQUISITION
On October 1, 1997, the Company acquired six radio news and sports networks
and approximately 350 outdoor advertising display faces from Paxson
Communications Corp. ("Paxson"). On December 8, 1997, the Company acquired 43
radio stations from Paxson and certain affiliates of Paxson (the "Paxson Radio
Acquisition"). The total purchase price for such acquisitions was approximately
$629 million in cash. Prior to the consummation of the acquisition of the radio
stations on December 8, 1997, the Company entered into a commercial time
brokerage agreement with respect to most of such radio stations and commercial
time sales agreements with respect to certain other radio stations. All of the
radio stations and display faces referred to above are located in Florida except
for four radio stations located in Tennessee.
In connection with the acquisitions of seven of the radio stations from
Paxson in the Jacksonville, Florida and the Mobile, Alabama/Pensacola, Florida
markets, the Company received temporary waivers of the Federal Communications
Commission's ("FCC") one-to-a-market rule which generally prohibits the common
ownership of radio and television stations in the same market. Such waivers are
conditioned upon the outcome of the FCC's pending ownership attribution
rulemaking proceeding. Some divestitures could be required at the conclusion of
the rulemaking proceeding. Should divestitures be necessary, the Company will be
required to submit applications to the FCC seeking consent to sell any
nonconforming stations within six months following finality of the rulemaking.
On December 8, 1997, the Company acquired options from Paxson to purchase a
radio station in Tampa, Florida and a radio station in Pensacola, Florida for a
total of approximately $3 million in cash. The Company and Paxson are parties to
commercial time sales agreements with respect to such stations. The Company
presently intends to exercise its option to acquire the radio station in Tampa,
Florida for approximately $1 million and has divested an existing radio station
it owned in Tampa in order to obtain FCC approval of the exercise of such
option.
ELLER MEDIA ACQUISITION
On April 10, 1997, the Company acquired approximately 93% of the then
outstanding stock of Eller Media for a total consideration of approximately $627
million, consisting of approximately $329 million in cash and 6,643,636 shares
of the Company Common Stock (approximately $298 million in the Company Common
Stock based on a price per share of $44.8625 per share) (the "Eller Media
Acquisition"). Immediately following the consummation of the Eller Media
Acquisition, the Company retired approximately $417 million of Eller Media's
outstanding bank debt through borrowings under the Credit Facility. In addition,
the Company issued options (with an estimated fair value of approximately $51
million) to purchase 1,468,182 shares of the Company Common Stock in connection
with the assumption of Eller Media's outstanding stock options. The Company also
agreed to issue 147,858 shares of Common Stock pursuant to certain phantom stock
plan obligations assumed by the Company as part of the Eller Media Acquisition.
The holders of the approximately 7% of the then outstanding capital stock of
Eller Media not purchased by the Company have the right to require the Company
to acquire such stock for 1,081,469 shares of the Company's Common Stock until
April 10, 2002. From and after April 10, 2004 (or before such date upon the
occurrence of certain events), the Company will have the right to acquire this
minority interest stake in Eller Media for 1,081,469 shares of Common Stock. On
April 29, 1997, Karl Eller, the Chief Executive Officer of Eller Media, was
appointed to the Company's Board of Directors. Mr. Eller currently is employed
by the Company to run Eller Media as a subsidiary of the Company pursuant to an
employment contract which is due to expire on August 18, 1999. In addition, Mr.
Eller and other members of the Eller Media management team have a significant
stake in the Company's stock options through the conversion of existing Eller
Media stock options into options to purchase the Company's Common Stock.
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OTHER COMPLETED AND PENDING ACQUISITIONS
Since December 31, 1997, the Company has completed the acquisition of 21
additional radio stations for approximately $110.7 million in five markets and
completed the acquisition of or obtained the rights to lease 4,592 display faces
for approximately $103.5 million in nine markets.
Since December 31, 1997, in addition to the pending Universal Merger and
More Group Acquisition, the Company has entered into definitive agreements to
purchase 16 display faces for approximately $2.2 million in four markets. In
addition, acquisitions to purchase four additional radio stations for
approximately $9.8 million in two markets are pending pursuant to definitive
agreements executed prior to December 31, 1997. All of these acquisitions of
broadcast properties are subject to the approval of the FCC and, in some cases,
the Federal Trade Commission (the "FTC") and the Antitrust Division of the
United States Department of Justice (the "Antitrust Division"), as well as
certain other closing conditions.
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THE OFFERING
Securities................. $500,000,000 aggregate principal amount of %
Senior Convertible Notes due 2003 (the "Notes").
Maturity Date.............. April 1, 2003
Interest Payment Dates..... Interest on the Notes will be payable in cash
semi-annually on each April 1 and October 1,
commencing on October 1, 1998.
Conversion Rights.......... The Notes are convertible into shares of Common
Stock at any time prior to maturity, unless
previously redeemed or repurchased, at a conversion
price of $ per share, subject to
adjustment in certain circumstances. See
"Description of Notes -- Conversion of Notes."
Sinking Fund............... None.
Redemption at the Option of
the Company................ The Notes are not redeemable by the Company until
April 1, 2001. Thereafter, the Notes will be
redeemable, at any time, on at least 15 days'
notice at the option of the Company, in whole or in
part, at the redemption prices set forth herein,
plus accrued interest. See "Description of
Notes -- Optional Redemption by the Company." The
Notes are not entitled to any sinking fund.
Repurchase at the Option of
Holders upon Change in
Control.................. In the event a Change in Control (as defined
herein) occurs, each holder of Notes may require
the Company to repurchase all or a portion of such
holder's Notes at 100% of the principal amount
thereof, together with accrued interest to the
repurchase date. If a Change in Control were to
occur, there could be no assurance that the Company
would have sufficient funds to pay the repurchase
price for all Notes tendered by the holders thereof
or that the Company would be permitted to
repurchase the Notes under its then-existing credit
arrangements. See "Description of
Notes -- Repurchase at Option of Holders upon
Change in Control" and "Risk Factors -- Limitation
of Repurchase of Notes upon Change in Control."
Ranking.................... The Notes are senior unsecured obligations of the
Company, rank on a parity with all other unsecured
and unsubordinated indebtedness of the Company and
are effectively subordinated in right of payment to
the prior payment in full of all indebtedness of
the Company's subsidiaries. The Indenture does not
restrict the Company's ability to incur
indebtedness or additional indebtedness of the
Company's subsidiaries.
Denomination and
Registration of Notes...... The Notes are represented by a global security (the
"Global Security") in full registered form, without
coupons, which will be deposited with a custodian
for, and registered in the name of the Depositary
in the City of New York. Beneficial interests in
the Global Security will be shown on and transfers
thereof will be effected only through, records
maintained by the Depositary and its participants.
Unless certain conditions specified in the
Indenture are met, certificated Notes will not be
issued in exchange for beneficial interests in the
Global Security. See "Description of
Notes -- Global Securities" and "-- Book Entry
System."
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Use of Proceeds............ The estimated net proceeds to be received by the
Company from the sale of the Notes offered hereby,
after deducting the discount to the Underwriters
and other estimated expenses payable by the
Company, are approximately $494.1 million. The
Company intends to use such net proceeds to repay a
portion of the outstanding indebtedness under the
Company's revolving credit facility with a group of
banks (the "Credit Facility").
Common Stock Trading....... The Common Stock is traded on the NYSE under the
symbol "CCU."
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RISK FACTORS
Prospective purchasers of the Notes should consider carefully the factors
set forth below, as well as the other information contained in this Prospectus
Supplement and the Prospectus. The Company cautions the reader, however, that
this list of factors may not be exhaustive.
UNIVERSAL MERGER
Consummation of the Universal Merger is subject to numerous conditions,
including the receipt of all regulatory approvals. The combined enterprise may
be required to divest assets or submit to various operating restrictions in
order to obtain the authorizations and approvals necessary to consummate the
Universal Merger or to ensure that governmental authorities do not seek to block
the Universal Merger. Such divestitures could be material to the business of the
combined enterprise or have a material adverse effect on the results of
operations of the combined entity. There can be no assurance that the
consummation of any such divestiture could be effected at a fair market price or
that the reinvestment of the proceeds or exchange of assets therefrom would
produce for the combined enterprise either an operating profit at the same level
as the divested product lines or a commensurate rate of return on the amount of
its investment. There also can be no assurance that any operating restrictions
imposed would not adversely affect the value of the combined enterprise. On
March 10, 1998, the Antitrust Division tentatively agreed to the early
termination of the waiting period under the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, as amended, if the Company makes divestitures of
certain display faces in certain of its markets. The Company is currently
negotiating a definitive agreement with a third party with respect to such
divestitures. The Company believes that such divestitures will not be material.
However, there can be no assurance that a definitive agreement will be executed
with such party or that the transactions contemplated therein will be
consummated. Therefore, there can be no assurance that the Universal Merger will
be consummated in a timely manner or on the terms described herein, if at all.
See "Recent Developments -- Universal Merger" in the Prospectus Supplement
Summary.
MORE GROUP ACQUISITION
Consummation of the More Group Acquisition is subject to numerous closing
conditions, including the acceptance by the holders of at least 90% of the total
shares of More Group, the receipt of all necessary approvals including
regulatory approvals, and there being no material adverse change in the business
of the More Group and its subsidiaries taken as a whole. Therefore, there can be
no assurance that the More Group Acquisition will be consummated in a timely
manner or on the terms described herein, if at all. See "Recent
Developments -- More Group Acquisition" in the Prospectus Supplement Summary.
GRUPO ACIR ACQUISITION
Consummation of the Grupo Acir Acquisition is subject to numerous closing
conditions, including, without limitation, receiving all required regulatory
approvals of the Mexican government. Therefore, there can be no assurance that
the Grupo Acir Acquisition will be consummated in a timely manner or on the
terms described herein, if at all. See "Recent Developments -- Grupo Acir
Acquisition" in the Prospectus Supplement Summary.
INTEGRATION OF THE BUSINESSES OF CLEAR CHANNEL, UNIVERSAL AND MORE GROUP
As a result of the Universal Merger and the More Group Acquisition, the
management of the Company will be required to assimilate the operations of
Universal and More Group into the operations of the Company. However, there can
be no assurance that the management of the Company will be able to integrate
successfully the operations of Universal or More Group with those of the Company
or that all of the benefits expected from such integration will be realized. Any
delays or unexpected costs incurred in connection with such integration could
have an adverse effect on the Company's business, operating results or financial
position. Moreover, the Universal Bonds (as defined herein) and Universal's
credit facility, to the extent they remain outstanding following consummation of
the Universal Merger, contain restrictive covenants which may
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limit the ability of the Company to integrate the separate operations. See
"-- Restrictions Imposed by Universal's Indebtedness." Additionally, there can
be no assurance that the operations, management and personnel of the Company,
Universal and More Group will be compatible or that a loss of key personnel will
not occur.
SIGNIFICANT SHAREHOLDERS
The two principal shareholders of the Company, L. Lowry Mays, Chairman,
Chief Executive Officer and a director of the Company, and B. J. McCombs, a
director of the Company, beneficially own approximately 26.9% of the outstanding
shares of the Company's Common Stock (22.5% assuming consummation of the
Universal Merger). As a result, Messrs. Mays and McCombs will be able to exert
significant influence over the outcome of elections of the Company's directors
and other matters requiring the vote or consent of the shareholders of the
Company. The Company and Messrs. Mays and McCombs are parties to a Buy-Sell
Agreement restricting the disposition of shares of the Common Stock owned by
Messrs. Mays and McCombs.
FINANCIAL LEVERAGE
At December 31, 1997, the Company had borrowings under its Credit Facility
(the "Credit Facility") and other long term debt outstanding of approximately
$1,540.4 million and stockholders' equity of $1,746.8 million and had $497.5
million available for borrowings under the Credit Facility. As of December 31,
1997, Universal had approximately $507.6 million of long-term debt outstanding.
As of December 31, 1997, More Group had approximately $95.3 million (based on
the exchange rate as of such date) of long-term debt outstanding as set forth in
accordance with the generally accepted accounting principles of the United
Kingdom. The Company has borrowed and expects to continue borrowing to finance
acquisitions of broadcasting and other media-related and outdoor advertising
properties and for other corporate purposes. The Company expects to borrow under
the Credit Facility to consummate the purchase of shares in the More Group
Acquisition. On April 10, 1997, in connection with the Eller Media Acquisition,
the Company amended its Credit Facility, increasing the amount it may borrow to
$1.750 billion at floating rates (currently LIBOR plus 0.325%). Future
acquisitions of radio and television stations and other media-related and
outdoor advertising properties are expected to be financed from increased
borrowings under the Credit Facility, other debt or equity financing and cash
flow from operations. See "-- Risk of Acquisition Strategy; Capital
Requirements."
Because of the amount of the Company's indebtedness, a significant portion
of the Company's operating income is required for debt service. The degree of
the Company's leverage could make it vulnerable to an increase in interest rates
or a downturn in the operating performance of its media assets or in general
economic conditions. The Credit Facility contains certain financial and
operational covenants and other restrictions with which the Company must comply,
including limitations on capital expenditures, the incurrence of additional
indebtedness, payment of cash dividends, and requirements to maintain certain
financial ratios.
GOVERNMENT REGULATION
Broadcasting. The domestic broadcasting industry is subject to extensive
federal regulation which, among other things, requires approval by the FCC for
the issuance, renewal, transfer and assignment of broadcasting station operating
licenses and limits the number of broadcasting properties the Company may own.
The Telecommunications Act of 1996 (the "1996 Act"), which became law on
February 8, 1996, creates significant new opportunities for broadcasting
companies but also creates uncertainties as to how the FCC and the courts will
enforce and interpret the 1996 Act.
The Company's broadcasting business will continue to be dependent upon
maintaining broadcasting licenses issued by the FCC, which are issued for a
maximum term of eight years. There can be no assurance that future renewal
applications will be approved, or that renewals will not include conditions or
qualifications that could adversely affect the Company's operations. Moreover,
governmental regulations and policies may change over time and there can be no
assurance that such changes would not have a material adverse impact upon the
Company's business, financial condition and results of operations. For example,
the FCC currently is
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considering whether to revise its policy with regard to television LMAs and
there can be no guarantee that the Company will be able to program stations
under existing LMAs for the remainder of their current terms, extend existing
LMAs beyond their current terms, or to enter into LMAs in other markets in which
the Company owns and operates television stations.
Outdoor Advertising. The outdoor advertising industry is subject to
governmental regulation at the federal, state and local level. Federal law,
principally the Highway Beautification Act of 1965, encourages states, by the
threat of withholding federal appropriations for the construction and
improvement of highways within such states, to implement legislation to restrict
billboards located within 660 feet of, or visible from, interstate and primary
highways except in commercial or industrial areas. All of the states have
implemented regulations at least as restrictive as the Highway Beautification
Act, including the prohibition on the construction of new billboards adjacent to
federally-aided highways and the removal at the owner's expense and without any
compensation of any illegal signs on such highways. The Highway Beautification
Act, and the various state statutes implementing it, require the payment of just
compensation whenever governmental authorities require legally erected and
maintained billboards to be removed from federally-aided highways.
The states and local jurisdictions have, in some cases, passed additional
and more restrictive regulations on the construction, repair, upgrading, height,
size and location of, and, in some instances, content of advertising copy being
displayed on outdoor advertising structures adjacent to federally-aided highways
and to other thoroughfares. Such regulations, often in the form of municipal
building, sign or zoning ordinances, specify minimum standards for the height,
size and location of billboards. In some cases, the construction of new
billboards or relocation of existing billboards is prohibited. Some
jurisdictions also have restricted the ability to enlarge or upgrade existing
billboards, such as converting from wood to steel or from non-illuminated to
illuminated structures. From time to time governmental authorities order the
removal of billboards by the exercise of eminent domain.
Amortization of billboards has also been adopted in varying forms in
certain jurisdictions. Amortization permits the billboard owner to operate its
billboard as a non-conforming use for a specified period of time, after which it
must remove or otherwise conform its billboards to the applicable regulations at
its own cost without any compensation. Amortization and other regulations
requiring the removal of billboards without compensation have been subject to
litigation in state and federal courts and cases have reached differing
conclusions as to the constitutionality of these regulations. Some local
jurisdictions, within the Company's existing markets (Houston and San Francisco)
have adopted amortization ordinances. The Houston ordinance has been the subject
of litigation for over five years and is currently not being enforced. The
Company believes that its operations will not be materially effected by this
ordinance even if it is enforced. The Company's operations have not been
materially affected by the San Francisco amortization ordinances since its signs
conform to effective ordinances and state law currently prevents the
effectiveness of other ordinances which require removal of signs without
compensation. There can be no assurance that the Company will be successful in
negotiating acceptable arrangements in circumstances in which its displays are
subject to removal or amortization, and what effect, if any, such regulations
may have on the Company's operations.
In addition, the Company is unable to predict what additional regulations
may be imposed on outdoor advertising in the future. Legislation regulating the
content of billboard advertisements and additional billboard restrictions have
been introduced in Congress from time to time in the past. Changes in laws and
regulations affecting outdoor advertising at any level of government could have
a material adverse effect on the Company.
Tobacco and Alcohol Advertising. In August 1996, the U.S. Food and Drug
Administration ("FDA") issued final regulations governing certain marketing
practices in the tobacco industry, including a prohibition of tobacco product
billboard advertisements within 1,000 feet of schools and playgrounds and a
requirement that all tobacco product advertisements on billboards be in black
and white and contain only text. These regulations, which were due to become
effective in August 1997, were challenged by members of the tobacco and
advertising industry in a lawsuit brought in North Carolina federal district
court. In that case, the court upheld the authority of the FDA to regulate
tobacco products by limiting access of such products to persons under 18 years
of age and by requiring tobacco manufacturers to label such products in
accordance with FDA
S-12
<PAGE> 40
regulations. Nevertheless, the court struck down the FDA restrictions on the
promotion and advertising of tobacco products. Both industry and the FDA have
appealed this decision. Arguments before the Fourth Circuit were heard on August
11, 1997, and it is unclear what action an appellate court will take in this
matter. To date, the FDA's regulations covering promotion and advertising of
tobacco products have not become effective and no decision by the court has been
reached. On a pro forma basis assuming the Eller Media Acquisition occurred on
January 1, 1997, less than 12% and 5% of the Company's outdoor advertising 1997
net revenues were derived from tobacco and alcohol advertising, respectively.
Regardless of whether the FDA is found to have jurisdiction over promotion
and advertising of tobacco, and thus have the ability to place limits on
billboard advertising, it appears that the FTC has begun to take regulatory
action in this area. The FTC has wide-ranging authority over advertising
practices, and it is within its regulatory authority to investigate unfair and
deceptive trade practices, including advertising, pertaining to FDA-regulated
products. In May 1997, the FTC charged the R.J. Reynolds Company ("R.J.
Reynolds") with unfair trade practices regarding the promotion of tobacco
products to children through the use of the "Joe Camel" advertising campaign.
The FTC sought an order that would, among other things, prohibit R.J. Reynolds
from using the "Joe Camel" campaign to advertise to children and require R.J.
Reynolds to institute corrective advertising to discourage persons under age 18
from smoking. In July 1997, it was reported that R.J. Reynolds decided to
terminate the "Joe Camel" campaign. The remaining issues in the litigation are
still pending. While the action against R.J. Reynolds was not focused directly
on billboard advertising, because of increasing regulatory and political
pressure it is possible that the FTC will take further action to limit the
content and placement of outdoor advertising, including, without limitation, the
content and placement of outdoor advertising relating to the sale of tobacco
products to children.
Outdoor advertising of tobacco products also may be affected by state law
or city regulations. For example, California and Texas have passed legislation
to restrict tobacco billboard advertising near locations frequented by children.
The Texas law levies a tax on tobacco billboards to raise money for tobacco
education programs. As a result of law suits brought in Texas and Florida,
several tobacco companies have entered settlement agreements with these
respective state governments. Part of the settlement agreement in Texas includes
the elimination of billboard and other outdoor advertising of tobacco products.
This agreement may be superseded by the national settlement agreement pending
before Congress. The settlement agreement in Florida also calls for the
discontinuation of all billboard advertising for tobacco products in the state.
The Florida ban on billboard advertising reportedly went into effect on February
9, 1998. Other states are considering state-wide bans on tobacco billboard
advertising or may do so in the future.
With regard to city governments, in 1995, the Court of Appeals for the
Fourth Circuit upheld the validity of a Baltimore, Maryland city ordinance
prohibiting the placement of outdoor advertisements of cigarettes in publicly
visible locations, such as billboards, signboards and sides of buildings.
Subsequently, the United States Supreme Court declined to review an appeal of
this case. Following the Baltimore ordinance, several city governments have
introduced legislation to ban outdoor tobacco advertising near schools and other
locations where children are likely to assemble or to ban tobacco billboard
advertising citywide. The City of Chicago, Illinois where the Company transacts
business, has recently enacted a ban on tobacco and alcohol billboard
advertising in certain parts of the city. The Chicago ordinance is being
challenged in court on constitutional free-speech grounds. In addition, the City
Council of New York City, New York recently passed a bill which bars outdoor
tobacco advertising within 1,000 feet of schools, playgrounds, day care centers,
youth centers and amusement arcades.
Some cities are proposing even broader restrictions. For instance, a San
Francisco, California Board of Supervisors committee recently proposed a
complete ban on outdoor tobacco advertising, including a ban on billboards,
kiosks and even private business window displays. Milwaukee, Wisconsin has
proposed an ordinance that would ban outdoor advertising for tobacco products in
most public places, except interstate highways, industrial areas, and sport and
convention sites. The Milwaukee ordinance also would prohibit convenience stores
from displaying tobacco-related posters in windows and would limit
tobacco-related signs inside stores to black and white ads with no artwork.
S-13
<PAGE> 41
County governments also have taken action in this area. A local council in
Anne Arundel County, Maryland voted to ban most tobacco billboard advertising in
the county. Similarly, Clark and Skamania Counties in Washington State have
issued regulations prohibiting tobacco billboard advertising from areas that
youths frequent, such as schools and parks. Finally, King County, Washington and
a company that owns almost all of the billboard display faces in the county have
entered into an agreement whereby the company will voluntarily discontinue all
tobacco advertising on billboards throughout the county. It is likely that other
state, city, or local governments have or will pass similar ordinances to limit
outdoor advertising of tobacco products in the future.
In addition to the decisions mentioned above, certain cigarette
manufacturers who are defendants in numerous class action suits throughout the
U.S. have proposed an out of court settlement with respect to such suits that
includes restrictions on billboard advertising by these and other cigarette
manufacturers. It has been reported that, as a part of the proposed settlement,
the tobacco industry will agree to a complete ban on all outdoor advertising,
such as on billboards, in stadiums, and in store window displays. The proposed
settlement agreement is pending before Congress. President Clinton and
Congressional leaders have met to discuss bipartisan cooperation on tobacco
control legislation in an effort to work out a compromise. It appears that
restrictions on tobacco billboard advertising may be implemented through
legislation, although some have argued that it would be unconstitutional for
Congress to impose such restrictions without the consent of the tobacco
industry. If legislation is not enacted, it is likely that restrictions on
billboard advertising nevertheless will be achieved through consensual agreement
between the tobacco industry and state and federal governments.
There can be no assurance as to the effect of these regulations, potential
legislation or settlement discussions on the Company's business and on their net
revenues and financial position. A reduction in billboard advertising by the
tobacco industry would cause an immediate reduction in the Company's direct
revenue from such advertisers and would simultaneously increase the available
space on the existing inventory of billboards in the outdoor advertising
industry. This could in turn result in a lowering of outdoor advertising rates
in each of the Company's outdoor advertising markets or limit the ability of
industry participants to increase rates for some period of time.
Any regulatory change or settlement agreement restricting the Company's or
the tobacco industry's ability to utilize outdoor advertising for tobacco
products could have a material adverse effect on the Company.
Antitrust. An important element of the Company's growth strategy involves
the acquisition of additional radio stations and other media-related and outdoor
advertising properties, many of which are likely to require antitrust review by
the FTC and the Antitrust Division prior to such acquisition. Following passage
of the 1996 Act, the Antitrust Division has become more aggressive in reviewing
proposed acquisitions of radio stations and radio station networks, particularly
in instances where the proposed acquiror already owns one or more radio station
properties in a particular market and the acquisition involves another radio
station in the same market. Recently, the Antitrust Division has obtained
consent decrees requiring radio station divestitures in a particular market
based on allegations that acquisitions would lead to unacceptable concentration
levels. The Antitrust Division has also been active in reviewing proposed
acquisitions of outdoor advertising properties. There can be no assurance that
the Antitrust Division or the FTC will not seek to bar the Company from
acquiring additional radio or television stations or other media-related and
outdoor advertising properties in any market where the Company already has a
significant position. In addition, to the extent the Company makes acquisitions
of international broadcasting properties or display faces, the Company will also
be subject to the antitrust laws of foreign jurisdictions.
Environmental. As the owner, lessee or operator of various real properties
and facilities, the Company is subject to various federal, state and local
environmental laws and regulations. Historically, compliance with such laws and
regulations has not had a material adverse effect on the Company's business.
There can be no assurance, however, that compliance with existing or new
environmental laws and regulations will not require the Company to make
significant expenditures in the future.
S-14
<PAGE> 42
RISK OF ACQUISITION STRATEGY; CAPITAL REQUIREMENTS
The Company intends to pursue growth through the opportunistic acquisition
of domestic and international broadcasting companies, radio and television
station groups, individual radio and television stations, outdoor advertising
companies, individual outdoor advertising display faces, or other assets that
the Company believes are best suited to the purpose of assisting its customers
in marketing their products and services. The Company routinely reviews
potential acquisitions. It is likely that the Company will continue to
experience significant expansion in the future. As a result, the Company's
management will be required to effectively manage a rapidly expanding and
significantly larger portfolio of broadcasting and outdoor advertising
properties. The Company's acquisition strategy involves numerous other risks,
including difficulties in the integration of operations and systems, the
diversion of management's attention from other business concerns and the
potential loss of key employees of acquired companies or stations. There can be
no assurance such acquisitions will benefit the Company. See "Company Strategy"
in the Prospectus Supplement Summary.
The Company will face competition from other broadcasting and outdoor
advertising companies for available acquisition opportunities. If the prices
sought by sellers of broadcasting and outdoor advertising properties increase
significantly, the Company may find fewer acceptable acquisition opportunities.
In addition, payment of the purchase price of possible acquisitions could
require the Company to incur additional debt or seek to obtain equity financing.
The incurrence of additional debt could increase the Company's leverage, make
the Company more vulnerable to economic downturns and limit its ability to
withstand competitive pressures. See "-- Financial Leverage." Additional equity
financing could result in dilution to the existing holders of the Common Stock.
There can be no assurance that the Company will have sufficient capital
resources to complete acquisitions, that acquisitions can be completed on terms
acceptable to the Company or that any businesses or assets that are acquired can
be integrated successfully into the Company.
The Company continually evaluates strategic opportunities both within and
outside its existing lines of business. The Company expects from time to time to
pursue additional acquisitions and may decide to dispose of certain businesses.
Such acquisitions or dispositions could be material.
COMPETITION; BUSINESS
The Company's three business segments are in highly competitive industries.
The Company's radio and television stations and outdoor advertising properties
compete for audiences and advertising revenues with other radio and television
stations and outdoor advertising companies, as well as with other media, such as
newspapers, magazines, cable television, and direct mail, within their
respective markets. Audience ratings and market shares are subject to change and
any adverse change in a particular market could have a material adverse effect
on the Company's revenue in that market. Future operations are subject to many
variables which could have an adverse effect upon the Company's financial
performance including economic conditions, both general and relative to the
broadcasting industry; shifts in population and other demographics; the level of
competition for advertising dollars; fluctuations in operating costs;
technological changes and innovations; changes in labor conditions; and changes
in governmental regulations and policies and actions of federal regulatory
bodies. There can be no assurance that the Company will be able to maintain or
increase its current audience ratings and advertising revenues.
NEW TECHNOLOGIES
The FCC is considering ways to introduce new technologies to the radio
broadcast industry, including satellite and terrestrial delivery of digital
audio broadcasting and the standardization of available technologies which
significantly enhance the sound quality of AM broadcasts. The Company is unable
to predict the effect any such new technology will have on the Company's
financial condition or results of operations. On April 3, 1997, the FCC
announced that it had adopted rules that will allow television broadcasters to
provide digital television ("DTV") to consumers. The FCC also adopted a table of
allotments for DTV, which will provide eligible existing broadcasters with a
second channel on which to provide DTV service. On February 23, 1998, in
response to numerous petitions for reconsideration, the FCC announced its
adoption of orders affirming, with some modifications, the FCC's April 3, 1997
decisions. The FCC's DTV allotment plan is based on the use of a "core" DTV
spectrum between channels 2-51. Ultimately, the FCC plans to recover the
channels currently used for analog broadcasting and will decide at a later date
the use of the spectrum ultimately
S-15
<PAGE> 43
recovered. Television broadcasters will be allowed to use their channels
according to their best business judgment. Such uses can include multiple
standard definition program channels, data transfer, subscription video,
interactive materials, and audio signals, although broadcasters will be required
to provide a free digital video programming service that is at least comparable
to today's analog service. Broadcasters will not be required to air "high
definition" programming or, initially, to simulcast their analog programming on
the digital channel. Affiliates of ABC, CBS, NBC and FOX in the top 10
television markets will be required to be on the air with a digital signal by
May 1, 1999. Affiliates of those networks in markets 11-30 will be required to
be on the air with a digital signal by November 1, 1999, and remaining
commercial broadcasters by May 1, 2002. The FCC stated that broadcasters will
remain public trustees and that it will issue a notice to determine the extent
of broadcasters' future public interest obligations. The Company will incur
considerable expense in the conversion to DTV and is unable to predict the
extent or timing of consumer demand for any such DTV services.
RESTRICTIONS IMPOSED BY UNIVERSAL'S INDEBTEDNESS
The indentures (the "Universal Indentures") governing Universal's 9 3/4%
Senior Subordinated Notes due 2006 and 9 3/4% Series B Senior Subordinated Notes
due 2006 (the "Universal Bonds") contain restrictions on the ability of
Universal Outdoor, Inc., the wholly-owned operating subsidiary of Universal
("UOI"), to incur additional indebtedness, create liens, pay dividends, sell
assets and make acquisitions and enter into transactions with affiliated
entities. UOI currently has approximately $325 million aggregate principal
amount of Universal Bonds outstanding. Under the Universal Indentures governing
the Universal Bonds, the Universal Merger will constitute a Change of Control
(as defined therein) requiring Universal to permit holders of such Bonds to put
them to Universal for consideration equal to 101% of the face amount thereof
(plus accrued and unpaid interest). In the event that all of the Universal Bonds
were put, the Company would have to provide the funding necessary to satisfy
such obligations. There can be no assurance that the Company would have the
funds available to satisfy such obligations. In the event that such put rights
are not exercised in full, the remaining outstanding Universal Bonds would
continue to contain restrictive covenants that may limit the ability of the
Company to integrate the separate outdoor advertising businesses. If the Company
were to attempt to repurchase the Universal Bonds, the holders of such Bonds
would likely require the Company to pay a substantial premium to the face value.
There can be no assurance that the Company would have adequate funds to
repurchase the Universal Bonds or that the bondholders would tender their
Universal Bonds in response to any offer. There can be no assurance that UOI and
its subsidiaries will be able to comply with the provisions of the Indentures,
and such provisions may restrict the ability of Universal to dividend its
earnings to the Company or any of its subsidiaries and may restrict the ability
of Universal and the Company to integrate their operations. In addition, if upon
consummation of the Universal Merger, the Company does not refinance Universal's
existing credit facility, Universal would continue to be subject to the
restrictive covenants set forth therein. See "-- Integration of the Businesses
of Clear Channel, Universal and More Group."
INTERNATIONAL BUSINESS RISKS
The Company currently derives a portion of its earnings from international
operations. The risks of doing business in foreign countries include potential
adverse changes in the diplomatic relations of foreign countries with the United
States, hostility from local populations, adverse effects of currency exchange
controls, restrictions on the withdrawal of foreign investment and earnings,
government policies against businesses owned by non-nationals, expropriations of
property, the potential instability of foreign governments and the risk of
insurrections that could result in losses against which the Company is not
insured. The Company's international operations also are subject to economic
uncertainties, including, among others, risks of renegotiation or modification
of existing agreements or arrangements with governmental authorities, foreign
exchange restrictions and changes in taxation structure.
EXCHANGE RATE RISK
A portion of the Company's earnings are derived from international
operations and a portion of the Company's assets are invested overseas.
Accordingly, fluctuations in the values of foreign currencies and in the
S-16
<PAGE> 44
value of the U.S. dollar may cause currency translation losses for the Company
or reduced earnings, or both. The Company cannot predict the effect of exchange
rate fluctuations upon future operating results.
LIMITATION ON REPURCHASE OF NOTES UPON CHANGE IN CONTROL.
Upon the occurrence of a Change in Control, each holder of Notes may
require the Company to repurchase all or a portion of such holder's Notes. If a
Change in Control were to occur, there could be no assurance that the Company
would have sufficient financial resources, or would be able to arrange
financing, to pay the repurchase price for all Notes tendered by holders
thereof. The Company's ability to repurchase the Notes in such event may be
limited by law, the Indenture or the terms of other agreements relating to
borrowings, as such agreements may be entered into, replaced, supplemented or
amended from time to time. If the Company is prohibited from repurchasing the
Notes, such failure would constitute an Event of Default under the Indenture
which may, in turn, constitute a further default under the Company's existing or
future agreements relating to other indebtedness. See "Description of
Notes -- Repurchase at Option of Holders upon Change in Control."
CERTAIN FORWARD-LOOKING STATEMENTS
This Prospectus Supplement and the Prospectus, including the documents
incorporated by reference, contain forward-looking statements within the meaning
of Section 27A of the Securities Act of 1933, as amended (the "1933 Act").
Discussions containing such forward-looking statements may be found in the
material set forth under "The Company," as well as within the Prospectus
Supplement and the Prospectus generally. In addition, when used in this
Prospectus Supplement or the Prospectus, the words "believes," "anticipates,"
"expects" and similar expressions are intended to identify forward-looking
statements. Such statements are subject to a number of risks and uncertainties.
Actual results in the future could differ materially from those described in the
forward-looking statements as a result of the risk factors set forth herein and
the matters set forth in the Prospectus Supplement or the Prospectus generally.
The Company undertakes no obligation to publicly release the results of any
revisions to these forward-looking statements that may be made to reflect any
future events or circumstances.
S-17
<PAGE> 45
USE OF PROCEEDS
The net proceeds to the Company from the sale of the Notes offered hereby
are estimated to be $494.1. The Company will use the net proceeds to repay
borrowings outstanding under the Credit Facility, to finance acquisitions and
for general corporate purposes. As of December 31, 1997, a total of
approximately $1,215.2 million in borrowings was outstanding under the Credit
Facility and the effective interest rate thereon was approximately 6.3%.
Borrowings under the Credit Facility, which must be paid in full by June 2005,
bear interest as of December 31, 1997 at a floating rate based on the LIBOR plus
0.325%. Upon repayment of such borrowings, the amount repaid will become
immediately available to the Company for re-borrowing under the Credit Facility,
subject to the satisfaction of certain conditions. The Company expects that
amounts available for re-borrowing under the Credit Facility as a result of the
application of the net proceeds of the Offering, together with additional
amounts that become available for borrowing under the Credit Facility, will be
used to finance acquisitions which may include the More Group Acquisition. The
purchase price of the More Group Acquisition is estimated to be approximately
$735.7 million. Future acquisitions of radio and television stations and other
media-related properties effected in connection with the implementation of the
Company's acquisition strategy are expected to be financed from increased
borrowings under the Credit Facility, other debt or equity financings and cash
flow from operations.
PRICE RANGE OF COMMON STOCK
The Company's Common Stock is listed on the New York Stock Exchange
("NYSE") under the symbol "CCU". The following table sets forth, for the periods
indicated, the high and low closing sale prices per share (as adjusted for all
stock splits to date) as reported on the NYSE.
<TABLE>
<CAPTION>
HIGH LOW
------ ------
<S> <C> <C>
YEAR ENDED DECEMBER 31, 1996
First Quarter............................................. $29.13 $20.50
Second Quarter............................................ 43.00 27.00
Third Quarter............................................. 44.56 36.56
Fourth Quarter............................................ 44.38 31.00
YEAR ENDED DECEMBER 31, 1997
First Quarter............................................. $49.63 $34.25
Second Quarter............................................ 63.38 42.75
Third Quarter............................................. 68.75 58.63
Fourth Quarter............................................ 79.44 60.00
YEAR ENDED DECEMBER 31, 1998
First Quarter (through March 11, 1998).................... $94.25 $73.44
</TABLE>
As of March 6, 1998, there were 466 shareholders of record of the Company's
Common Stock. However, the Company believes that the number of beneficial owners
is significantly greater.
S-18
<PAGE> 46
CAPITALIZATION
The following table sets forth the current portion of long-term debt and
capitalization of the Company as of December 31, 1997, and as adjusted to give
effect to the issuance and sale of $500 million aggregate principal amount of
the Notes offered hereby. The following table is not adjusted to give effect to
the Stock Offering.
<TABLE>
<CAPTION>
DECEMBER 31, 1997
----------------------------
ACTUAL AS ADJUSTED(1)
---------- --------------
(IN THOUSANDS)
<S> <C> <C>
Current portion of long-term debt.......................... $ 13,294 $ 13,294
========== ==========
Credit Facility(2)......................................... $1,215,221 $ 721,096
7.25% Debentures due October 15, 2027.................... 300,000 300,000
% Notes due April 1, 2003............................ -- 500,000
Other long-term debt(3).................................... 25,200 25,200
Shareholders' equity:
Preferred Stock, $1.00 par value, 2,000,000 shares
authorized, no shares issued or outstanding........... -- --
Common Stock, $.10 par value, 150,000,000 shares
authorized, 98,232,893 shares issued and
outstanding........................................... 9,823 9,823
Additional paid-in capital............................... 1,541,865 1,541,865
Retained earnings........................................ 169,631 169,631
Other equity............................................. 2,398 2,398
Unrealized gain on investments........................... 23,754 23,754
Cost of shares (38,207) held in treasury................. (687) (687)
---------- ----------
Total shareholders' equity............................ 1,746,784 1,746,784
---------- ----------
Total capitalization............................. $3,287,205 $3,293,080
========== ==========
</TABLE>
- ---------------
(1) As adjusted to give effect to the Offering and the application of the
estimated net proceeds therefrom of $494.1 million.
(2) The Company has and may incur additional indebtedness of up to
approximately $735.7 million in connection with the More Group Acquisition.
See "Recent Developments -- More Group Acquisition" in the Prospectus
Supplement Summary.
(3) As of December 31, 1997, Universal had approximately $507.6 of long-term
debt outstanding. As of December 31, 1997, More Group had approximately
$95.3 million (based on the exchange rate as of such date) of long-term
debt outstanding as set forth in accordance with the generally accepted
accounting principles of the United Kingdom.
S-19
<PAGE> 47
SELECTED FINANCIAL INFORMATION
The selected historical financial information presented below for the five
years ended December 31, 1997 has been derived from the historical consolidated
financial statements of the Company, which have been audited by Ernst & Young
LLP, independent auditors. The following selected financial information should
be read in conjunction with the historical consolidated financial statements and
notes thereto of the Company, which are incorporated herein by reference.
<TABLE>
<CAPTION>
PRO FORMA
ELLER MEDIA
PRO FORMA & PAXSON
ELLER MEDIA RADIO
& PAXSON ACQUISITIONS &
RADIO UNIVERSAL
ACQUISITIONS MERGER
YEAR YEAR
YEAR ENDED DECEMBER 31, ENDED ENDED
---------------------------------------------------- DECEMBER 31, DECEMBER 31,
1993 1994 1995 1996 1997 1997(1) 1997(2)
-------- -------- -------- -------- -------- ------------ --------------
(IN THOUSANDS EXCEPT PER SHARE AMOUNTS)
<S> <C> <C> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA(3):
Net revenue............................ $121,118 $178,053 $250,059 $351,739 $697,068 $831,814 $1,041,453
Operating expenses..................... 78,925 105,380 137,504 198,332 394,404 490,324 591,937
Depreciation and amortization.......... 17,447 24,669 33,769 45,790 114,207 152,206 243,064
-------- -------- -------- -------- -------- -------- ----------
Operating income....................... 24,746 48,004 78,786 107,617 188,457 189,284 206,452
Corporate expenses..................... 3,464 5,100 7,414 8,527 20,883 23,201 23,201
-------- -------- -------- -------- -------- -------- ----------
Operating income....................... 21,282 42,904 71,372 99,090 167,574 166,083 183,251
Interest expense....................... 5,390 7,669 20,752 30,080 75,076 116,805 163,205
Other income (expense)................. (196) 1,161 (803) 2,230 11,579 6,463 3,842
-------- -------- -------- -------- -------- -------- ----------
Income before income taxes............. 15,696 36,396 49,817 71,240 104,077 55,741 23,888
Income taxes........................... 6,573 14,387 20,292 28,386 47,116 32,465 32,465
-------- -------- -------- -------- -------- -------- ----------
Income before equity in net income
(loss) of, and other income from
nonconsolidated affiliates........... 9,123 22,009 29,525 42,854 56,961 23,276 (8,577)
Equity in net income (loss) of, and
other income from, nonconsolidated
affiliates........................... -- -- 2,489 (5,158) 6,615 6,615 6,615
-------- -------- -------- -------- -------- -------- ----------
Net income (loss)...................... $ 9,123 $ 22,009 $ 32,014 $ 37,696 $ 63,576 $ 29,891 $ (1,962)
======== ======== ======== ======== ======== ======== ==========
Net income (loss) per common share
(basic).............................. $ .15 $ .32 $ .46 $ .51 $ .72 $ .33 $ (0.02)
======== ======== ======== ======== ======== ======== ==========
Net income (loss) per common share
(diluted)............................ $ .15 $ .32 $ .46 $ .51 $ .67 $ .28 $ (0.05)
======== ======== ======== ======== ======== ======== ==========
OTHER DATA:
After-tax cash flow(4)................. $ 26,638 $ 46,866 $ 71,140 $107,318 $213,445 $217,759 $ 276,764
======== ======== ======== ======== ======== ======== ==========
After-tax cash flow per share
(diluted)(5)......................... $ .43 $ .68 $ 1.01 $ 1.44 $ 2.33 $ 2.33 $ 2.45
======== ======== ======== ======== ======== ======== ==========
EBITDA(6).............................. $ 38,533 $ 68,734 $106,827 $141,952 $299,975 $331,367 $ 436,772
</TABLE>
<TABLE>
<CAPTION>
DECEMBER 31,
---------------------------------------------------------------------------
1997 AS
1993 1994 1995 1996 1997 ADJUSTED(7)
-------- -------- -------- ---------- ---------- -----------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C>
BALANCE SHEET DATA(3):
Cash and cash equivalents................ $ 5,517 $ 6,818 $ 5,391 $ 16,701 $ 24,657 $ 24,657
Total assets............................. 227,577 411,594 563,011 1,324,711 3,455,637 3,455,637
Long-term debt, net of current(8)........ 87,815 238,204 334,164 725,132 1,540,421 1,546,296
Shareholders' equity..................... 98,343 130,533 163,713 513,431 1,746,784 1,746,784
</TABLE>
- ---------------
(1) As adjusted to give effect to the Eller Media Acquisition and the Paxson
Radio Acquisition as if such acquisitions had been consummated on January
1, 1997.
(2) As adjusted to give effect to the Eller Media and Paxson Radio Acquisitions
and the Universal Merger as if such transactions had been consummated on
January 1, 1997.
(3) The comparability of results of operations and balance sheet data is
affected by acquisitions consummated in each of the periods presented.
S-20
<PAGE> 48
(4) Defined as net income before unusual items plus depreciation, amortization
of intangibles (including non-consolidated affiliates) and deferred taxes.
After-tax cash flow is not presented as a measure of operating results and
does not purport to represent cash provided by operating activities.
After-tax cash flow should not be considered in isolation or as a
substitute for measures of performance prepared in accordance with
generally accepted accounting principles.
(5) Defined as after-tax cash flow divided by weighted average common shares
and common share equivalents outstanding assuming dilution.
(6) Defined as income from continuing operations before interest expense,
income taxes and depreciation and amortization. EBITDA is not a calculation
based upon generally accepted accounting principles; however, the amounts
included in the EBITDA calculation are derived from amounts included in the
Statement of Operations. In addition, EBITDA should not be considered as an
alternative to net income or operating income, as an indicator of operating
performance, or as an alternative to operating cash flows as a measure of
liquidity.
(7) As adjusted to give effect to the issuance and sale of $500 million
aggregate principal amount of the Notes due April 1, 2003 offered hereby.
(8) The Company may incur additional indebtedness of up to approximately $803.0
million in connection with various pending acquisitions excluding acquired
company debt. See "Recent Developments" in the Prospectus Supplement
Summary.
S-21
<PAGE> 49
BUSINESS
The Company consists of three principal business segments -- radio
broadcasting, television broadcasting and outdoor advertising. The radio segment
includes both stations for which the Company is the licensee and stations for
which the Company programs and/or sells air time under LMAs or Joint Sales
Agreements ("JSA"). The radio segment also operates eleven networks. The
television segment includes both television stations for which the Company is
the licensee and stations programmed under LMAs. The outdoor advertising segment
has advertising display faces in 15 major domestic markets.
INDUSTRY SEGMENTS
For the year ended December 31, 1997, the Company derived approximately 48%
of its net revenue from radio operations, approximately 22% from television
operations, and approximately 30% from outdoor advertising operations.
Selected information relating to radio and television broadcasting for
1995, 1996 and 1997 is presented in the following table:
<TABLE>
<CAPTION>
1995 1996 1997
-------- -------- --------
(IN THOUSANDS)
<S> <C> <C> <C>
RADIO
Net revenue.......................................... $144,244 $217,189 $332,571
Operating expenses................................... 87,531 126,628 201,182
Depreciation......................................... 6,974 8,916 13,252
Amortization of intangibles.......................... 13,007 18,840 35,215
-------- -------- --------
Operating income before corporate expenses........... $ 36,732 $ 62,805 $ 82,922
======== ======== ========
TELEVISION
Net revenue.......................................... $105,815 $134,550 $157,062
Operating expenses................................... 49,973 71,704 85,132
Depreciation......................................... 8,406 10,420 11,563
Amortization of intangibles.......................... 5,382 7,614 6,353
-------- -------- --------
Operating income before corporate expenses........... $ 42,054 $ 44,812 $ 54,014
======== ======== ========
OUTDOOR*
Net revenue.......................................... -- -- $207,435
Operating expenses................................... -- -- 108,090
Depreciation......................................... -- -- 26,885
Amortization of intangibles.......................... -- -- 20,939
-------- -------- --------
Operating income before corporate expenses........... -- -- $ 51,521
======== ======== ========
CONSOLIDATED
Net revenue.......................................... $250,059 $351,739 $697,068
Operating expenses................................... 137,504 198,332 394,404
Depreciation......................................... 15,380 19,336 51,700
Amortization of intangibles.......................... 18,389 26,453 62,507
-------- -------- --------
Operating income before corporate expenses........... $ 78,786 $107,617 $188,457
======== ======== ========
</TABLE>
- ---------------
* Eller Media was purchased by the Company in April 1997. See "Recent
Developments -- Eller Media Acquisition" in the Prospectus Supplement Summary.
S-22
<PAGE> 50
RADIO BROADCASTING
The following table sets forth certain selected information with regard to
each of the Company's 56 AM and 117 FM radio stations which it owned or
programmed, or for which it sold airtime, as of December 31, 1997.
<TABLE>
<CAPTION>
AM FM
MARKET STATIONS STATIONS TOTAL
------ -------- -------- -----
<S> <C> <C> <C>
ARKANSAS
Little Rock................................................ -- 5 5
CALIFORNIA
Monterey................................................... 2(a) 4(a) 6
CONNECTICUT
New Haven.................................................. 2 1 3
FLORIDA
Florida Keys............................................... -- 3 3
Ft. Myers/Naples........................................... 1 4 5
Jacksonville............................................... 2 4 6
Miami/Ft. Lauderdale....................................... 3 5 8
Orlando.................................................... 2 4 6
Panama City................................................ 1 4 5
Pensacola.................................................. -- 2(b) 2
Tallahassee................................................ 1 4 5
Tampa/St. Petersburg....................................... 4(c) 5 9
West Palm Beach............................................ 1 2 3
KENTUCKY
Louisville................................................. 3 4 7
LOUISIANA
New Orleans................................................ 2 5 7
MASSACHUSETTS
Springfield................................................ 1 1 2
MICHIGAN
Grand Rapids............................................... 2 4 6
NEW YORK
Albany..................................................... 1(d) 3(d) 4
NORTH CAROLINA
Winston-Salem.............................................. 1 2 3
Raleigh.................................................... 1 4 5
OHIO
Cleveland.................................................. 1 2 3
Dayton..................................................... 1(a) 2(a) 3
OKLAHOMA
Oklahoma City.............................................. 3(c) 4 7
Tulsa...................................................... 2(c) 4(b)(c) 6
PENNSYLVANIA
Lancaster.................................................. 1 1 2
Reading.................................................... 1 1 2
RHODE ISLAND
Providence................................................. -- 2 2
</TABLE>
S-23
<PAGE> 51
<TABLE>
<CAPTION>
AM FM
MARKET STATIONS STATIONS TOTAL
------ -------- -------- -----
<S> <C> <C> <C>
SOUTH CAROLINA
Columbia................................................... 1 3 4
TENNESSEE
Cookeville................................................. 2 2 4
Memphis.................................................... 3 4 7
TEXAS
Austin..................................................... 1 3 4
El Paso.................................................... 1 2 3
Houston.................................................... 3(e) 4(c) 7
San Antonio................................................ 2 3(b) 5
VIRGINIA
Norfolk.................................................... -- 4 4
Richmond................................................... 3 3 6
WISCONSIN
Milwaukee.................................................. 1 3 4
-- --- ---
Total............................................ 56 117 173
== === ===
</TABLE>
- ---------------
(a) Stations programmed pursuant to an LMA (FCC licenses not owned by the
Company).
(b) Includes one station for which the Company sells airtime pursuant to a JSA
(FCC license not owned by the Company).
(c) Includes one station programmed pursuant to an LMA (FCC license not owned by
the Company).
(d) Stations owned by Radio Enterprises, Inc., in which the Company owns an 80%
interest.
(e) Includes two stations which are owned by CCC-Houston AM, Ltd., in which the
Company owns an 80% interest.
The Company also owns the Kentucky News Network based in Louisville,
Kentucky, the Virginia News Network based in Richmond, Virginia, the Oklahoma
News Network based in Oklahoma City, Oklahoma, the Voice of Southwest
Agriculture Network based in San Angelo, Texas, the Clear Channel Sports Network
based both in College Station, Texas, and Des Moines, Iowa, the Alabama Radio
Network based in Birmingham, Alabama, the Tennessee Radio Network based in
Nashville, Tennessee, the University of Miami Sports Network based in Miami,
Florida, the Florida Radio Network based in Maitland, Florida, the University of
Florida Sports Network based in Gainesville, Florida and Orlando, Florida, and
the Penn State Sports Network based in West Palm Beach, Florida.
TELEVISION BROADCASTING
The following table sets forth certain selected information with regard to
each of the Company's 18 television stations and one satellite station which it
owned or programmed as of December 31, 1997.
<TABLE>
<CAPTION>
NETWORK
MARKET AFFILIATION
------ -----------
<S> <C>
ALBANY/SCHENECTADY/TROY, NEW YORK
WXXA-TV..................................................... FOX
HARRISBURG/LEBANON/LANCASTER/YORK, PENNSYLVANIA
WHP-TV...................................................... CBS
WLYH-TV(a).................................................. UPN
JACKSONVILLE, FLORIDA
WAWS-TV..................................................... FOX
WTEV-TV(a).................................................. UPN
</TABLE>
S-24
<PAGE> 52
<TABLE>
<CAPTION>
NETWORK
MARKET AFFILIATION
------ -----------
<S> <C>
LITTLE ROCK, ARKANSAS
KLRT-TV..................................................... FOX
KASN-TV(a).................................................. UPN
MEMPHIS, TENNESSEE
WPTY-TV..................................................... ABC
WLMT-TV(a).................................................. UPN
MINNEAPOLIS, MINNESOTA
WFTC-TV..................................................... FOX
MOBILE, ALABAMA/PENSACOLA, FLORIDA
WPMI-TV..................................................... NBC
WJTC-TV(a).................................................. UPN
PROVIDENCE/NEW BEDFORD, RHODE ISLAND
WPRI-TV..................................................... CBS
WNAC-TV(a).................................................. FOX
TUCSON, ARIZONA
KTTU-TV(b).................................................. UPN
TULSA, OKLAHOMA
KOKI-TV..................................................... FOX
KTFO-TV(a).................................................. UPN
WICHITA, KANSAS
KSAS-TV..................................................... FOX
SALINA, KANSAS
KAAS-TV(c).................................................. FOX
</TABLE>
- ---------------
(a) LMA (FCC license not owned by the Company).
(b) Station programmed by another party pursuant to an LMA.
(c) Satellite station of KSAS-TV in Wichita, Kansas.
OUTDOOR ADVERTISING
The following table sets forth certain selected information with regard to
each of the Company's outdoor advertising display faces as of December 31, 1997.
<TABLE>
<CAPTION>
TOTAL
DISPLAY
MARKET FACES(A)
------ --------
<S> <C>
ARIZONA:
Phoenix..................................................... 359
CALIFORNIA:
Los Angeles(b).............................................. 7,863
San Francisco/Oakland(c).................................... 10,355
MIDWEST:
Chicago..................................................... 6,838
Cleveland(d)................................................ 2,258
Milwaukee................................................... 1,187
SOUTHEAST:
Atlanta..................................................... 1,628
Miami....................................................... 2,052
Tampa(e).................................................... 2,362
</TABLE>
S-25
<PAGE> 53
<TABLE>
<CAPTION>
TOTAL
DISPLAY
MARKET FACES(A)
------ --------
<S> <C>
TEXAS:
Dallas/Fort Worth........................................... 3,110
El Paso..................................................... 1,353
Houston..................................................... 5,214
San Antonio................................................. 3,463
CONVENIENCE STORES:
Various................................................... 5,921
UNION PACIFIC SOUTHERN PACIFIC(F):
Various................................................... 3,697
------
Total............................................. 57,660
======
</TABLE>
- ---------------
(a) Display faces primarily include 20(#)x60(#) bulletins 14(#)x48(#) bulletins,
12(#)x25(#) Premier Panels(TM), 25(#)x25(#) Premier Plus Panels(TM)
12(#)x25(#) 30-sheet posters, 6(#)x12(#) 8-sheet posters, and various
transit displays.
(b) Includes Los Angeles, San Diego, Orange, Riverside, San Bernardino and
Ventura counties.
(c) Includes San Francisco, Oakland, San Jose, Santa Cruz, Sacramento and Solano
counties.
(d) Includes Akron and Canton.
(e) Includes Sarasota, Orlando and Bradenton.
(f) Represents licenses managed under Union Pacific Southern Pacific License
Management Agreement.
DESCRIPTION OF NOTES
The following description of the particular terms of the Notes offered
hereby (which are a series of "Senior Debt Securities" described in the
accompanying Prospectus) supplements, and to the extent inconsistent therewith
replaces, insofar as such description relates to the Notes, the description of
the general terms and provisions of the Debt Securities set forth in the
accompanying Prospectus, to which description reference is hereby made.
The Notes will be issued under an Indenture, dated as of October 1, 1997,
as supplemented by supplemental indentures from time to time (collectively, the
"Indenture"), between the Company and The Bank of New York, as Trustee (the
"Trustee"). The Indenture contains provisions limiting the Company's ability to
consolidate with or merge into any other corporation or convey or transfer its
properties and assets substantially as an entirety, limitations on Mortgages and
limitations on Sale and Leaseback Transactions. See "Description of Debt
Securities -- Consolidation, Merger, Conveyance or Transfer" and "Description of
Debt Securities -- Senior Debt Securities -- Covenants of the Company" in the
accompanying Prospectus.
Capitalized terms used and not otherwise defined below or elsewhere in this
Prospectus Supplement are used with the respective meanings given thereto in the
Indenture.
GENERAL
The Notes will be senior unsecured general obligations of the Company, and
rank on a parity with all other unsecured and unsubordinated indebtedness of the
Company. The Notes will be limited to an aggregate principal amount of $500
million and will mature on April 1, 2003. The Notes will bear interest at a rate
of % per annum from March , 1998, or from the most recent Interest Payment
Date on which interest has been paid or provided for, payable semi-annually on
April 1 and October 1 of each year, commencing October 1, 1998, to each Person
in whose name a Note (or any predecessor Note) is registered (a "Holder") at the
close of business on the preceding March 15 or September 15 (whether or not a
Business Day), as the case may be. Interest on the Notes will be computed on the
basis of a 360-day year comprised of twelve, 30-day months.
S-26
<PAGE> 54
Principal of, and premium, if any, and interest on the Notes will be
payable, Notes may be presented for conversion and transfers of the Notes will
be registrable at the office or agency of the Company in the Borough of
Manhattan, The City of New York, and transfers of the Notes will also be
registrable at such other office or agency of the Company as may be maintained
for such purpose. In addition, payment of interest may be made, at the option of
the Company, by check mailed to the address of the person entitled thereto as
shown on the Security Register. The Notes are to be in denominations of $1,000
or any integral multiple thereof. No service charge will be made for any
conversion or registration of transfer or exchange of Notes, except for any tax
or other governmental charge that may be imposed in connection therewith.
GLOBAL SECURITIES
The Notes will be issued in the form of one or more global securities
("Global Securities") that will be deposited with, or on behalf of, The
Depository Trust Company, New York, New York (the "Depositary"). Interests in
the Global Securities will be issued only in denominations of $1,000 or integral
multiples thereof. Unless and until it is exchanged in whole or in part for
Notes in definitive form, a Global Security may not be transferred except as a
whole to a nominee of the Depositary for such Global Security, or by a nominee
of the Depositary to the Depositary or another nominee of the Depositary, or by
the Depositary or any such nominee to a successor Depositary or a nominee of
such successor Depositary.
BOOK-ENTRY SYSTEM
Initially, the debentures will be registered in the name of Cede & Co., the
nominee of the Depositary. Accordingly, beneficial interests in the Notes will
be shown on, and transfers thereof will be effected only through, records
maintained by the Depositary and its participants.
The Depositary has advised the Company and the Underwriters as follows: the
Depositary is a limited-purpose trust company organized under the New York
Banking Law, a "banking organization" within the meaning of the New York Banking
Law, a member of the United States Federal Reserve System, a "clearing
corporation" within the meaning of the New York Uniform Commercial Code and a
"clearing agency" registered pursuant to the provisions of Section 17A of the
United States Securities Exchange Act of 1934, as amended. The Depositary holds
securities that its participants ("Direct Participants") deposit with the
Depositary. The Depositary also facilitates the settlement among Direct
Participants of securities transactions, such as transfers and pledges, in
deposited securities through electronic computerized book-entry changes in such
Direct Participants' accounts, thereby eliminating the need for physical
movement of securities certificates. Direct Participants include securities
brokers and dealers (including the Underwriters), banks, trust companies,
clearing corporations, and certain other organizations. The Depositary is owned
by a number of its Direct Participants and by the New York Stock Exchange, Inc.,
the American Stock Exchange, Inc. and the National Association of Securities
Dealers, Inc. Access to the Depositary's book-entry system is also available to
others such as securities brokers and dealers, banks and trust companies that
clear through or maintain a custodial relationship with a Direct Participant,
either directly or indirectly ("Indirect Participants"). The rules applicable to
the Depositary and its Direct and Indirect Participants are on file with the
United States Securities and Exchange Commission.
The Depositary advises that its established procedures provide that (i)
upon issuance of the Notes by the Company, the Depositary will credit the
accounts of Direct and Indirect Participants designated by the Underwriters with
the principal amounts of the Notes purchased by the Underwriters and (ii)
ownership of interest in the Global Securities will be shown on, and the
transfer of the ownership will be effected only through, records maintained by
the Depositary, the Direct Participants and the Indirect Participants. The laws
of some States require that certain persons take physical delivery in definitive
form of securities which they own. Consequently, the ability to transfer
beneficial interest in the Global Securities is limited to such extent.
So long as a nominee of the Depositary is the registered owner of the
Global Securities, such nominee for all purposes will be considered the sole
owner or holder of such Global Securities under the Indenture. Except as
provided below, owners of beneficial interests in the Global Securities will not
be entitled to have Notes
S-27
<PAGE> 55
registered in their names, will not receive or be entitled to receive physical
delivery of Notes in definitive form and will not be considered the owners or
holders thereof under the Indenture.
Neither the Company, the Trustee, any paying agent nor the registrar will
have any responsibility or liability for any aspect of the records relating to
or payments made on account of beneficial ownership interests in the Global
Securities, or for maintaining, supervising or reviewing any records relating to
such beneficial ownership interests.
Principal and interest payments on the Notes registered in the name of the
Depositary's nominee will be made in immediately available funds to the
Depositary's nominee as the registered owner of the Global Securities. Under the
terms of the Notes, the Company and the Trustee will treat the persons in whose
names the Notes are registered as the owners of such Notes for the purpose of
receiving payment of principal and interest on such Notes and for all other
purposes whatsoever. Therefore, neither the Company, the Trustee nor any paying
agent has any direct responsibility or liability for the payment of principal or
interest on the Notes to owners of beneficial interests in the Global
Securities. The Depositary has advised the Company and the Trustee that its
current practice is upon receipt of any payment of principal or interest, to
credit Direct Participants' accounts on the payment date in accordance with
their respective holdings of beneficial interests in the Global Securities as
shown on the Depositary's records, unless the Depositary has reason to believe
that it will not receive payment on the payment date. Payments by Direct and
Indirect Participants to owners of beneficial interests in the Global Securities
will be governed by standing instructions and customary practices, as is the
case with securities held for the accounts of customers in bearer form or
registered in "street name", and will be the responsibility of such Direct and
Indirect Participants and not of the Depositary, the Trustee or the Company,
subject to any statutory requirements that may be in effect from time to time.
Payment of principal and interest to the Depositary is the responsibility of the
Company or the Trustee, disbursement of such payments to the owners of
beneficial interests in the Global Securities shall be the responsibility of the
Depositary and Direct and Indirect Participants.
Notes represented by a Global Security will be exchangeable for Notes in
definitive form of like tenor as such Global Security in denominations of $1,000
and in any greater amount that is an integral multiple if the Depositary
notifies the Company that it is unwilling or unable to continue as Depositary
for such Global Security or if at any time the Depositary ceases to be a
clearing agency registered under applicable law and successor depositary is not
appointed by the Company within 90 days or the Company in its discretion at any
time determines not to require all of the Notes to be represented by a Global
Security and notifies the Trustee thereof. Any Notes that are exchangeable
pursuant to the preceding sentence are exchangeable for Notes issuable in
authorized denominations and registered in such names as the Depositary shall
direct. Subject to the foregoing, a Global Security is not exchangeable, except
for a Global Security or Global Securities of the same aggregate denominations
to be registered in the name of the Depositary or its nominee.
SAME-DAY SETTLEMENT AND PAYMENT
Settlement for the Notes will be made by the Underwriters in immediately
available funds. So long as the Depositary continues to make its Same-Day Funds
Settlement System available to the Company, all payments of principal and
interest on the Notes will be made by the Company in immediately available
funds.
Secondary trading in long-term notes and debentures of corporate issues is
generally settled in clearing-house or next-day funds. In contrast, the Notes
will trade in the Depositary's Same-Day Funds Settlement System until maturity,
and secondary market trading activity in the Notes will therefore be required by
the Depositary to settle in immediately available funds. No assurance can be
given as to the effect, if any, of settlement in immediately available funds on
trading activity in the Notes.
CONVERSION OF NOTES
The holders of Notes will be entitled at any time through the close of
business on the final maturity date of the Notes, subject to prior redemption or
repurchase, to convert any Notes or portions thereof (in denominations of $1,000
or multiples thereof) into Common Stock, at the conversion price set forth on
the cover page of this Prospectus Supplement, subject to adjustment as described
below. Except as described
S-28
<PAGE> 56
below, no adjustment will be made on conversion of any Notes for interest
accrued thereon or for dividends on any Common Stock issued upon conversion of
the Notes.
If any Notes not called for redemption are converted after a Record Date
for the payment of interest and prior to the next succeeding Interest Payment
Date, such Notes must be accompanied by funds equal to the interest payable on
such succeeding Interest Payment Date on the principal amount so converted. No
such payment will be required if the Company exercises its right to redeem such
Notes on a redemption date that is an Interest Payment Date. The Company is not
required to issue fractional shares of Common Stock upon conversion of Notes
and, in lieu thereof, will pay a cash adjustment based upon the market price of
the Common Stock on the last day on which shares of Common Stock traded on the
New York Stock Exchange (a "Trading Day") prior to the date of conversion. In
the case of Notes called for redemption, conversion rights will expire at the
close of business on the fifth business day preceding the date fixed for
redemption, unless the Company defaults in payment of the redemption price. A
Note in respect of which a holder is exercising its option to require repurchase
upon a Change in Control may be converted only if such holder withdraws its
election to exercise its option in accordance with the terms of the Note.
The initial conversion price of $ per share of Common Stock is subject
to adjustment (under formulae set forth in the Notes) in certain events,
including: (i) the issuance of Common Stock as a dividend or distribution on
Common Stock of the Company; (ii) certain subdivisions and combinations of the
Common Stock; (iii) the issuance to all holders of Common Stock of certain
rights or warrants to purchase Common Stock; (iv) the distribution to all
holders of Common Stock of shares of capital stock of the Company (other than
Common Stock) or evidences of indebtedness of the Company or assets (including
securities, but excluding those rights, warrants, dividends and distributions
referred to above and dividends and distributions in connection with the
liquidation, dissolution or winding up of the Company or paid in cash); (v)
dividends or other distributions consisting exclusively of cash (excluding any
cash portion of distributions referred to in clause (iv)) to all holders of
Common Stock to the extent that such distributions, combined together with (A)
all other such all-cash distributions made within the preceding 12 months in
respect of which no adjustment has been made plus (B) any cash and the fair
market value of other consideration payable in respect of any tender offers by
the Company for Common Stock concluded within the preceding 12 months in respect
of which no adjustment has been made, exceeds 10% of the Company's market
capitalization (being the product of the then current market price of the Common
Stock times the number of shares of Common Stock then outstanding on the Record
Date for such distribution); (vi) the purchase of Common Stock pursuant to a
tender offer made by the Company or any of its subsidiaries to the extent that
the same involves an aggregate consideration that, together with (X) any cash
and the fair market value of any other consideration payable in any other tender
offer by the Company or any of its subsidiaries for Common Stock expiring within
the 12 months preceding such tender offer in respect of which no adjustment has
been made plus (Y) the aggregate amount of any such all-cash distributions
referred to in clause (v) above to all holders of Common Stock within the 12
months preceding the expiration of such tender offer in respect of which no
adjustments have been made, exceeds 10% of the Company's market capitalization
on the expiration of such tender offer and (vii) payment in respect of a tender
offer or exchange offer by a person other than the Company or any subsidiary of
the Company in which, as of the closing date of the offer, the Board of
Directors is not recommending rejection of the offer. If an adjustment is
required to be made as set forth in clause (v) above as a result of a
distribution that is not a quarterly dividend, such adjustment would be based
upon the full amount of the distribution. The adjustment referred to in clause
(vii) above will only be made if the tender offer or exchange offer is for an
amount which increases that person's ownership of Common Stock to more than 25%
of the total shares of Common Stock outstanding and, if the cash and value of
any other consideration included in such payment per share of Common Stock,
exceeds the Current Market Price per share of Common Stock on the business day
next succeeding the last date on which tenders or exchanges may be made pursuant
to such tender or exchange offer. The adjustment referred to in clause (vii)
above will not be made, however, if, as of the closing of the offer, the
offering documents with respect to such offer disclose a plan or an intention to
cause the Company to engage in a consolidation or merger of the Company or a
sale of the Company's assets, as an entirety or substantially as an entirety.
No adjustment in the conversion price will be required unless such
adjustment would require a change of at least 1% in the conversion price then in
effect; provided that any adjustment that would otherwise be
S-29
<PAGE> 57
required to be made shall be carried forward and taken into account in any
subsequent adjustment. Except as stated above, the conversion price will not be
adjusted for the issuance of Common Stock or any securities convertible into or
exchangeable for Common Stock or carrying the right to purchase any of the
foregoing.
In the case of (i) any reclassification or change of the Common Stock or
(ii) a consolidation, merger or combination involving the Company or a sale or
conveyance to another person of the property and assets of the Company as an
entirety or substantially as an entirety, in each case as a result of which
holders of Common Stock shall be entitled to receive stock, other securities,
other property or assets (including cash) with respect to or in exchange for
such Common Stock, the holders of the Notes then outstanding will be entitled
thereafter to convert such Notes into the kind and amount of shares of stock,
other securities or other property or assets which they would have owned or been
entitled to receive upon such reclassification, change, consolidation, merger,
combination, sale or conveyance had such Notes been converted into Common Stock
immediately prior to such reclassification, change, consolidation, merger,
combination, sale or conveyance assuming that a holder of Notes would not have
exercised any rights of election as to the stock, other securities or other
property or assets receivable in connection therewith.
In the event of a taxable distribution to holders of Common Stock (or other
transaction) which results in any adjustment of the conversion price, the
holders of Notes may, in certain circumstances, be deemed to have received a
distribution subject to United States income tax as a dividend; in certain other
circumstances, the absence of such an adjustment may result in a taxable
dividend to the holders of Common Stock. See "Certain Federal Income Tax
Considerations."
The Company from time to time may, to the extent permitted by law, reduce
the conversion price of the Notes by any amount for any period of at least 20
days, in which case the Company shall give at least 15 days' notice of such
decrease, if the Board of Directors has made a determination that such decrease
would be in the best interests of the Company, which determination shall be
conclusive. See "Certain Federal Income Tax Considerations." The Company may, at
its option, make such reductions in the conversion price, in addition to those
set forth above, as the Board of Directors deems advisable to avoid or diminish
any income tax to holders of Common Stock resulting from any dividend or
distribution of stock (or rights to acquire stock) or from any event treated as
such for income tax purposes. See "Certain Federal Income Tax Considerations."
OPTIONAL REDEMPTION BY THE COMPANY
The Notes are not entitled to any sinking fund. At any time on or after
April 1, 2001, the Notes will be redeemable at the Company's option on at least
15 but not more than 60 days' notice, as a whole or, from time to time in part,
at the following prices (expressed in percentages of the principal amount),
together with accrued interest to, but excluding, the date fixed for redemption.
If redeemed during the 12-month period beginning April 1:
<TABLE>
<CAPTION>
REDEMPTION
YEAR PRICE
---- ----------
<S> <C>
2001........................................................
2002........................................................
</TABLE>
and 100% at April 1, 2003; provided that any semi-annual payment of interest
becoming due on the date fixed for redemption shall be payable to the holders of
record on the relevant Record Date of the Notes being redeemed.
If fewer than all the Notes are to be redeemed, the Trustee will select the
Notes to be redeemed in principal amounts of $1,000 or multiples thereof by lot
or, in its discretion, on a pro rata basis. If any Note is to be redeemed in
part only, a new Note or Notes in principal amount equal to the unredeemed
principal portion thereof will be issued. If a portion of a holder's Notes is
selected for partial redemption and such holder converts a portion of such
Notes, such converted portion shall be deemed to be taken from the portion
selected for redemption.
S-30
<PAGE> 58
REPURCHASE AT OPTION OF HOLDERS UPON CHANGE IN CONTROL
The Indenture provides that if a Change in Control occurs, each holder of
Notes shall have the right to require the Company to repurchase all of such
holder's Notes, or any portion of the principal amount thereof that is an
integral multiple of $1,000, on the date (the "Repurchase Date") that is 30 days
after the date of the Company Notice (as defined below), for cash at a price
equal to 100% of the principal amount thereof (the "Repurchase Price"), together
with accrued and unpaid interest to, but excluding, the Repurchase Date;
provided that any semi-annual payment of interest becoming due on the Repurchase
Date shall be payable to the holders of record on the relevant Record Date of
the Notes being repurchased.
Within 15 Trading Days after the occurrence of a Change in Control, the
Company or, at the Company's request, the Trustee is obligated to mail to all
holders of record of Notes a notice (the "Company Notice") of the occurrence of
such Change in Control and of the repurchase right arising as a result thereof.
The Company must also deliver a copy of the Company Notice to the Trustee. To
exercise the repurchase right, a holder of such Notes must deliver to the
Trustee on or before the Repurchase Date, written notice of the holder's
exercise of such right, together with the Notes with respect to which the right
is being exercised, duly endorsed for transfer to the Company.
A "Change in Control" will be deemed to have occurred at such time after
the original issuance of the Notes as:
(i) any person (including any syndicate or group deemed to be a
"person" under Section 13(d)(3) of the Exchange Act), other than the
Company, any subsidiary of the Company, or any employee benefit plan of the
Company or any such subsidiary, L. Lowry Mays, B.J. McCombs or their
affiliates is or becomes the beneficial owner, directly or indirectly,
through a purchase or other acquisition transaction or series of
transactions (other than a merger or consolidation involving the Company),
of shares of capital stock of the Company entitling such person to exercise
in excess of 50% of the total voting power of all shares of capital stock
of the Company entitled to vote generally in the election of directors;
(ii) there occurs any consolidation of the Company with, or merger of
the Company into, any other person, any merger of another person into the
Company, or any sale or transfer of the assets of the Company, as an
entirety or substantially as an entirety, to another person (other than (a)
any such transaction pursuant to which the holders of the Common Stock
immediately prior to such transaction have, directly or indirectly, shares
of capital stock of the continuing or surviving corporation immediately
after such transaction which entitle such holders to exercise in excess of
50% of the total voting power of all shares of capital stock of the
continuing or surviving corporation entitled to vote generally in the
election of directors and (b) any merger (1) which does not result in any
reclassification, conversion, exchange or cancellation of outstanding
shares of Common Stock or (2) which is effected solely to change the
jurisdiction of incorporation of the Company and results in a
reclassification, conversion or exchange of outstanding shares of Common
Stock solely into shares of common stock and separate series of common
stock carrying substantially the same relative rights as the Common Stock);
or
(iii) a change in the Board of Directors of the Company in which the
individuals who constituted the Board of Directors of the Company at the
beginning of the one-year period immediately preceding such change
(together with any other director whose election by the Board of Directors
of the Company or whose nomination for election by the stockholders of the
Company was approved by a vote of at least a majority of the directors then
in office either who were directors at the beginning of such period or
whose election or nomination for election was previously so approved) cease
for any reason to constitute a majority of the directors then in office;
provided, however, that a Change in Control shall not be deemed to have occurred
if either (a) the closing price per share of the Common Stock for any ten
Trading Days within the period of 20 consecutive Trading Days ending immediately
before the Change in Control shall equal or exceed 105% of the conversion price
in effect on each such Trading Day, or (b)(i) at least 90% of the consideration
(excluding cash payments for fractional shares) in the transaction or
transactions constituting the Change in Control consists of shares of common
stock with full voting rights traded on a national securities exchange or quoted
on the Nasdaq
S-31
<PAGE> 59
National Market (or which will be so traded or quoted when issued or exchanged
in connection with such Change in Control) (such securities being referred to as
"Publicly Traded Securities") and as a result of such transaction or
transactions such Notes become convertible solely into such Publicly Traded
Securities and (ii) the consideration in the transaction or transactions
constituting the Change in Control consists of cash, Publicly Traded Securities
or a combination of cash and Publicly Traded Securities with an aggregate fair
market value (which, in the case of Publicly Traded Securities, shall be equal
to the average closing price of such Publicly Traded Securities during the ten
consecutive Trading Days commencing with the third Trading Day following
consummation of the transaction or transactions constituting the Change in
Control) is at least 105% of the Conversion Price in effect on the date
immediately preceding the date of consummation of such Change in Control. The
term "beneficial owner" shall be determined in accordance with Rule 13d-3
promulgated by the Commission under the Exchange Act.
To the extent applicable, the Company will comply with the provisions of
Rule 13e-4 or any other tender offer rules, and will file a Schedule 13E-4 or
any other schedule required under such rules, in connection with any offer by
the Company to repurchase Notes upon a Change in Control.
The Change in Control feature of the Notes may in certain circumstances
make more difficult or discourage a takeover of the Company and, thus, the
removal of incumbent management. The repurchase right is not the result of
management's knowledge of any effort to accumulate any Common Stock or to obtain
control of the Company by means of a merger, tender offer, solicitation or
otherwise, or part of a plan by management to adopt a series of anti-takeover
provisions. Instead, this right is the result of negotiations between the
Company and the Underwriters.
The foregoing provisions would not necessarily afford holders of the Notes
protection in the event of a highly leveraged transaction, certain changes in
control of the Company or other transactions involving the Company that may
adversely affect holders.
The Company's ability to repurchase Notes upon the occurrence of a Change
in Control is subject to limitations. If a Change in Control were to occur,
there could be no assurance that the Company would have sufficient financial
resources, or would be able to arrange financing, to pay the repurchase price
for all Notes tendered by holders thereof.
GOVERNING LAW
The Indenture and the Notes will be governed by and construed in accordance
with the laws of the State of New York.
CERTAIN FEDERAL INCOME TAX CONSIDERATIONS
The following is a general summary of certain United States federal income
tax consequences relating to an investment in the Notes as of the date hereof.
This discussion is based on existing provisions of the Internal Revenue Code of
1986, as amended (the "Code"), Treasury regulations promulgated thereunder,
judicial decisions and administrative rulings, all of which are subject to
change or alternative construction, possibly with retroactive effect. This
summary does not discuss other United States federal taxes (such as federal
estate and gift taxes) or any state, local or foreign tax considerations, nor
does it purport to address all United States federal income tax consequences
applicable to all categories of investors, some of which may be subject to
special rules, such as life insurance companies, tax-exempt organizations,
dealers in securities or currency, banks or other financial institutions,
investors whose functional currency is not the U.S. dollar, or investors that
hold the Notes as part of a hedge, straddle or conversion transaction. In
addition, this summary deals only with Notes and Common Stock into which the
Notes are convertible which are held as "capital assets" within the meaning of
Section 1221 of the Code and that are purchased by investors upon original
issuance at the initial offering price. The Company will not seek a ruling from
the Internal Revenue Service (the "IRS") with regard to the United States
federal income tax treatment relating to an investment in the Notes (or the
Common Stock into which the Notes are convertible) and, therefore, there can be
no assurance that the IRS will agree with the conclusions set forth below.
S-32
<PAGE> 60
For purposes of this summary, the term "U.S. Holder" means a beneficial
owner of a Note or Common Stock that is (i) a citizen or resident of the United
States, (ii) 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, (iii) an estate the income of which is subject to United States federal
income taxation regardless of its source, and (iv) a trust if (a) a U.S. court
is able to exercise primary supervision over the trust's administration and (b)
one or more U.S. fiduciaries have the authority to control all of the trust's
substantial decisions. The term "Non-U.S. Holder" shall mean the beneficial
owner of a Note or Common Stock other than a U.S. Holder.
PERSONS CONSIDERING THE PURCHASE OF THE NOTES SHOULD CONSULT THEIR OWN TAX
ADVISORS CONCERNING THE APPLICATION OF UNITED STATES FEDERAL TAX LAWS, AS WELL
AS THE LAWS OF ANY STATE, LOCAL OR FOREIGN TAXING JURISDICTION, TO THEIR
PARTICULAR SITUATIONS. THIS SUMMARY DOES NOT PURPORT TO ADDRESS ALL ASPECTS OF
FEDERAL, STATE, LOCAL OR FOREIGN TAXATION THAT MAY BE RELEVANT TO AN INVESTOR'S
DECISION TO PURCHASE THE NOTES.
TAXATION OF U.S. HOLDERS
Adjustment to Conversion Price. The Indenture provides that the conversion
price will be adjusted upon the occurrence of certain circumstances. Section 305
of the Code treats as a distribution taxable as a dividend (to the extent of the
Company's current or accumulated earnings and profits) certain actual or
constructive distributions of stock with respect to stock and convertible
securities. Applicable Treasury regulations treat holders of convertible
debentures, such as the Notes, as having received such a constructive
distribution where the conversion price is adjusted to reflect certain
distributions with respect to the stock into which such debentures are
convertible. Thus, under certain circumstances, an adjustment in the conversion
price of the Common Stock may be taxable to the U.S. Holders as a dividend
distribution. In such a case, U.S. Holders may recognize income as a result of
an event pursuant to which they receive no cash or property that could be used
to pay the related income tax. Generally, a U.S. Holder's tax basis in a Note
will be increased by the amount of any such constructive dividend. U.S. Holders
of the Notes are advised to consult their tax advisors with respect to the
potential of taxable constructive dividend distributions upon such conversion
price modifications.
Payments of Interest. The payment of stated interest on the Notes will be
taxable to a U.S. Holder as ordinary interest income at the time it accrues or
is received in accordance with such holder's usual method of accounting for
federal income tax purposes.
Conversion of a Note into Common Stock. In general, a U.S. Holder will not
recognize gain or loss on conversion of a Note solely into Common Stock of the
Company pursuant to the terms of the conversion right of the Notes, except with
respect to cash received in lieu of a fractional share. The holding period of
the Common Stock received by the U.S. Holder upon conversion of a Note generally
will include the period during which the Note was held prior to the conversion.
The U.S. Holder's aggregate tax basis in the Common Stock received upon
conversion of a Note generally will equal the U.S. Holder's aggregate tax basis
in the Note exchanged (reduced by the portion allocable to cash received in lieu
of a fractional share). A U.S. Holder generally will recognize capital gain or
loss in connection with any cash received in lieu of a fractional share in an
amount equal to the difference between the amount of cash received and the U.S.
Holder's tax basis in the fractional share. U.S. Holders should consult their
own tax advisors regarding the tax consequences of converting the Notes into
Common Stock, in particular in the case of the conversion of a Note into Common
Stock after a record date for the payment of interest but prior to the next
succeeding interest payment date.
Disposition of Notes or Common Stock. A U.S. Holder of a Note (or the
Common Stock into which it was converted) generally will recognize capital gain
or loss upon the sale, exchange, retirement or other disposition of the Note (or
the Common Stock into which it was converted) measured by the difference between
(i) the amount realized (except to the extent the amount is attributable to
accrued interest income, which will generally be taxable as ordinary income) and
(ii) the U.S. Holder's tax basis in the Note (or the Common Stock into which it
was converted). The gain or loss on such disposition will be long-term capital
S-33
<PAGE> 61
gain or loss if the Note (or the Common Stock into which it was converted) has
been held for more than one year at the time of such disposition. Pursuant to
the Taxpayer Relief Act of 1997, in the case of an individual holder, any
capital gain recognized on the disposition of the Notes (or Common Stock into
which it was converted) will generally be subject to United States federal
income tax at a stated maximum rate of (i) 20%, if the holder's holding period
in the Notes was more than 18 months at the time of such sale, exchange,
retirement or other disposition, or (ii) 28%, if the holder's holding period in
such Notes was more than one year, but not more than 18 months, at the time of
such sale, exchange, retirement or other disposition. The ability to use capital
losses to offset ordinary income in determining taxable income is generally
limited.
Distributions with Respect to Common Stock. In general, distributions made
by the Company with respect to Common Stock will constitute dividends for United
States federal income tax purposes and will be taxable to a U.S. Holder as
ordinary income to the extent of the Company's undistributed current or
accumulated earnings and profits (as determined for U.S. federal income tax
purposes). Distributions in excess of the Company's current or accumulated
earnings and profits will be treated first as a nontaxable return of capital
reducing the U.S. Holder's tax basis in the Common Stock, thus increasing the
amount of any gain (or reducing the amount of any loss) which might be realized
by such holder upon the sale, exchange or redemption of such Common Stock. Any
such distributions in excess of the U.S. Holder's tax basis in the Common Stock
will be treated as capital gain to the U.S. Holder and will be either long-term
or short-term capital gain depending upon the holder's U.S. federal income tax
holding period for the Common Stock.
Subject to certain limitations, to the extent that distributions made by
the Company are treated as dividends, a U.S. Holder of Common Stock that is
taxed as a domestic corporation and that meets the applicable holding period and
taxable income requirements of the Code may be entitled to a deduction under
Section 243 of the Code equal in amount to 70% of the dividends paid out of such
earnings and profits (the "Dividends Received Deduction"). With respect to
Common Stock considered to be "portfolio stock" as defined in Section 246A of
the Code, the Dividends Received Deduction will be reduced to the extent that
the Common Stock constitutes "debt financed portfolio stock." In addition, under
certain circumstances, the receipt of a dividend on the Common Stock determined
to be an "extraordinary dividend" may cause the holder's tax basis in the Common
Stock to be reduced by the untaxed portion of the dividend and could result in
gain recognition pursuant to Section 1059 of the Code.
TAXATION OF NON-U.S. HOLDERS
Payments of Interest. Except as explained in the discussion of backup
withholding below, any payment of stated interest on a Note by the Company or
any paying agent to a Non-U.S. Holder will qualify for the "portfolio interest
exemption" and, therefore, will not be subject to United States federal income
tax or withholding tax, provided that such interest income is not taxable as
effectively connected with a United States trade or business of the Non-U.S.
Holder and provided that the Non-U.S. Holder (i) does not actually or
constructively own 10% or more of the combined voting power of all classes of
stock of the Company entitled to vote, (ii) is not a controlled foreign
corporation related to the Company actually or constructively through stock
ownership, (iii) is not a bank receiving interest on a loan entered into in the
ordinary course of business, and (iv) either (a) provides a Form W-8 (or
suitable substitute form) signed under penalties of perjury that includes its
name and address and certifies as to its non-United States status in compliance
with applicable law and regulations, or (b) deposits the Note with a securities
clearing organization, bank or financial institution that holds customers'
securities in the ordinary course of its trade or business and which holds the
Note and provides a statement to the Company or its agent under penalties of
perjury in which it certifies that such a Form W-8 (or a suitable substitute)
has been received by it from the Non-U.S. Holder or qualifying intermediary and
furnishes the Company or its agent with a copy thereof.
Conversion of a Note into Common Stock. In general, no United States
federal income tax or withholding tax will be imposed upon the conversion of a
Note into Common Stock by a Non-U.S. Holder except, with respect to the receipt
of cash in lieu of fractional shares by Non-U.S. Holders upon conversion of a
Note, where any one of the four exceptions described below under "-- Disposition
of Notes or Common Stock" is applicable. In addition, under certain
circumstances, the extent to which the fair market value of the Common
S-34
<PAGE> 62
Stock received upon conversion is attributable to accrued interest will be
treated as ordinary interest income taxable as described above under
"-- Payments of Interest."
Disposition of Notes or Common Stock. A Non-U.S. Holder of the Note (or the
Common Stock into which it was converted) generally will not be subject to
United States federal income tax or withholding tax on any gain realized on the
sale, exchange, retirement or other disposition of the Note (including the
receipt of cash in lieu of fractional shares upon conversion of the Note to
Common Stock), unless (i) the gain is effectively connected with a United States
trade or business of the Non-U.S. Holder, (ii) in the case of a Non-U.S. Holder
who is an individual, such holder is present in the United States for a period
or periods aggregating 183 days or more during the taxable year of the
disposition, and either such holder has a "tax home" in the United States or the
disposition is attributable to an office or other fixed place of business
maintained by such holder in the United States, (iii) the Non-U.S. Holder is
subject to tax pursuant to the provisions of the Code applicable to certain
United States expatriates, or (iv) the Company is or has been a United States
real property holding corporation (as defined in the Code) at any time during
the shorter of the 5 year period ending on the date of disposition or such
non-U.S. Holder's holding period. The Company does not believe that it is, or is
likely to become, a United States real property holding corporation.
Distributions with Respect to Common Stock. To the extent distributions
made by the Company are treated as dividends (as described above under "U.S.
Holders -- Distributions with Respect to Common Stock"), a Non-U.S. holder will
be subject to United States federal withholding tax at a 30% rate (or lower rate
provided under an applicable income tax treaty) on dividends paid (or deemed
paid, as described above under "-- Adjustment to Conversion Price") on Common
Stock, unless the dividends are taxable as effectively connected with the
conduct of a trade or business in the United States and the Non-U.S. Holder
delivers IRS Form 4224 to the payor. Except to the extent otherwise provided
under an applicable tax treaty, a Non-U.S. Holder generally will be taxed in the
same manner as a U.S. Holder on dividends paid (or deemed paid) that are
effectively connected with the conduct of a trade or business in the United
States by the Non-U.S. Holder. If such Non-U.S. Holder is a foreign corporation,
it may also be subject to a United States branch profits tax on such effectively
connected income at a 30% rate or such lower rate as may be specified by an
applicable income tax treaty.
BACKUP WITHHOLDING AND INFORMATION REPORTING
U.S. Holders. Under current United States federal income tax law, U.S.
Holders of Notes or Common Stock will be subject to information reporting and,
under certain circumstances, may be subject to "backup withholding" at the rate
of 31% in respect of payments of principal, interest and dividends (actual or
constructive) made to, and the proceeds of disposition of Notes or Common Stock
by, certain noncorporate, not otherwise exempt U.S. Holders. Generally, the
backup withholding rules will apply only if the U.S. Holder (i) fails to furnish
its taxpayer identification number ("TIN") to the payor in the manner required,
(ii) furnishes such payor with an incorrect TIN, (iii) is notified by the IRS
that it has failed to report properly interest, dividends or other "reportable
payments" as defined by the Code, or (iv) under certain circumstances, fails to
provide such payor or the U.S. Holder's securities broker with a certified
statement, signed under penalty of perjury, that the TIN provided is its correct
number and that the U.S. Holder is not subject to backup withholding for failure
to report interest and dividend payments. Backup withholding will not apply with
respect to payments made to certain U.S. Holders of the Notes, including
payments to certain exempt recipients (such as corporations and exempt
organizations). The amount of backup withholding from a payment to a holder will
be allowed as a credit against the holder's United States federal income tax
liability and may entitle such holder to a refund provided the required
information is furnished to the IRS.
Non-U.S. Holders. Payments made on the Notes or Common Stock and proceeds
from the sale of the Notes or Common Stock received by a non-U.S. Holder on or
before December 31, 1998 will generally not be subject to a backup withholding
tax of 31% or to information reporting requirements unless the holder fails to
comply with certain reporting procedures or otherwise fails to establish an
exemption from such tax reporting requirements under applicable provisions of
the Code. On October 6, 1997, the IRS issued final Treasury regulations relating
to withholding tax, information reporting, and backup withholding tax rules that
unify current certification procedures and forms and clarify reliance standards
(the "Final Regulations"). The Final
S-35
<PAGE> 63
Regulations eliminate the general current law presumption that dividends paid or
deemed paid to an address in a foreign country are paid to a resident of that
country and impose certain certification and documentation requirements on
Non-U.S. Holders claiming the benefit of a reduced withholding tax with respect
to dividends under a tax treaty. The Final Regulations will generally be
effective for payments made after December 31, 1998.
Any amounts withheld under the backup withholding rules from a payment to a
Non-U.S. Holder will be allowed as a refund or a credit against such Non-U.S.
Holder's United States federal income tax, provided that the required
information is furnished to the IRS.
Holders of Notes should consult their tax advisors regarding their
qualification for exemption from backup withholding and the procedure for
obtaining such an exemption.
UNDERWRITING
Under the terms and subject to the conditions contained in the Underwriting
Agreement (the "Underwriting Agreement"), the Underwriters named below (the
"Underwriters") have agreed to purchase from the Company the following
respective principal amounts of the Notes set forth opposite their names below
at the public offering price less the underwriting discounts and commissions set
forth on the cover page of this Prospectus Supplement:
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT
OF
UNDERWRITER NOTES
----------- ------------
<S> <C>
BT Alex. Brown Incorporated................................. $
Credit Suisse First Boston Corporation......................
Furman Selz LLC.............................................
Goldman, Sachs & Co. .......................................
Lehman Brothers Inc. .......................................
Merrill Lynch, Pierce, Fenner & Smith
Incorporated ..................................
Morgan Stanley & Co. Incorporated...........................
NationsBanc Montgomery Securities LLC.......................
Smith Barney Inc. ..........................................
Schroder & Co. Inc. ........................................
------------
Total............................................. $500,000,000
============
</TABLE>
The Underwriting Agreement provides that the obligations of the
Underwriters are subject to certain conditions precedent and that the
Underwriters will purchase the entire principal amount of the Notes, if any such
Notes are purchased.
The Company has been advised by the Underwriters that the Underwriters
propose to offer the Notes to the public initially at the public offering price
set forth on the cover page of this Prospectus Supplement and to certain dealers
at such price less a concession not in excess of % of such offering price.
The Underwriters may allow and such dealers may reallow a concession not in
excess of % of the public offering price of such Notes to certain other
dealers. After the initial public offering, the public offering price and other
selling terms may be changed by the Underwriters.
The Company has granted to the Underwriters an option, exercisable not
later than 30 days after the date of this Prospectus Supplement, to purchase up
to an additional $75 million aggregate principal amount of Notes at the public
offering price less the underwriting discounts and commissions set forth on the
cover page of this Prospectus Supplement. To the extent that the Underwriters
exercise such option, each of the Underwriters will have a firm commitment to
purchase approximately the same percentage of additional notes that the Notes to
be purchased by it shown in the above table bears to $75 million, and the
Company will be
S-36
<PAGE> 64
obligated, pursuant to the option, to sell such Notes to the Underwriters. The
Underwriters may exercise such option only to cover over-allotments made in
connection with the sale of the Notes offered hereby. If purchased, the
Underwriters will offer such additional Notes on the same terms as those on
which the $500 million principal amount of Notes are being offered.
The Notes are a new issue of securities with no established trading market.
The Notes will not be listed on any securities exchange. The Underwriters have
advised the Company that they intend to act as market makers for the Notes.
However, the Underwriters are not obligated to do so and may discontinue any
market making at any time without notice. No assurance can be given as to the
liquidity of the trading market for the Notes.
The Company has agreed to indemnify the Underwriters against certain
liabilities, including civil liabilities under the Securities Act of 1933, or
contribute to payments which the Underwriters may be required to make in respect
thereof.
The Underwriters may engage in over-allotment, stabilizing transactions,
syndicate covering transactions and penalty bids. Over-allotment involves
syndicate sales in excess of the offering size, which creates a syndicate short
position. Stabilizing transactions permit bids to purchase the underlying
security so long as the stabilizing bids do not exceed a specified maximum.
Syndicate covering transactions involve the purchase of the Notes in the open
market after the distribution has been completed in order to cover syndicate
short positions. Penalty bids permit the Underwriters to reclaim a selling
concession from a syndicate member when the Notes originally sold by such
syndicate member are purchased in a syndicate covering transaction to cover
syndicate short positions. Such stabilizing transactions, syndicate covering
transactions and penalty bids may cause the price of the Notes to be higher than
it would otherwise be in the absence of such transactions.
The Company and Messrs. L. Lowry Mays and B. J. McCombs have agreed not to
offer, sell, contract to sell or otherwise dispose of, or announce the offering
of, any shares of Common Stock for a period of 30 days following the date of
this Prospectus Supplement; provided, however, that the Company may offer shares
of Common Stock to the public in the Stock Offering contemplated to occur
simultaneously with the Offering of Notes hereby. Furthermore, Mr. Simon also
entered into a Resale Agreement with the Company (the "Resale Agreement")
restricting his ability to sell Common Stock for a period beginning on the date
the Universal Merger is consummated and ending on the earlier of (i) the date
Mr. Simon is no longer an officer or director of the Company or any of its
subsidiaries and (ii) two years following the date the Universal Merger is
consummated. The Resale Agreement also restricts the ability of Mr. Simon to buy
or sell shares of Common Stock prior to the consummation of the Universal
Merger.
The Underwriters and their respective affiliates may be customers of,
lenders to, engage in transactions with, and perform services for the Company
and its subsidiaries in the ordinary course of business.
LEGAL OPINIONS
The validity of the Notes offered hereby will be passed upon for the
Company by its special counsel, Akin, Gump, Strauss, Hauer & Feld, L.L.P. (a
partnership including professional corporations), San Antonio, Texas, and for
the Underwriters by Cravath, Swaine & Moore, New York, New York. Alan D. Feld,
the sole shareholder of a professional corporation which is a partner of Akin,
Gump, Strauss, Hauer & Feld, L.L.P., is a director of the Company and owns
approximately 90,000 shares of Common Stock (including presently exercisable
nonqualified options to acquire approximately 51,000 shares).
S-37
<PAGE> 65
======================================================
NO DEALER, SALESPERSON OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATION NOT CONTAINED IN THIS PROSPECTUS
SUPPLEMENT OR THE ACCOMPANYING PROSPECTUS AND, IF GIVEN OR MADE, SUCH
INFORMATION OR REPRESENTATION MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED
BY THE COMPANY OR ANY UNDERWRITER. THIS PROSPECTUS SUPPLEMENT AND THE PROSPECTUS
DO NOT CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF AN OFFER TO BUY ANY OF
THE SECURITIES OFFERED HEREBY IN ANY JURISDICTION TO ANY PERSON TO WHOM IT IS
UNLAWFUL TO MAKE SUCH AN OFFER OR SOLICITATION. NEITHER THE DELIVERY OF THIS
PROSPECTUS SUPPLEMENT OR THE PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL, UNDER
ANY CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THE INFORMATION HEREIN IS CORRECT
AS OF ANY TIME SUBSEQUENT HEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT TO THE
DATE HEREOF.
---------------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
PROSPECTUS SUPPLEMENT
Prospectus Supplement Summary.......... S-3
Risk Factors........................... S-10
Use of Proceeds........................ S-18
Price Range of Common Stock............ S-18
Capitalization......................... S-19
Selected Financial Information......... S-20
Business............................... S-22
Description of Notes................... S-26
Certain Federal Income Tax
Considerations....................... S-32
Underwriting........................... S-36
Legal Opinions......................... S-37
PROSPECTUS
Available Information.................. 3
Incorporation of Certain Documents by
Reference............................ 3
The Company............................ 4
The CCCI Trusts........................ 4
Ratio of Earnings to Combined Fixed
Charges and Preferred Stock
Dividends............................ 5
Use of Proceeds........................ 5
Holding Company Structure.............. 6
General Description of Securities and
Risk Factors......................... 6
Description of Debt Securities......... 6
Description of Junior Subordinated Debt
Securities........................... 16
Description of Preferred Stock......... 24
Description of Common Stock............ 24
</TABLE>
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Description of Warrants................ 26
Description of Stock Purchase Contracts
and Stock Purchase Units............. 27
Description of Preferred Securities.... 28
Description of Guarantees.............. 30
ERISA Matters.......................... 33
Plan of Distribution................... 33
Legal Opinions......................... 34
Experts................................ 35
</TABLE>
======================================================
======================================================
[CLEAR CHANNEL LOGO]
CLEAR CHANNEL
COMMUNICATIONS, INC.
$500,000,000
% SENIOR CONVERTIBLE NOTES
DUE APRIL 1, 2003
PROSPECTUS SUPPLEMENT
BT ALEX. BROWN
CREDIT SUISSE FIRST BOSTON
FURMAN SELZ
GOLDMAN, SACHS & CO.
LEHMAN BROTHERS
MERRILL LYNCH & CO.
MORGAN STANLEY DEAN WITTER
NATIONSBANC MONTGOMERY SECURITIES LLC
SALOMON SMITH BARNEY
SCHRODER & CO. INC.
======================================================
<PAGE> 66
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY
OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES
EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE SECURITIES
IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR
TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH STATE.
SUBJECT TO COMPLETION
MARCH 12, 1998
PROSPECTUS
<TABLE>
<S> <C> <C>
[CLEAR CHANNEL LOGO] $1,500,000,000
Clear Channel Communications, Inc.
DEBT SECURITIES, JUNIOR SUBORDINATED DEBT SECURITIES,
PREFERRED STOCK, COMMON STOCK, WARRANTS,
STOCK PURCHASE CONTRACTS, AND STOCK PURCHASE UNITS
CCCI CAPITAL TRUST I
CCCI CAPITAL TRUST II
CCCI CAPITAL TRUST III
</TABLE>
PREFERRED SECURITIES, GUARANTEED TO THE EXTENT SET FORTH HEREIN
BY CLEAR CHANNEL COMMUNICATIONS, INC.
Clear Channel Communications, Inc., a Texas corporation (the "Company"), may
issue from time to time, together or separately, (i) unsecured senior debt
securities (the "Senior Debt Securities"), (ii) unsecured subordinated debt
securities (the "Subordinated Debt Securities" and, together with the Senior
Debt Securities, the "Debt Securities"), (iii) unsecured junior subordinated
debt securities ("Junior Subordinated Debt Securities"); (iv) warrants to
purchase Debt Securities or Junior Subordinated Debt Securities (the "Debt
Warrants"), (v) shares of preferred stock, par value $1.00 per share, of the
Company (the "Preferred Stock"), (vi) warrants to purchase shares of Preferred
Stock (the "Preferred Stock Warrants"), (vii) shares of common stock, par value
$.10 per share, of the Company (the "Common Stock"), (viii) warrants to purchase
shares of Common Stock (the "Common Stock Warrants"), (ix) stock purchase
contracts ("Stock Purchase Contracts") to purchase Common Stock or Preferred
Stock and (x) stock purchase units ("Stock Purchase Units"), each representing
ownership of a Stock Purchase Contract and Debt Securities, Junior Subordinated
Debt Securities, debt obligations of the United States of America or agencies or
instrumentalities thereof ("U.S. Obligations"), or Preferred Securities (as
defined below), securing the holder's obligation to purchase Common Stock or
Preferred Stock under the Stock Purchase Contract, or any combination of the
foregoing, either individually or as units consisting of one or more of the
foregoing in amounts, at prices and on terms to be determined by market
conditions at the time of offering. The Debt Warrants, Preferred Stock Warrants
and Common Stock Warrants are referred to herein collectively as the "Warrants",
and the Debt Securities, the Junior Subordinated Debt Securities, Preferred
Stock, Common Stock, the Warrants, Stock Purchase Contracts and Stock Purchase
Units are referred to herein collectively as the "Company Securities".
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION PASSED UPON
THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY
IS A CRIMINAL OFFENSE.
ADDITIONAL INFORMATION REGARDING THE OFFERED SECURITIES IS SET FORTH ON THE
INSIDE FRONT COVER.
FOR A DISCUSSION OF CERTAIN RISKS ASSOCIATED WITH AN INVESTMENT IN THE
OFFERED SECURITIES, SEE "GENERAL DESCRIPTION OF SECURITIES AND RISK FACTORS" ON
PAGE 6.
CCCI Capital Trust I, CCCI Capital Trust II and CCCI Capital Trust III
(each, a "CCCI Trust" and collectively, the "CCCI Trusts"), each a statutory
business trust formed under Delaware law, may offer, from time to time,
preferred securities (the "Preferred Securities") with the payment of
distributions and payments on liquidation or redemption of the Preferred
Securities issued by each such CCCI Trust guaranteed on a subordinated basis by
the Company to the extent described herein and in an accompanying prospectus
supplement (the "Guarantees"). The Company will be the owner of the trust
interests represented by common securities (the "Common Securities") to be
issued by each CCCI Trust. Unless indicated otherwise in a prospectus
supplement, each CCCI Trust exists for the sole purpose of issuing its trust
interests and investing the proceeds thereof in Junior Subordinated Debt
Securities. The Company Securities and the Preferred Securities are referred to
herein collectively as the "Offered Securities".
The Offered Securities may be issued in one or more series or issuances and
will be limited to $1,500,000,000 in aggregate public offering price (or its
equivalent, based on the applicable exchange rate, to the extent Debt Securities
or Junior Subordinated Debt Securities are issued for one or more foreign
currencies or currency units). The Offered Securities may be sold for U.S.
dollars, or any foreign currency or currencies or currency units, and the
principal of, any premium on, and any interest on, the Debt Securities or Junior
Subordinated Debt Securities may be payable in U.S. dollars, or any foreign
currency or currencies or currency units.
The Offered Securities may be offered separately or as units with other
Offered Securities, in separate series, in amounts, at prices and on terms to be
determined at or prior to the time of sale. The sale of other securities under
the Registration Statement of which this Prospectus forms a part or under a
Registration Statement to which this Prospectus relates will reduce the amount
of Offered Securities which may be sold hereunder.
The specific terms of the Offered Securities in respect of which this
Prospectus is being delivered are set forth in the accompanying Prospectus
Supplement (the "Prospectus Supplement"), including, where applicable, (i) in
the case of Debt Securities or Junior Subordinated Debt Securities, the specific
designation, aggregate principal amount, ranking as senior or subordinated debt,
authorized denomination, initial offering price, maturity (which may be fixed or
extendible), premium (if any), interest rate (which may be fixed or floating),
time of and method of calculating the payment of interest, if any, the currency
in which principal, premium, if any, and interest, if any, are payable, any
exchangeability, conversion, redemption or sinking fund terms, the right of the
Company, if any, to defer payment of interest on the Junior Subordinated Debt
Securities and the maximum length of such deferral period, put options, if any,
public offering price, and other specific terms; (ii) in the case of Preferred
Stock or Preferred Securities, the designation, number of shares, liquidation
preference per share, initial public offering price, dividend or distribution
rate (or method of calculation thereof), dates on which dividends or
distributions shall be payable and dates from which dividends or distributions
shall accrue, any redemption or sinking fund provisions, any voting rights, any
conversion or exchange provisions, and any other rights, preferences,
privileges, limitations or restrictions relating to the Preferred Stock or
Preferred Securities of a specific series and the terms upon which the proceeds
of the sale of the Preferred Securities will be used to purchase a specific
series of Junior Subordinated Debt Securities of the Company; (iii) in the case
of Common Stock, the number of shares, public offering price and the terms of
the offering and sale thereof; (iv) in the case of Warrants, the number and
terms thereof, the designation and description of the Common Stock, Preferred
Stock, Debt Securities, Junior Subordinated Debt Securities, or Preferred
Securities issuable thereunder, the number of securities issuable upon exercise,
the exercise price, the terms of the offering and sale thereof and, where
applicable, the duration and detachability thereof; (v) in the case of Stock
Purchase Contracts, the designation and number of shares of Common Stock or
Preferred Stock issuable thereunder, the purchase price of the Common Stock or
Preferred Stock, the date or dates on which the Common Stock or Preferred Stock
is required to be purchased by the holders of the Stock Purchase Contracts, any
periodic payments required to be made by the Company to the holders of the Stock
Purchase Contracts or vice versa, and the terms of the offering and sale
thereof; (vi) in the case of Stock Purchase Units, the specific terms of the
Stock Purchase Contracts and any Preferred Stock, Debt Securities, Junior
Subordinated Debt Securities, U.S. Obligations or Preferred Securities securing
the holder's obligation to purchase the Preferred Stock or Common Stock under
the Stock Purchase Contracts, and the terms of the offering and sale thereof;
and (vii) in the case of all Offered Securities, whether such Offered Securities
will be offered separately or as a unit with other Offered Securities. The
Prospectus Supplement will also contain information, where applicable, about
certain federal income tax considerations relating to, and any listing on a
securities exchange of, the Offered Securities covered by the Prospectus
Supplement.
The Offered Securities will be sold directly, through agents, dealers or
underwriters as designated from time to time, or through a combination of such
methods. If any agents of the Company or the CCCI Trusts or any dealers or
underwriters are involved in the sale of the Offered Securities in respect of
which this Prospectus is being delivered, the names of such agents, dealers or
underwriters and any applicable agent's commission, dealer's purchase price or
underwriter's discount will be set forth in or may be calculated from the
Prospectus Supplement. The net proceeds to the Company or the CCCI Trusts from
such sale will be the purchase price less such commission in the case of an
agent, the purchase price in the case of a dealer, or the public offering price
less such discount in the case of an underwriter and less, in each case, other
applicable issuance expenses. See "Plan of Distribution".
---------------------
THE DATE OF THIS PROSPECTUS IS , 1998.
<PAGE> 67
CERTAIN PERSONS PARTICIPATING IN THIS OFFERING MAY ENGAGE IN TRANSACTIONS
THAT STABILIZE, MAINTAIN OR OTHERWISE AFFECT THE PRICE OF THE DEBT SECURITIES,
INCLUDING STABILIZING AND SYNDICATE COVERING TRANSACTIONS. THE UNDERWRITERS MAY
OVER-ALLOT OR EFFECT TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE
OF THE COMMON STOCK OF THE COMPANY AT A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE
PREVAIL IN THE OPEN MARKET. FOR A DESCRIPTION OF THESE ACTIVITIES. SEE "PLAN OF
DISTRIBUTION".
2
<PAGE> 68
AVAILABLE INFORMATION
The Company is subject to the information requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and, in accordance
therewith, files reports, proxy statements and other information with the
Securities and Exchange Commission (the "Commission"). Reports, proxy and
information statements filed by the Company with the Commission pursuant to the
information requirements of the Exchange Act may be inspected and copied at the
public reference facilities maintained by the Commission at 450 Fifth Street,
N.W., Washington, D.C. 20549; and at the following Regional Offices of the
Commission: New York Regional Office, Seven World Trade Center, 13th Floor, New
York, New York 10048; and Chicago Regional Office, Citicorp Center, 500 West
Madison Street, 14th Floor, Chicago, Illinois 60661. Copies of such material may
be obtained from the Public Reference Section of the Commission at 450 Fifth
Street, N.W., Washington, D.C. 20549, at prescribed rates. The Commission also
maintains a site on the World Wide Web at http://www.sec.gov that contains
reports, proxies and information statements and other information regarding
registrants (including the Company) that file electronically. In addition,
reports, proxy statements and other information concerning the Company can be
inspected and copied at the offices of the New York Stock Exchange, Inc.
("NYSE"), 20 Broad Street, New York, New York 10005, on which the Common Stock
of the Company (symbol: "CCU") is listed.
No separate financial statements of the CCCI Trusts have been included or
incorporated by reference herein. Neither the CCCI Trusts nor the Company
considers such financial statements material to holders of Preferred Securities
because (i) all of the voting securities of each CCCI Trust will be owned,
directly or indirectly, by the Company, a reporting company under the Exchange
Act, (ii) no CCCI Trust has independent operations but rather each exists for
the purpose of issuing securities representing undivided beneficial interests in
the assets of such CCCI Trust and investing the proceeds thereof in Junior
Subordinated Debt Securities, and (iii) the obligations of the CCCI Trusts under
the Preferred Securities are fully and unconditionally guaranteed on a
subordinated basis by the Company to the extent set forth herein. See "The CCCI
Trusts" and "Description of Guarantees." Upon the granting of relief by the
Commission pursuant to SAB 53, the Company intends to provide only abbreviated
information concerning the CCCI Trusts in the Company's Exchange Act reports.
The Company and the CCCI Trusts have filed with the Commission a joint
registration statement (the "Registration Statement") under the Securities Act
of 1933, as amended (the "Securities Act"), with respect to the securities
offered hereby. This Prospectus does not contain all the information set forth
in the Registration Statement, certain parts of which are omitted in accordance
with the rules and regulations of the Commission. Reference is made to the
Registration Statement and to the exhibits relating thereto for further
information with respect to the Company, the CCCI Trusts and the securities
offered hereby.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents, heretofore filed by the Company with the
Commission pursuant to the Exchange Act, are hereby incorporated by reference
into this Prospectus and made a part hereof:
1. The Company's Annual Report on Form 10-K for the fiscal year ended
December 31, 1996.
2. The Company's Quarterly Report on Form 10-Q for the quarter ended
March 31, 1997.
3. The Company's Quarterly Report on Form 10-Q for the quarter ended
June 30, 1997.
4. The Company's Quarterly Report on Form 10-Q for the quarter ended
September 30, 1997.
5. The Company's Current Report on Form 8-K dated March 12, 1998.
6. The Company's Current Report on Form 8-K dated December 22, 1997.
7. The Company's Current Report on Form 8-K dated November 3, 1997.
8. The Company's Current Report on Form 8-K date October 14, 1997.
9. The Company's Current Report on Form 8-K dated April 17, 1997.
3
<PAGE> 69
Any documents filed by the Company pursuant to Sections 13(a), 13(c), 14 or
15(d) of the Exchange Act after the date of this Prospectus and prior to the
termination of the Offering of the Offered Securities offered hereby shall be
deemed to be incorporated by reference in this Prospectus and to be a part
hereof from the date of filing of such documents.
Any statement contained in a document incorporated or deemed to be
incorporated by reference herein shall be deemed to be modified or superseded
for purposes of this Prospectus to the extent that a statement contained herein
or in any other subsequently filed document which also is or is deemed to be
incorporated by reference herein modifies or supersedes such statement. Any such
statement so modified or superseded shall not be deemed, except as so modified
or superseded, to constitute a part of this Prospectus. To the extent that any
proxy statement is incorporated by reference herein, such incorporation shall
not include any information contained in such proxy statement which is not,
pursuant to the Commission's rules, deemed to be "filed" with the Commission or
subject to the liabilities of Section 18 of the Exchange Act.
The Company will provide without charge to each person, including any
beneficial owner, to whom a copy of this Prospectus is delivered, upon the
written or oral request of any such person, a copy of any document described
above (other than exhibits, unless such exhibits are specifically incorporated
by reference). Requests for such copies should be directed to Houston Lane,
Clear Channel Communications, Inc., 200 Concord Plaza, Suite 600, San Antonio,
Texas 78216 (telephone: (210) 822-2828).
THE COMPANY
The Company, which began operations in 1972, is a diversified media company
in three primary lines of business: radio, television, and outdoor advertising.
In addition, the Company currently owns a 50% equity interest in the Australian
Radio Network Pty. Ltd., which operates radio stations in Australia; a one-third
equity interest in New Zealand Radio Network which operates radio stations in
New Zealand; a 28.7% non-voting equity interest in Heftel Broadcasting
Corporation (Nasdaq: HBCCA), a Spanish-language broadcaster which operates radio
stations in domestic markets; and a 30% equity interest in American Tower
Corporation, a leading domestic provider of wireless transmission sites.
The radio stations currently owned or programmed by the Company are located
principally in the South, Southeast, Southwest, Northeast and Midwest. These
radio stations employ a wide variety of programming formats, such as
News/Talk/Sports, Country, Adult Contemporary, Urban and Album Rock. The
television stations currently owned or programmed by the Company are located in
the South, Southeast, Northeast and Midwest. These television stations are
typically affiliated with one of the television networks, including the FOX
television network, the UPN television network, the ABC television network, the
NBC television network, or the CBS television network. Additionally, the Company
operates radio networks serving Oklahoma, Texas, Iowa, Kentucky, Virginia,
Alabama, Tennessee, Florida and Pennsylvania. The Company's outdoor advertising
properties are located primarily in the South, Southeast, Midwest, and West.
The Company has its principal executive offices at 200 Concord Plaza, Suite
600, San Antonio, Texas 78216 (telephone: 210-822-2828).
THE CCCI TRUSTS
Each of CCCI Capital Trust I, CCCI Capital Trust II and CCCI Capital Trust
III is a statutory business trust formed under Delaware law pursuant to (i) a
separate Declaration of Trust executed by the Company, as depositor for such
CCCI Trust, and the Trustees (as defined herein) of such trust and (ii) the
filing of a certificate of trust with the Delaware Secretary of State. The
declarations will be amended and restated in their entirety (each as so amended
and restated, a "Declaration") substantially in the form filed as an exhibit to
the Registration Statement of which this Prospectus is a part and will be
qualified as Indentures under the Trust Indenture Act of 1939, as amended (the
"Trust Indenture Act"). Unless an accompanying Prospectus Supplement provides
otherwise, each CCCI Trust exists for the sole purposes of (i) issuing the
Preferred Securities, (ii) investing the gross proceeds of the sale of the
Preferred Securities in a specific series of Junior Subordinated Debt
Securities, and (iii) engaging in only those other activities necessary or
incidental thereto. All of the Common Securities will be owned by the Company.
The Common Securities will rank pari passu,
4
<PAGE> 70
and payments will be made thereon pro rata, with the Preferred Securities,
except that upon the occurrence and continuance of an event of default under the
applicable Declaration, the rights of the holders of the applicable Common
Securities to payment in respect of distributions and payments upon liquidation,
redemption and otherwise will be subordinated to the rights of the holders of
the applicable Preferred Securities. The Company will acquire Common Securities
having an aggregate liquidation amount equal to a minimum of 1% of the total
capital of each CCCI Trust. Each CCCI Trust will have a term of at least 20 but
not more than 50 years, but may terminate earlier as provided in the applicable
Declaration. Each CCCI Trust's business and affairs will be conducted by the
Trustees. The holder of the Common Securities will be entitled to appoint,
remove or replace any of, or increase or reduce the number of, the Trustees of
each CCCI Trust. The duties and obligations of the Trustees shall be governed by
the Declaration of such CCCI Trust. At least one of the Trustees of each CCCI
Trust will be a person who is an employee or officer of or who is affiliated
with the Company (a "Regular Trustee"). One Trustee of each CCCI Trust will be a
financial institution that is not affiliated with the Company, which shall act
as property trustee and as indenture trustee for the purposes of the Trust
Indenture Act, pursuant to the terms set forth in a Prospectus Supplement (the
"Property Trustee"). In addition, unless the Property Trustee maintains a
principal place of business in the State of Delaware and otherwise meets the
requirements of applicable law, one Trustee of each CCCI Trust will be a legal
entity having a principal place of business in, or an individual resident of,
the State of Delaware (the "Delaware Trustee"). The Company will pay all fees
and expenses related to each CCCI Trust and the offering of the Preferred
Securities. Unless otherwise set forth in the Prospectus Supplement, the
Property Trustee will be The Bank of New York, and the Delaware Trustee will be
The Bank of New York (Delaware). The office of the Delaware Trustee in the State
of Delaware is 100 White Clay Center, Newark, Delaware 19711. The principal
place of business of each CCCI Trust is c/o Clear Channel Communications, Inc.,
200 Concord Plaza, Suite 600, San Antonio, Texas 78216 (telephone: (210)
822-2828).
RATIO OF EARNINGS TO COMBINED FIXED CHARGES
AND PREFERRED STOCK DIVIDENDS
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
- --------------------------------
1997 1996 1995 1994 1993
- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C>
2.32 3.63 3.32 5.54 3.81
</TABLE>
The ratio of earnings to combined fixed charges and preferred stock
dividends has been computed on a total enterprise basis. Earnings represent
income from continuing operations before income taxes less equity in
undistributed net income (loss) of unconsolidated affiliates plus fixed charges.
Fixed charges represent interest, amortization of debt discount and expense, and
the estimated interest portion of rental charges. The Company had no Preferred
Stock outstanding and paid no dividends thereon for any period presented.
USE OF PROCEEDS
Unless otherwise specified in the Prospectus Supplement, the net proceeds
from the sale of the Company Securities offered hereby will be used for general
corporate purposes, including repayment of borrowings, working capital, capital
expenditures, stock repurchase programs and acquisitions. Unless otherwise
specified in a Prospectus Supplement, each CCCI Trust will use all proceeds
received from the sale of Preferred Securities to purchase Junior Subordinated
Debt Securities of the Company. Additional information on the use of net
proceeds from the sale of the Offered Securities offered hereby may be set forth
in a Prospectus Supplement relating to such Offered Securities.
5
<PAGE> 71
HOLDING COMPANY STRUCTURE
The Company is a holding company and its assets consist primarily of
investments in its subsidiaries and majority-owned partnerships. The Company's
rights and the rights of its creditors, including holders of Debt Securities or
Junior Subordinated Debt Securities, to participate in the distribution of
assets of any person in which the Company owns an equity interest (including any
subsidiary and majority-owned partnerships) upon such person's liquidation or
reorganization will be subject to prior claims of such person's creditors,
including trade creditors, except to the extent that the Company may itself be a
creditor with recognized claims against such person (in which case the claims of
the Company would still be subject to the prior claims of any secured creditor
or such person and of any holder of indebtedness of such person that is senior
to that held by the Company). Accordingly, the holder of Debt Securities or
Junior Subordinated Debt Securities may be deemed to be effectively subordinated
to such claims.
GENERAL DESCRIPTION OF SECURITIES AND RISK FACTORS
The Company may offer shares of Common Stock, Preferred Stock, Debt
Securities, Junior Subordinated Debt Securities, Warrants, Stock Purchase
Contracts, Stock Purchase Units, or any combination of the foregoing either
individually or as units consisting of one or more Company Securities under this
Prospectus. Each CCCI Trust may offer Preferred Securities under this
Prospectus.
CERTAIN OF THE SECURITIES TO BE OFFERED HEREBY THEMSELVES MAY INVOLVE A
HIGH DEGREE OF RISK. SUCH RISKS WILL BE SET FORTH IN THE PROSPECTUS SUPPLEMENT
RELATING TO SUCH SECURITY. IN ADDITION, CERTAIN RISK FACTORS, IF ANY, RELATING
TO THE COMPANY'S BUSINESS WILL BE SET FORTH IN A PROSPECTUS SUPPLEMENT.
DESCRIPTION OF DEBT SECURITIES
The following description of the terms of the Debt Securities summarizes
certain general terms and provisions of the Debt Securities to which any
Prospectus Supplement may relate. The particular terms of the Debt Securities
and the extent, if any, to which such general provisions may apply to any series
of Debt Securities will be described in the Prospectus Supplement relating to
such series.
Senior Debt Securities may be issued, from time to time, in one or more
series under an Indenture (the "Senior Indenture"), between the Company and The
Bank of New York, as trustee, or such other trustee as shall be named in a
Prospectus Supplement (the "Senior Trustee"). The form of Senior Indenture is
filed as an exhibit to the Registration Statement of which this Prospectus is a
part. Subordinated Debt Securities may be issued, from time to time, in one or
more series under an indenture (the "Subordinated Indenture") between the
Company and The Bank of New York or such other trustee as shall be named in a
Prospectus Supplement (the "Subordinated Trustee"). The form of Subordinated
Indenture is filed as an Exhibit to the Registration Statement of which this
Prospectus is a part. The Senior Indenture and the Subordinated Indenture are
sometimes referred to collectively as the "Indentures," and the Senior Trustee
and the Subordinated Trustee are sometimes referred to collectively as the "Debt
Trustees." None of the Indentures will limit the amount of Debt Securities that
may be issued hereunder, and each Indenture will provide that Debt Securities
may be issued thereunder up to an aggregate principal amount authorized from
time to time by the Company and may be payable in any currency or currency unit
designated by the Company or in amounts determined by reference to an index. The
following statements are subject to the detailed provisions of the Indentures.
Wherever any particular provisions of the Indentures or terms defined therein
are referred to, such provisions and terms are incorporated by reference as a
part of the statements made herein and such statements are qualified in their
entirety by such references, including the definitions therein of certain terms.
Capitalized terms used herein but not defined herein shall have the meanings
ascribed to them in the Indentures.
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<PAGE> 72
GENERAL
The Senior Debt Securities will be unsecured and will rank equally and
ratably with other unsecured and unsubordinated debt of the Company, unless the
Company shall be required to secure the Senior Debt Securities as described
below under " -- Senior Debt Securities." The obligations of the Company
pursuant to any Subordinated Debt Securities will be subordinate in right of
payment to all Senior Indebtedness of the Company with respect to such
Subordinated Debt Securities, and will be described in an accompanying
Prospectus Supplement. Debt Securities will be issued from time to time and
offered on terms determined by market conditions at the time of sale.
The Debt Securities may be issued in one or more series with the same or
various maturities, at par, at a premium, or at a discount. Any Debt Securities
bearing no interest or interest at a rate which at the time of issuance is below
market rates will be sold at a discount (which may be substantial) from their
stated principal amount. Federal income tax consequences and other special
considerations applicable to any such substantially discounted Debt Securities
will be described in the Prospectus Supplement relating thereto.
Reference is made to the Prospectus Supplement for the following terms of
the Debt Securities offered hereby: (i) the designation, aggregate principal
amount and authorized denominations of such Debt Securities; (ii) the percentage
of their principal amount at which such Debt Securities will be issued; (iii)
the date or dates on which the Debt Securities will mature (which may be fixed
or extendible); (iv) the rate or rates (which may be fixed or floating) per
annum at which the Debt Securities will bear interest, if any, or the method of
determining such rate or rates; (v) the date or dates on which any such interest
will be payable, the date or dates on which payment of any such interest will
commence and the Regular Record Dates for such Interest Payment Dates; (vi) the
terms of any mandatory or optional redemption (including any provisions for any
sinking, purchase or other analogous fund) or repayment option; (vii) the
currency, currencies or currency units for which the Debt Securities may be
purchased and the currency, currencies or currency units in which the principal
thereof, any premium thereon and any interest thereon may be payable; (viii) if
the currency, currencies or currency units for which the Debt Securities may be
purchased or in which the principal thereof, any premium thereon and any
interest thereon may be payable is at the election of the Company or the
purchaser, the manner in which such election may be made; (ix) if the amount of
payments on the Debt Securities is determined with reference to an index based
on one or more currencies or currency units, changes in the price of one or more
securities or changes in the price of one or more commodities, the manner in
which such amounts may be determined; (x) the extent to which any of the Debt
Securities will be issuable in temporary or permanent global form, or the manner
in which any interest payable on a temporary or permanent Global Security will
be paid; (xi) the terms and conditions upon which the Debt Securities may be
convertible into or exchanged for Common Stock, Preferred Stock, or indebtedness
or other securities of any kind of the Company; (xii) information with respect
to book-entry procedures, if any; (xiii) a discussion of certain federal income
tax, accounting and other special considerations, procedures and limitations
with respect to the Debt Securities; and (xiv) any other specific terms of the
Debt Securities not inconsistent with the applicable Indenture.
If any of the Debt Securities are sold for one or more foreign currencies
or foreign currency units or if the principal of, premium, if any, or any
interest on any series of Debt Securities is payable in one or more foreign
currencies or foreign currency units, the restrictions, elections, federal
income tax consequences, specific terms and other information with respect to
such issue of Debt Securities and such currencies or currency units will be set
forth in the Prospectus Supplement relating thereto.
Unless otherwise specified in the Prospectus Supplement, the principal of,
any premium on, and any interest on the Debt Securities will be payable, and the
Debt Securities will be transferable, at the Corporate Trust Office of the
applicable Debt Trustee in New York, New York, provided that payment of
interest, if any, may be made at the option of the Company by check mailed on or
before the payment date, first class mail, to the address of the person entitled
thereto as it appears on the registry books of the Company or its agent.
Unless otherwise specified in the Prospectus Supplement, the Debt
Securities will be issued only in fully registered form and in denominations of
$1,000 and any integral multiple thereof. No service charge will be made for any
transfer or exchange of any Debt Securities, but the Company may, except in
certain specified
7
<PAGE> 73
cases not involving any transfer, require payment of a sum sufficient to cover
any tax or other governmental charge payable in connection therewith. Unless
otherwise set forth in the Prospectus Supplement, interest on outstanding Debt
Securities will be paid to holders of record on the date which is 15 days
immediately prior to the date such interest is to be paid.
The Company's rights and the rights of its creditors (including holders of
Debt Securities) to participate in any distribution of assets of any subsidiary
of the Company upon its liquidation or reorganization or otherwise is
necessarily subject to the prior claims of creditors of the subsidiary, except
to the extent that claims of the Company itself as a creditor of the subsidiary
may be recognized. The operations of the Company are conducted through its
subsidiaries and, therefore, the Company is dependent upon the earnings and cash
flow of its subsidiaries to meet its obligations, including obligations under
the Debt Securities. The Debt Securities will be effectively subordinated to all
indebtedness of the Company's subsidiaries.
GLOBAL SECURITIES
The Debt Securities of a series may be issued in whole or in part in the
form of one or more Global Securities that will be deposited with, or on behalf
of, a depositary (the "Depositary") identified in the Prospectus Supplement
relating to such series. Global Securities may be issued only in fully
registered form and in either temporary or permanent form. Unless and until it
is exchanged in whole or in part for the individual Debt Securities represented
thereby, a Global Security may not be transferred except as a whole by the
Depositary for such Global Security to a nominee of such Depositary or by a
nominee of such Depositary to such Depositary or another nominee of such
Depositary or by the Depositary or any nominee of such Depositary to a successor
Depositary or any nominee of such successor.
The specific terms of the depositary arrangement with respect to a series
of Debt Securities will be described in the Prospectus Supplement relating to
such series. The Company anticipates that the following provisions will
generally apply to depositary arrangements.
Upon the issuance of a Global Security, the Depositary for such Global
Security or its nominee will credit, on its book entry registration and transfer
system, the respective principal amounts of the individual Debt Securities
represented by such Global Security to the accounts of persons that have
accounts with such Depositary. Such accounts shall be designated by the dealers,
underwriters or agents with respect to such Debt Securities or by the Company if
such Debt Securities are offered and sold directly by the Company. Ownership of
beneficial interests in a Global Security will be limited to persons that have
accounts with the applicable Depositary ("participants") or persons that may
hold interests through participants. Ownership of beneficial interests in such
Global Security will be shown on, and the transfer of that ownership will be
effected only through, records maintained by the applicable Depositary or its
nominee (with respect to interests of participants) and the records of
participants (with respect to interests of persons other than participants). The
laws of some states require that certain purchasers of securities take physical
delivery of such securities in definitive form. Such limits and such laws may
impair the ability to transfer beneficial interests in a Global Security.
So long as the Depositary for a Global Security, or its nominee, is the
registered owner of such Global Security, such Depositary or such nominee, as
the case may be, will be considered the sole owner or holder of the Debt
Securities represented by such Global Security for all purposes under the
applicable Indenture. Except as provided below, owners of beneficial interests
in a Global Security will not be entitled to have any of the individual Debt
Securities of the series represented by such Global Security registered in their
names, will not receive or be entitled to receive physical delivery of any such
Debt Securities of such series in definitive form and will not be considered the
owners or holders thereof under the applicable Indenture governing such Debt
Securities.
Payments of principal of, any premium on, and any interest on, individual
Debt Securities represented by a Global Security registered in the name of a
Depositary or its nominee will be made to the Depositary or its nominee, as the
case may be, as the registered owner of the Global Security representing such
Debt Securities. Neither the Company, the applicable Debt Trustee for such Debt
Securities, any Paying Agent, nor the Security Registrar for such Debt
Securities will have any responsibility or liability for any aspect of the
records
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relating to or payments made on account of beneficial ownership interests of the
Global Security for such Debt Securities or for maintaining, supervising or
reviewing any records relating to such beneficial ownership interests.
The Company expects that the Depositary for a series of Debt Securities or
its nominee, upon receipt of any payment of principal, premium or interest in
respect of a permanent Global Security representing any of such Debt Securities,
immediately will credit participants' accounts with payments in amounts
proportionate to their respective beneficial interests in the principal amount
of such Global Security for such Debt Securities as shown on the records of such
Depositary or its nominee. The Company also expects that payments by
participants to owners of beneficial interests in such Global Security held
through such participants will be governed by standing instructions and
customary practices, as is now the case with securities held for the accounts of
customers in bearer form or registered in "street name". Such payments will be
the responsibility of such participants.
If the Depositary for a series of Debt Securities is at any time unwilling,
unable or ineligible to continue as depositary and a successor depositary is not
appointed by the Company within 90 days, the Company will issue individual Debt
Securities of such series in exchange for the Global Security representing such
series of Debt Securities. In addition, the Company may at any time and in its
sole discretion, subject to any limitations described in the Prospectus
Supplement relating to such Debt Securities, determine not to have any Debt
Securities of a series represented by one or more Global Securities and, in such
event, will issue individual Debt Securities of such series in exchange for the
Global Security or Securities representing such series of Debt Securities.
Further, if the Company so specifies with respect to the Debt Securities of a
series, an owner of a beneficial interest in a Global Security representing Debt
Securities of such series may, on terms acceptable to the Company, the
applicable Debt Trustee and the Depositary for such Global Security, receive
individual Debt Securities of such series in exchange for such beneficial
interests, subject to any limitations described in the Prospectus Supplement
relating to such Debt Securities. In any such instance, an owner of a beneficial
interest in a Global Security will be entitled to physical delivery of
individual Debt Securities of the series represented by such Global Security
equal in principal amount to such beneficial interest and to have such Debt
Securities registered in its name. Individual Debt Securities of such series so
issued will be issued in denominations, unless otherwise specified by the
Company, of $1,000 and integral multiples thereof.
CONSOLIDATION, MERGER, CONVEYANCE OR TRANSFER
Each Indenture provides that the Company may not consolidate with or merge
into any other corporation or convey or transfer its properties and assets
substantially as an entirety to any person, unless (i) the successor corporation
shall be a corporation organized and existing under the laws of the United
States or any State thereof or the District of Columbia, and shall expressly
assume by a supplemental indenture the due and punctual payment of the principal
of, any premium on, and any interest on, all the outstanding Debt Securities and
the performance of every covenant in the applicable Indenture on the part of the
Company to be performed or observed; (ii) immediately after giving effect to
such transaction, no Event of Default, and no event which, after notice or lapse
of time or both, would become an Event of Default, shall have happened and be
continuing; and (iii) the Company shall have delivered to the applicable Debt
Trustee an Officers' Certificate and an Opinion of Counsel, each stating that
such consolidation, merger, conveyance or transfer and such supplemental
indenture comply with the foregoing provisions relating to such transaction. In
case of any such consolidation, merger, conveyance or transfer, such successor
corporation will succeed to and be substituted for the Company as obligor on the
Debt Securities, with the same effect as if it had been named in the applicable
Indenture as the Company. Other than the restrictions on Mortgages described
below, the Indentures and the Debt Securities do not contain any covenants or
other provisions designed to protect holders of Debt Securities in the event of
a highly leveraged transaction involving the Company or any Subsidiary.
EVENTS OF DEFAULT; WAIVER AND NOTICE THEREOF; DEBT SECURITIES IN FOREIGN
CURRENCIES
As to any series of Debt Securities, an Event of Default is defined in each
Indenture as (i) default for 30 days in payment of any interest on the Debt
Securities of such series, or, in the case of the Subordinated
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Debt Indenture, for a period of 90 days; (ii) default in payment of principal of
or any premium on the Debt Securities of such series at maturity; (iii) default
in payment of any sinking or purchase fund or analogous obligation, if any, on
the Debt Securities of such series; (iv) default by the Company in the
performance of any other covenant or warranty contained in the applicable
Indenture for the benefit of such series which shall not have been remedied for
a period of 90 days after notice is given as specified in the applicable
Indenture; and (v) certain events of bankruptcy, insolvency and reorganization
of the Company.
A default under other indebtedness of the Company will not be a default
under the Indentures and a default under one series of Debt Securities will not
necessarily be a default under another series.
Each Indenture provides that (i) if an Event of Default described in clause
(i), (ii), (iii) or (iv) above (if the Event of Default under clause (iv) is
with respect to less than all series of Debt Securities then outstanding) shall
have occurred and be continuing with respect to any series, either the
applicable Debt Trustee or the holders of not less than 25% in aggregate
principal amount of the Debt Securities of such series then outstanding (each
such series acting as a separate class) may declare the principal (or, in the
case of Original Issue Discount Securities, the portion thereof specified in the
terms thereof) of all outstanding Debt Securities of such series and the
interest accrued thereon, if any, to be due and payable immediately and (ii) if
an Event of Default described in clause (iv) or (v) above (if the Event of
Default under clause (iv) is with respect to all series of Debt Securities then
outstanding) shall have occurred and be continuing, either the applicable Debt
Trustee or the holders of at least 25% in aggregate principal amount of all Debt
Securities then outstanding (treated as one class) may declare the principal
(or, in the case of Original Issue Discount Securities, the portion thereof
specified in the terms thereof) of all Debt Securities then outstanding and the
interest accrued thereon, if any, to be due and payable immediately, but upon
certain conditions such declarations may be annulled and past defaults (except
for defaults in the payment of principal of, any premium on, or any interest on,
such Debt Securities and in compliance with certain covenants) may be waived by
the holders of a majority in aggregate principal amount of the Debt Securities
of such series then outstanding.
Under each Indenture the applicable Debt Trustee must give to the holders
of each series of Debt Securities notice of all uncured defaults known to it
with respect to such series within 90 days after such a default occurs (the term
"default" to include the events specified above without notice or grace periods,
except that in the case of any default of the type described in clause (iv)
above, no such notice shall be given until at least 90 days after the occurrence
thereof); provided that, except in the case of default in the payment of
principal of, any premium on, or any interest on, any of the Debt Securities, or
default in the payment of any sinking or purchase fund installment or analogous
obligations, the applicable Debt Trustee shall be protected in withholding such
notice if it in good faith determines that the withholding of such notice is in
the interests of the holders of the Debt Securities of such series.
No holder of any Debt Securities of any series may institute any action
under either Indenture unless (i) such holder shall have given the Debt Trustee
thereunder written notice of a continuing Event of Default with respect to such
series, (ii) the holders of not less than 25% in aggregate principal amount of
the Debt Securities of such series then outstanding shall have requested the
Debt Trustee thereunder to institute proceedings in respect of such Event of
Default, (iii) such holder or holders shall have offered the Debt Trustee
thereunder such reasonable indemnity as such Debt Trustee may require, (iv) the
Debt Trustee thereunder shall have failed to institute an action for 60 days
thereafter and (v) no inconsistent direction shall have been given to the Debt
Trustee thereunder during such 60-day period by the holders of a majority in
aggregate principal amount of Debt Securities of such series then outstanding.
The holders of a majority in aggregate principal amount of the Debt
Securities of any series affected and then outstanding will have the right,
subject to certain limitations, to direct the time, method and place of
conducting any proceeding for any remedy available to the applicable Debt
Trustee or exercising any trust or power conferred on such Debt Trustee with
respect to such series of Debt Securities. Each Indenture provides that, in case
an Event of Default shall occur and be continuing, the Debt Trustee thereunder,
in exercising its rights and powers under such Indenture, will be required to
use the degree of care of a prudent person in the conduct of such person's own
affairs. Each Indenture further provides that the Debt Trustee thereunder shall
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not be required to expend or risk its own funds or otherwise incur any financial
liability in the performance of any of its duties under such Indenture unless it
has reasonable grounds for believing that repayment of such funds or adequate
indemnity against such risk or liability is reasonably assured to it.
The Company must furnish to the Debt Trustees within 120 days after the end
of each fiscal year a statement signed by one of certain officers of the Company
to the effect that a review of the activities of the Company during such year
and of its performance under the applicable Indenture and the terms of the Debt
Securities has been made, and, to the best of the knowledge of the signatories
based on such review, the Company has complied with all conditions and covenants
of such Indenture through such year or, if the Company is in default, specifying
such default.
If any Debt Securities are denominated in a coin or currency other than
that of the United States, then for the purposes of determining whether the
holders of the requisite principal amount of Debt Securities have taken any
action as herein described, the principal amount of such Debt Securities shall
be deemed to be that amount of United States dollars that could be obtained for
such principal amount on the basis of the spot rate of exchange into United
States dollars for the currency in which such Debt Securities are denominated
(as evidenced to the applicable Debt Trustee by an Officers' Certificate) as of
the date the taking of such action by the holders of such requisite principal
amount is evidenced to the applicable Debt Trustee as provided in the respective
Indenture.
If any Debt Securities are Original Issue Discount Securities, then for the
purposes of determining whether the holders of the requisite principal amount of
Debt Securities have taken any action herein described, the principal amount of
such Debt Securities shall be deemed to be the portion of such principal amount
that would be due and payable at the time of the taking of such action upon a
declaration of acceleration of maturity thereof.
MODIFICATION OF THE INDENTURES
The Indentures provide that the Company and the applicable Debt Trustee
may, without the consent of any holders of Debt Securities, enter into
supplemental indentures for the purposes, among other things, of adding to the
Company's covenants, adding additional Events of Default, establishing the form
or terms of any series of Debt Securities or curing ambiguities or
inconsistencies in such Indenture or making other provisions.
With certain exceptions, the applicable Indenture or the rights of the
holders of the Debt Securities may be modified by the Company and the applicable
Debt Trustee with the consent of the holders of a majority in aggregate
principal amount of the Debt Securities of each series affected by such
modification then outstanding, but no such modification may be made without the
consent of the holder of each outstanding Debt Security affected thereby which
would (i) change the maturity of any payment of principal of, or any premium on,
or any installment of interest on any Debt Security, or reduce the principal
amount thereof or the interest or any premium thereon, or change the method of
computing the amount of principal thereof or interest thereon on any date or
change any place of payment where, or the coin or currency in which, any Debt
Security or any premium or interest thereon is payable, or impair the right to
institute suit for the enforcement of any such payment on or after the maturity
thereof (or, in the case of redemption or repayment, on or after the redemption
date or the repayment date, as the case may be), (ii) reduce the percentage in
principal amount of the outstanding Debt Securities of any series, the consent
of whose holders is required for any such modification, or the consent of whose
holders is required for any waiver of compliance with certain provisions of the
applicable Indenture or certain defaults thereunder and their consequences
provided for in such Indenture, or (iii) modify any of the provisions of certain
Sections of the applicable Indenture, including the provisions summarized in
this paragraph, except to increase any such percentage or to provide that
certain other provisions of such Indenture cannot be modified or waived without
the consent of the holder of each outstanding Debt Security affected thereby.
SATISFACTION AND DISCHARGE OF THE INDENTURES; DEFEASANCE
The Indentures shall generally cease to be of any further effect with
respect to a series of Debt Securities if (i) the Company has delivered to the
applicable Debt Trustee for cancellation all Debt Securities of such
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series (with certain limited exceptions) or (ii) all Debt Securities of such
series not theretofore delivered to the applicable Debt Trustee for cancellation
shall have become due and payable, or are by their terms to become due and
payable within one year or are to be called for redemption within one year, and
the Company shall have deposited with the applicable Debt Trustee as trust funds
the entire amount sufficient (in the opinion of a nationally recognized firm of
independent public accountants expressed in a written certification thereof
delivered to the applicable Debt Trustee) without consideration of any
reinvestment and after payment of all taxes or other charges and assessments in
respect thereof payable by the applicable Debt Trustee to pay at maturity or
upon redemption all such Debt Securities, no default with respect to the Debt
Securities has occurred and is continuing on the date of such deposit, such
deposit does not result in a breach or violation of, or constitute a default
under, the applicable Indenture or any other agreement or instrument to which
the Company is a party and the Company delivered an officers' certificate and an
opinion of counsel each stating that such conditions have been complied with
(and if, in either case, the Company shall also pay or cause to be paid all
other sums payable under the applicable Indenture by the Company).
In addition, the Company shall have a "legal defeasance option" (pursuant
to which it may terminate, with respect to the Debt Securities of a particular
series, all of its obligations under such Debt Securities and the applicable
Indenture with respect to such Debt Securities) and a "covenant defeasance
option" (pursuant to which it may terminate, with respect to the Debt Securities
of a particular series, its obligations with respect to such Debt Securities
under certain specified covenants contained in the applicable Indenture). If the
Company exercises its legal defeasance option with respect to a series of Debt
Securities, payment of such Debt Securities may not be accelerated because of an
Event of Default. If the Company exercises its covenant defeasance option with
respect to a series of Debt Securities, payment of such Debt Securities may not
be accelerated because of an Event of Default related to the specified
covenants.
The Company may exercise its legal defeasance option or its covenant
defeasance option with respect to the Debt Securities of a series only if (i)
the Company irrevocably deposits in trust with the applicable Debt Trustee cash
or U.S. Government Obligations (as defined in the applicable Indenture) for the
payment of principal, premium, if any, and interest with respect to such Debt
Securities to maturity or redemption, as the case may be, (ii) the Company
delivers to the applicable Debt Trustee a certificate from a nationally
recognized firm of independent public accountants expressing their opinion that
the payments of principal and interest when due and without reinvestment on the
deposited U.S. Government Obligations plus any deposited money without
investment will provide cash at such times and in such amounts as will be
sufficient to pay the principal, premium, if any, and interest when due with
respect to all the Debt Securities of such series to maturity or redemption, as
the case may be, (iii) 91 days pass after the deposit is made and during the
91-day period no default described in clause (v) under "-- Events of Default,
Waiver and Notice Thereof; Debt Securities in Foreign Currencies" above with
respect to the Company occurs that is continuing at the end of such period, (iv)
no Default has occurred and is continuing on the date of such deposit and after
giving effect thereto, (v) the deposit does not constitute a default under any
other agreement binding on the Company, (vi) the Company delivers to the
applicable Debt Trustee an opinion of counsel to the effect that the trust
resulting from the deposit does not constitute, or is qualified as, a regulated
investment company under the Investment Company Act of 1940, (vii) the Company
shall have delivered to the applicable Debt Trustee an opinion of counsel
addressing certain federal income tax matters relating to the defeasance, and
(viii) the Company delivers to the applicable Debt Trustee an officers'
certificate and an opinion of counsel, each stating that all conditions
precedent to the defeasance and discharge of the Debt Securities of such series
as contemplated by the applicable Indenture have been complied with.
The applicable Debt Trustee shall hold in trust cash or U.S. Government
Obligations deposited with it as described above and shall apply the deposited
cash and the proceeds from deposited U.S. Government Obligations to the payment
of principal, premium, if any, and interest with respect to the Debt Securities
of the defeased series.
CONCERNING THE DEBT TRUSTEES
The Debt Trustee for the Senior Debt Securities and the Debt Trustee for
the Subordinated Debt Securities will be identified in the relevant Prospectus
Supplement. In certain instances, the Company or the
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holders of a majority of the then outstanding principal amount of the Debt
Securities issued under an indenture may remove the Debt Trustee and appoint a
successor Debt Trustee. The Debt Trustee may become the owner or pledgee of any
of the Debt Securities with the same rights, subject to certain conflict of
interest restrictions, it would have if it were not the Debt Trustee. The Debt
Trustee and any successor trustee must be a corporation organized and doing
business as a commercial bank or trust company under the laws of the United
States or of any state thereof, authorized under such laws to exercise corporate
trust powers, having a combined capital and surplus of at least $50,000,000 and
subject to examination by federal or state authority. From time to time and
subject to applicable law relating to conflicts of interest, the Debt Trustee
may also serve as trustee under other indentures relating to Debt Securities
issued by the Company or affiliated companies and may engage in commercial
transactions with the Company and affiliated companies. The initial Debt Trustee
under each Indenture is The Bank of New York, who currently serves as the
transfer agent and registrar for the Common Stock and is a lender to the Company
under the Company's Amended and Restated Credit Agreement dated April 10, 1997.
SENIOR DEBT SECURITIES
In addition to the provisions previously described herein and applicable to
all Debt Securities, the following description of the Senior Debt Securities
summarizes certain general terms and provisions of the Senior Debt Securities to
which any Prospectus Supplement may relate. The particular terms of the Senior
Debt Securities offered by any Prospectus Supplement and the extent, if any, to
which such general provisions may apply to any series of Senior Debt Securities
will be described in the Prospectus Supplement relating thereto.
Ranking of Senior Debt Securities
Unless otherwise specified in a Prospectus Supplement for a particular
series of Debt Securities, all series of Senior Debt Securities will be senior
indebtedness of the Company and will be direct, unsecured obligations of the
Company, ranking on a parity with all other unsecured and unsubordinated
indebtedness of the Company. The Company is a holding company and the Debt
Securities will be effectively subordinated to all existing and future
liabilities, including indebtedness, of the Company's subsidiaries. See "Holding
Company Structure."
Covenants of the Company
The Senior Indenture contains the covenants summarized below, which will be
applicable (unless waived or amended) so long as any of the Senior Debt
Securities are outstanding, unless stated otherwise in the Prospectus
Supplement.
Limitation on Mortgages. The Company will not, nor will it permit any
Restricted Subsidiary to, create, assume, incur or suffer to exist (i) any
Mortgage upon any stock or indebtedness of any Restricted Subsidiary,
whether owned on the date of the Senior Indenture or thereafter acquired,
to secure any Debt of the Company or any other person (other than the
Senior Debt Securities), or (ii) any Mortgage upon any Principal Property,
whether owned or leased on the date of the Senior Indenture, or thereafter
acquired, to secure any Debt of the Company or any other person (other than
the Senior Debt Securities), without in any such case making effective
provision whereby all the outstanding Senior Debt Securities shall be
directly secured equally and ratably with such Debt. There will be excluded
from this restriction any Mortgage upon stock or indebtedness of a
corporation existing at the time such corporation becomes a Subsidiary or
at the time stock or indebtedness of a Subsidiary is acquired and any
extension, renewal or replacement of any such Mortgage; provided, however,
that the principal amount of Debt secured thereby shall not exceed the
principal amount of Debt so secured at the time of such extension, renewal
or replacement; and provided further, that such Mortgage shall be limited
to all or such part of the stock or indebtedness which secured the Mortgage
so extended, renewed or replaced.
There will be excluded from the restriction referred to in the next
preceding paragraph the following Mortgages (the Mortgages set forth in the
following clauses (i) through (viii) the "Permitted
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Mortgages"): (i) any Mortgage upon property owned or leased by a
corporation existing at the time such corporation becomes a Restricted
Subsidiary, (ii) any Mortgage upon property existing at the time of the
acquisition thereof or to secure payment of any part of the purchase price
thereof or any Debt incurred to finance the purchase thereof, (iii) any
Mortgage upon property to secure any part of the cost of development,
construction, alteration, repair or improvement of such property, or Debt
incurred to finance such cost, (iv) any Mortgage securing Debt of a
Restricted Subsidiary owing to the Company or to another Restricted
Subsidiary, (v) any Mortgage existing on the date of the Senior Indenture,
(vi) any Mortgage on property of the Company or a Restricted Subsidiary in
favor of the United States of America or any State or political subdivision
thereof, or in favor of any other country or any political subdivision
thereof, to secure payment pursuant to any contract or statute or to secure
any indebtedness incurred for the purpose of financing all or part of the
purchase price or the cost of construction or improvement of the property
subject to such Mortgage, (vii) any Mortgage on any property subsequently
acquired by the Company or any Restricted Subsidiary, contemporaneously
with such acquisition or within 120 days thereafter, to secure or provide
for the payment of any part of the purchase price of such property, or any
Mortgage assumed by the Company or any Restricted Subsidiary upon any
property subsequently acquired by the Company or any Restricted Subsidiary
which were existing at the time of such acquisition, provided that the
amount of any Indebtedness secured by any such Mortgage created or assumed
does not exceed the cost to the Company or Restricted Subsidiary, as the
case may be, of the property covered by such Mortgage, and (viii) any
extension, renewal or replacement, in whole or in part, of any Mortgage
referred to in the foregoing clauses (i) through (vii); provided, however,
that the principal amount of Debt secured thereby shall not exceed the
principal amount of Debt so secured at the time of such extension, renewal
or replacement; and provided, further, that such Mortgage shall be limited
to all or such part of the property which secured the Mortgage so extended,
renewed or replaced.
Notwithstanding the foregoing, the Company may, and may permit any
Restricted Subsidiary to, create, assume, incur or suffer to exist any
Mortgage upon any Principal Property without equally and ratably securing
the Senior Debt Securities if the aggregate amount of all Debt then
outstanding secured by such Mortgage and all similar Mortgages does not
exceed 15% of the total consolidated shareholders' equity (including
Preferred Stock) of the Company as shown on the audited consolidated
balance sheet contained in the latest annual report to shareholders of the
Company; provided that Debt secured by Permitted Mortgages shall not be
included in the amount of such secured Debt.
Sale and Leaseback Transactions. The Company will not, nor will it
permit any Restricted Subsidiary to, enter into any arrangement with any
person providing for the leasing by the Company or a Restricted Subsidiary
as lessee of any Principal Property (except for temporary leases for a
term, including renewals, of not more than three years), which property has
been or is to be sold or transferred by the Company or such Restricted
Subsidiary to such person (herein referred to as a "Sale-Leaseback
Transaction"), unless (i) such Sale-Leaseback Transaction occurs within 120
days from the date of acquisition of such Principal Property or the date of
the completion of construction or commencement of full operations on such
Principal Property, whichever is later, or (ii) the Company, within 120
days after such Sale-Leaseback Transaction, applies or causes to be applied
to the retirement of Funded Debt of the Company or any Subsidiary (other
than Funded Debt of the Company which by its terms or the terms of the
instrument pursuant to which it was issued is subordinate in right of
payment to the Senior Debt Securities) an amount not less than the net
proceeds of the sale of such Principal Property. Notwithstanding the
foregoing provisions, the Company may, and may permit any Restricted
Subsidiary to, effect any Sale-Leaseback Transaction involving any
Principal Property, provided that the net sale proceeds from such
Sale-Leaseback Transaction, together with all Debt secured by Mortgages
other than Permitted Mortgages, does not exceed 15% of the total
consolidated shareholders' equity of the Company as shown on the audited
consolidated balance sheet contained in the latest annual report to
shareholders of the Company.
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Definitions
For the purposes of the description of the Senior Debt Securities:
"Debt" means indebtedness for money borrowed.
"Funded Debt" of any person means all indebtedness for borrowed money
created, incurred, assumed or guaranteed in any manner by such person, and all
indebtedness, contingent or otherwise, incurred or assumed by such person in
connection with the acquisition of any business, property or asset, which in
each case matures more than one year after, or which by its terms is renewable
or extendible or payable out of the proceeds of similar indebtedness incurred
pursuant to the terms of any revolving credit agreement or any similar agreement
at the option of such person for a period ending more than one year after the
date as of which Funded Debt is being determined; provided, however, that Funded
Debt shall not include (i) any indebtedness for the payment, redemption or
satisfaction of which money (or evidences of indebtedness, if permitted under
the instrument creating or evidencing such indebtedness) in the necessary amount
shall have been irrevocably deposited in trust with a trustee or proper
depository either on or before the maturity or redemption date thereof or (ii)
any indebtedness of such person to any of its Subsidiaries or of any Subsidiary
to such person or any other Subsidiary or (iii) any indebtedness incurred in
connection with the financing of operating, construction or acquisition
projects, provided that the recourse for such indebtedness is limited to the
assets of such projects.
"Mortgage" means any mortgage, pledge, lien, encumbrance, charge or
security interest of any kind.
"Principal Property" means any radio broadcasting, television broadcasting
or outdoor advertising property located in the United States owned or leased by
the Company or any subsidiary, unless, in the opinion of the Board of Directors
of the Company, any of such properties are not in the aggregate of material
importance to the total business conducted by the Company and its Subsidiaries
as an entirety.
"Restricted Subsidiary" means each Subsidiary as of the date of the
Indenture and each Subsidiary thereafter created or acquired, unless expressly
excluded by resolution of the Board of Directors of the Company before, or
within 120 days following, such creation or acquisition.
"Subsidiary", when used with respect to the Company, means any corporation
of which a majority of the outstanding voting stock is owned, directly or
indirectly, by the Company or by one or more other Subsidiaries, or both.
SUBORDINATED DEBT SECURITIES
In addition to the provisions previously described herein and applicable to
all Debt Securities, the following description of the Subordinated Debt
Securities summarizes certain general terms and provisions of the Subordinated
Debt Securities to which any Prospectus Supplement may relate. The particular
terms of the Subordinated Debt Securities offered by any Prospectus Supplement
and the extent, if any, to which such general provisions may apply to any series
of Subordinated Debt Securities will be described in the Prospectus Supplement
relating thereto.
Ranking of Subordinated Debt Securities
The Subordinated Debt Securities will be subordinated in right of payment
to certain other indebtedness of the Company to the extent set forth in the
applicable Prospectus Supplement.
The payment of the principal of, premium, if any, and interest on the
Subordinated Debt Securities will be subordinated in right of payment to the
prior payment in full of all Senior Indebtedness of the Company and pari passu
with the Company's trade creditors. No payment on account of principal of,
premium, if any, or interest on the Subordinated Debt Securities and no
acquisition of, or payment on account of any sinking fund for, the Subordinated
Debt Securities may be made unless full payment of amounts then due for
principal, premium, if any, and interest then due on all Senior Indebtedness by
reason of the maturity thereof (by lapse of time, acceleration or otherwise) has
been made or duly provided for in cash or in a manner satisfactory to the
holders of such Senior Indebtedness. In addition, the Subordinated Indenture
provides that if a default has
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occurred giving the holders of such Senior Indebtedness the right to accelerate
the maturity thereof, or an event has occurred which, with the giving of notice,
or lapse of time, or both, would constitute such an event of
default, then unless and until such event shall have been cured or waived or
shall have ceased to exist, no payment on account of principal, premium, if any,
or interest on the Subordinated Debt Securities and no acquisition of, or
payment on account of a sinking fund for, the Subordinated Debt Securities may
be made. The Company shall give prompt written notice to the Subordinated
Trustee of any default under any Senior Indebtedness or under any agreement
pursuant to which Senior Indebtedness may have been issued. The Subordinated
Indenture provisions described in this paragraph, however, do not prevent the
Company from making a sinking fund payment with Subordinated Debt Securities
acquired prior to the maturity of Senior Indebtedness or, in the case of
default, prior to such default and notice thereof. Upon any distribution of its
assets in connection with any dissolution, liquidation or reorganization of the
Company, all Senior Indebtedness must be paid in full before the holders of the
Subordinated Debt Securities are entitled to any payments whatsoever. As a
result of these subordination provisions, in the event of the Company's
insolvency, holders of the Subordinated Debt Securities may recover ratably less
than senior creditors of the Company.
For purposes of the description of the Subordinated Debt Securities, the
term "Senior Indebtedness" means the principal of and premium, if any, and
interest on the following, whether outstanding on the date of execution of the
Subordinated Indenture or thereafter incurred or created (i) indebtedness of the
Company for money borrowed by the Company (including purchase money obligations
with an original maturity in excess of one year) or evidenced by securities
(other than the Subordinated Debt Securities or Junior Subordinated Debt
Securities), notes, bankers' acceptances or other corporate debt securities or
similar instruments issued by the Company; (ii) obligations with respect to
letters of credit; (iii) indebtedness of the Company constituting a guarantee of
indebtedness of others of the type referred to in the preceding clauses (i) and
(ii); or (iv) renewals, extensions or refundings of any of the indebtedness
referred to in the preceding clauses (i), (ii) and (iii) unless, in the case of
any particular indebtedness, renewal, extension or refunding, under the express
provisions of the instrument creating or evidencing the same, or pursuant to
which the same is outstanding, such indebtedness or such renewal, extension or
refunding thereof is not superior in right of payment to the Subordinated Debt
Securities.
DESCRIPTION OF JUNIOR SUBORDINATED DEBT SECURITIES
The following description of the terms of the Junior Subordinated Debt
Securities summarizes certain general terms and provisions of the Junior
Subordinated Debt Securities to which any Prospectus Supplement may relate. The
particular terms of the Junior Subordinated Debt Securities offered by any
Prospectus Supplement and the extent, if any, to which such general provisions
may apply to any series of Junior Subordinated Debt Securities will be described
in the Prospectus Supplement relating thereto.
Junior Subordinated Debt Securities may be issued from time to time in one
or more series under an Indenture (the "Junior Subordinated Indenture") between
the Company and The Bank of New York or such other trustee as may be named in a
Prospectus Supplement (the "Junior Subordinated Indenture Trustee"). The form of
Junior Subordinated Indenture has been filed as an exhibit to the Registration
Statement of which this Prospectus forms a part. The following description
summarizes the material terms of the Junior Subordinated Indenture and is
qualified in its entirety by reference to the Junior Subordinated Indenture and
the Trust Indenture Act. Whenever particular provisions or defined terms in the
Junior Subordinated Indenture are referred to herein, such provisions or defined
terms are incorporated by reference herein.
GENERAL
The Junior Subordinated Debt Securities will be unsecured, junior
subordinated obligations of the Company. The Junior Subordinated Indenture does
not limit the amount of additional indebtedness the Company or any of its
subsidiaries may incur. Since the Company is a holding company, the Company's
rights and the rights of its creditors, including the holders of Junior
Subordinated Debt Securities, to participate in the assets of any subsidiary
upon the latter's liquidation or recapitalization will be subject to the prior
claims of
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the subsidiary's creditors, except to the extent that the Company may itself be
a creditor with recognized claims against the subsidiary.
The Junior Subordinated Indenture does not limit the aggregate principal
amount of indebtedness which may be issued thereunder and provides that Junior
Subordinated Debt Securities may be issued thereunder from time to time in one
or more series. The Junior Subordinated Debt Securities are issuable in one or
more series pursuant to a board resolution or an indenture supplemental to the
Junior Subordinated Indenture.
In the event Junior Subordinated Debt Securities are issued to a CCCI Trust
or a Trustee of such CCCI Trust in connection with the issuance of Preferred
Securities by such CCCI Trust, such Junior Subordinated Debt Securities
subsequently may be distributed pro rata to the holders of such Preferred
Securities in connection with the dissolution of such CCCI Trust upon the
occurrence of certain events described in the applicable Prospectus Supplement.
Only one series of Junior Subordinated Debt Securities will be issued to a CCCI
Trust or a Trustee of such CCCI Trust in connection with the issuance of
Preferred Securities by such CCCI Trust.
Reference is made to the Prospectus Supplement for the following terms of
the series of Junior Subordinated Debt Securities being offered hereby (to the
extent such terms are applicable to the Junior Subordinated Debt Securities):
(i) the specific designation of such Junior Subordinated Debt Securities,
aggregate principal amount and purchase price; (ii) any limit on the aggregate
principal amount of such Junior Subordinated Debt Securities; (iii) the date or
dates on which the principal of such Junior Subordinated Debt Securities is
payable and the right, if any, to extend such date or dates; (iv) the rate or
rates at which such Junior Subordinated Debt Securities will bear interest or
the method of calculating such rate or rates, if any; (v) the date or dates from
which such interest shall accrue, the interest payment dates on which such
interest will be payable or the manner of determination of such interest payment
dates and the record dates for the determination of holders to whom interest is
payable on any such interest payment dates; (vi) the right, if any, to extend
the interest payment periods and the duration of such extension; (vii) the
period or periods within which, the price or prices at which, and the terms and
conditions upon which, such Junior Subordinated Debt Securities may be redeemed,
in whole or in part, at the option of the Company; (viii) the obligation, if
any, of the Company to redeem or purchase such Junior Subordinated Debt
Securities pursuant to any sinking fund or analogous provisions or at the option
of the holder thereof and the period or periods within which, the price or
prices at which, and the terms and conditions upon which, such Junior
Subordinated Debt Securities shall be redeemed or purchased, in whole or part,
pursuant to such obligation; (ix) any applicable federal income tax
consequences, including whether and under what circumstances the Company will
pay additional amounts on the Junior Subordinated Debt Securities held by a
person who is not a U.S. person in respect of any tax, assessment or
governmental charge withheld or deducted and, if so, whether the Company will
have the option to redeem such Junior Subordinated Debt Securities rather than
pay such additional amounts; (x) the form of such Junior Subordinated Debt
Securities; (xi) if other than denominations of $25 or any integral multiple
thereof, the denominations in which such Junior Subordinated Debt Securities
shall be issuable; (xii) any and all other terms with respect to such series,
including any modification of or additions to the events of default or covenants
provided for with respect to the Junior Subordinated Debt Securities, and any
terms which may be required by or advisable under applicable laws or regulations
not inconsistent with the Junior Subordinated Indenture; (xiii) the terms and
conditions upon which the Junior Subordinated Debt Securities may be convertible
into or exchanged for Common Stock, Preferred Stock, Preferred Securities, or
indebtedness or other securities of any kind of the Company; and (xiv) whether
such Junior Subordinated Debt Securities are issuable as a global security, and
in such case, the identity of the depositary.
Unless otherwise indicated in the applicable Prospectus Supplement, the
Junior Subordinated Debentures will be issued in United States dollars in fully
registered form without coupons in denominations of $25 or integral multiples
thereof. No service charge will be made for any transfer or exchange of any
Junior Subordinated Debt Securities, but the Company may, except in certain
specified cases not involving any transfer, require payment of a sum sufficient
to cover any tax or other governmental charge payable in connection therewith.
Unless otherwise set forth in the Prospectus Supplement, interest on outstanding
Junior
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Subordinated Debt Securities will be paid to holders of record on the date which
is 15 days immediately prior to the date such interest is to be paid.
Junior Subordinated Debt Securities may bear interest at a fixed rate or a
floating rate. Junior Subordinated Debt Securities bearing no interest or
interest at a rate that at the time of issuance is below the prevailing market
rate will be sold at a discount below their stated principal amount. Special
federal income tax considerations applicable to any such discounted Junior
Subordinated Debt Securities or to certain Junior Subordinated Debt Securities
issued at par which are treated as having been issued at a discount for federal
income tax purposes will be described in the applicable Prospectus Supplement.
GLOBAL SECURITIES
If any Junior Subordinated Debt Securities of a series are represented by
one or more Global Securities, the applicable Prospectus Supplement will
describe the circumstances, if any, under which beneficial owners of interests
in any such Global Security may exchange such interests for Junior Subordinated
Debt Securities of such series and of like tenor and principal amount in any
authorized form and denomination. Principal of, and any premium and interest on,
a Global Security will be payable in the manner described in the applicable
Prospectus Supplement.
The specific terms of the depositary arrangement with respect to any
portion of a series of Junior Subordinated Debt Securities to be represented by
a Global Security will be described in the applicable Prospectus Supplement.
CONSOLIDATION, MERGER, CONVEYANCE OR TRANSFER
The Junior Subordinated Indenture provides that the Company may not
consolidate with or merge into any other corporation or convey or transfer its
properties and assets substantially as an entirety to any person, unless (i) the
successor corporation shall be a corporation organized and existing under the
laws of the United States or any State thereof or the District of Columbia, and
shall expressly assume by a supplemental indenture the due and punctual payment
of the principal of, any premium on, and any interest on, all the outstanding
Junior Subordinated Debt Securities and the performance of every covenant in the
Junior Subordinated Indenture on the part of the Company to be performed or
observed; (ii) immediately after giving effect to such transaction, no Event of
Default, and no event which, after notice or lapse of time or both, would become
an Event of Default, shall have happened and be continuing; and (iii) the
Company shall have delivered to the applicable Junior Subordinated Indenture
Trustee an Officers' Certificate and an Opinion of Counsel, each stating that
such consolidation, merger, conveyance or transfer and such supplemental
indenture comply with the foregoing provisions relating to such transaction. In
case of any such consolidation, merger, conveyance or transfer, such successor
corporation will succeed to and be substituted for the Company as obligor on the
Junior Subordinated Debt Securities, with the same effect as if it had been
named in the Junior Subordinated Indenture as the Company. The Junior
Subordinated Indentures and the Junior Subordinated Debt Securities do not
contain any covenants or other provisions designed to protect holders of Junior
Subordinated Debt Securities in the event of a highly leveraged transaction
involving the Company or any Subsidiary.
EVENTS OF DEFAULT; WAIVER AND NOTICE THEREOF; JUNIOR SUBORDINATED DEBT
SECURITIES IN FOREIGN CURRENCIES
As to any series of Junior Subordinated Debt Securities, an Event of
Default is defined in each Junior Subordinated Indenture as (i) default for 90
days in payment of any interest on the Junior Subordinated Debt Securities of
such series (subject to the deferral of any due date in the case of an Extension
Period); (ii) default in payment of principal of or any premium on the Junior
Subordinated Debt Securities of such series at maturity; (iii) default in
payment of any sinking or purchase fund or analogous obligation, if any, on the
Junior Subordinated Debt Securities of such series; (iv) default by the Company
in the performance, or breach, of any other covenant or warranty contained in
the Junior Subordinated Indenture for the benefit of such series which shall not
have been remedied for a period of 90 days after notice is given as specified in
the
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Junior Subordinated Indenture; and (v) certain events of bankruptcy, insolvency
and reorganization of the Company.
A default under other indebtedness of the Company will not be a default
under the Junior Subordinated Indentures and a default under one series of Debt
Securities or Junior Subordinated Debt Securities will not necessarily be a
default under another series.
The Junior Subordinated Indenture provides that (i) if an Event of Default
described in clause (i), (ii), (iii) or (iv) above (if the Event of Default
under clause (iv) above is with respect to less than all series of Junior
Subordinated Debt Securities outstanding) shall have occurred and be continuing
with respect to any series, either the Junior Subordinated Indenture Trustee or
the holders of not less than 25% in aggregate principal amount of the Junior
Subordinated Debt Securities of such series then outstanding (each such series
acting as a separate class) may declare the principal (or, in the case of
Original Issue Discount Securities, the portion thereof specified in the terms
thereof) of all outstanding Junior Subordinated Debt Securities of such series
and the interest accrued thereon, if any, to be due and payable immediately, and
(ii) if an Event of Default described in clause (iv) or (v) above (if the Event
of Default under clause (iv) above is with respect to all series of Junior
Subordinated Debt Securities then outstanding) shall have occurred and be
continuing, either the Junior Subordinated Indenture Trustee or the holders of
at least 25% in aggregate principal amount of all Junior Subordinated Debt
Securities then outstanding (treated as one class) may declare the principal
(or, in the case of Original Issue Discount Securities, the portion thereof
specified in the terms thereof) of all Junior Subordinated Debt Securities then
outstanding and the interest accrued thereon, if any, to be due and payable
immediately, but upon certain conditions such declarations may be annulled and
past defaults (except for defaults in the payment of principal of, any premium
on, or any interest on, such Junior Subordinated Debt Securities and in
compliance with certain covenants) may be waived by the holders of a majority in
aggregate principal amount of the Junior Subordinated Debt Securities of such
series then outstanding (subject to, in the case of any series of Junior
Subordinated Debt Securities held as trust assets of a CCCI Trust and with
respect to which a Security Exchange has not theretofore occurred, such consent
of the holders of the Preferred Securities and the Common Securities of such
CCCI Trust as may be required under the Declaration of Trust of such CCCI
Trust).
"Security Exchange" when used with respect to the Securities of any series
which are held as trust assets of a CCCI Trust pursuant to the Declaration of
Trust of such CCCI Trust means the distribution of the Securities of such series
by such CCCI Trust in exchange for the Preferred Securities and the Common
Securities of such CCCI Trust in dissolution of such CCCI Trust pursuant to the
Declaration of Trust of such CCCI Trust.
Under the Junior Subordinated Indenture the Junior Subordinated Indenture
Trustee must give to the holders of each series of Junior Subordinated Debt
Securities notice of all uncured defaults known to it with respect to such
series within 90 days after such a default occurs (the term "default" to include
the events specified above without notice or grace periods, except that in the
case of any default of the type described in clause (d) above, no such notice
shall be given until at least 90 days after the occurrence thereof); provided
that, except in the case of default in the payment of principal of, any premium
on, or any interest on, any of the Junior Subordinated Debt Securities, or
default in the payment of any sinking or purchase fund installment or analogous
obligations, the applicable Junior Subordinated Indenture Trustee shall be
protected in withholding such notice if it in good faith determines that the
withholding of such notice is in the interests of the holders of the Junior
Subordinated Debt Securities of such series.
No holder of any Junior Subordinated Debt Securities of any series may
institute any action under the Junior Subordinated Indenture unless (i) such
holder shall have given the Junior Subordinated Indenture Trustee thereunder
written notice of a continuing Event of Default with respect to such series,
(ii) the holders of not less than 25% in aggregate principal amount of the
Junior Subordinated Debt Securities of such series then outstanding shall have
requested the Junior Subordinated Indenture Trustee thereunder to institute
proceedings in respect of such Event of Default, (iii) such holder or holders
shall have offered the Junior Subordinated Indenture Trustee thereunder such
reasonable indemnity as such Junior Subordinated Indenture Trustee may require,
(iv) the Junior Subordinated Indenture Trustee thereunder shall have failed to
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institute an action for 60 days thereafter and (v) no inconsistent direction
shall have been given to the Junior Subordinated Indenture Trustee thereunder
during such 60-day period by the holders of a majority in aggregate principal
amount of Junior Subordinated Debt Securities of such series then outstanding
(subject to, in the case of any series of Junior Subordinated Debt Securities
held as trust assets of a CCCI Trust and with respect to which a Security
Exchange has not theretofore occurred, such consent of the holders of the
Preferred Securities and the Common Securities of such CCCI Trust as may be
required under the Declaration of Trust of such CCCI Trust).
The holders of a majority in aggregate principal amount of the Junior
Subordinated Debt Securities of any series affected and then outstanding
(subject to, in the case of any series of Junior Subordinated Debt Securities
held as trust assets of a CCCI Trust and with respect to which a Security
Exchange has not theretofore occurred, such consent of the holders of the
Preferred Securities and the Common Securities of such CCCI Trust as may be
required under the Declaration of Trust of such CCCI Trust) will have the right,
subject to certain limitations, to direct the time, method and place of
conducting any proceeding for any remedy available to the applicable Junior
Subordinated Indenture Trustee or exercising any trust or power conferred on
such Junior Subordinated Indenture Trustee with respect to such series of Junior
Subordinated Debt Securities. The Junior Subordinated Indenture provides that,
in case an Event of Default shall occur and be continuing, the Junior
Subordinated Indenture Trustee thereunder, in exercising its rights and powers
under such Junior Subordinated Indenture, will be required to use the degree of
care of a prudent person in the conduct of such person's own affairs. Each
Junior Subordinated Indenture further provides that the Junior Subordinated
Indenture Trustee thereunder shall not be required to expend or risk its own
funds or otherwise incur any financial liability in the performance of any of
its duties under such Junior Subordinated Indenture unless it has reasonable
grounds for believing that repayment of such funds or adequate indemnity against
such risk or liability is reasonably assured to it.
The Company must furnish to the Junior Subordinated Indenture Trustee
within 120 days after the end of each fiscal year a statement signed by one of
certain officers of the Company to the effect that a review of the activities of
the Company during such year and of its performance under the Junior
Subordinated Indenture and the terms of the Junior Subordinated Debt Securities
has been made, and, to the best of the knowledge of the signatories based on
such review, the Company has complied with all conditions and covenants of such
Junior Subordinated Indenture through such year or, if the Company is in
default, specifying such default.
If any Junior Subordinated Debt Securities are denominated in a coin or
currency other than that of the United States, then for the purposes of
determining whether the holders of the requisite principal amount of Junior
Subordinated Debt Securities have taken any action as herein described, the
principal amount of such Junior Subordinated Debt Securities shall be deemed to
be that amount of United States dollars that could be obtained for such
principal amount on the basis of the spot rate of exchange into United States
dollars for the currency in which such Junior Subordinated Debt Securities are
denominated (as evidenced to the applicable Junior Subordinated Indenture by an
Officers' Certificate) as of the date the taking of such action by the holders
of such requisite principal amount is evidenced to the applicable Junior
Subordinated Indenture as provided in the respective Junior Subordinated
Indenture.
If any Junior Subordinated Debt Securities are Original Issue Discount
Securities, then for the purposes of determining whether the holders of the
requisite principal amount of Junior Subordinated Debt Securities have taken any
action herein described, the principal amount of such Junior Subordinated Debt
Securities shall be deemed to be the portion of such principal amount that would
be due and payable at the time of the taking of such action upon a declaration
of acceleration of maturity thereof.
MODIFICATION OF THE JUNIOR SUBORDINATED INDENTURE
The Junior Subordinated Indenture provides that the Company and the Junior
Subordinated Indenture Trustee may, without the consent of any holders of Junior
Subordinated Debt Securities, enter into supplemental indentures for the
purposes, among other things, of adding to the Company's covenants, adding
additional Junior Subordinated Indenture Events of Default, establishing the
form or terms of any series of
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Junior Subordinated Debt Securities or curing ambiguities or inconsistencies in
the Junior Subordinated Indenture or making other provisions.
With certain exceptions, the Junior Subordinated Indenture or the rights of
the holders of the Junior Subordinated Debt Securities may be modified by the
Company and the Junior Subordinated Indenture Trustee with the consent of the
holders of a majority in aggregate principal amount of the Junior Subordinated
Debt Securities of each series affected by such modification then outstanding
(subject to, in the case of any series of Junior Subordinated Debt Securities
held as trust assets of a CCCI Trust and with respect to which a Security
Exchange has not theretofore occurred, such consent of the holders of the
Preferred Securities and the Common Securities of such CCCI Trust as may be
required under the Declaration of Trust of such CCCI Trust), but no such
modification may be made without the consent of the holder of each outstanding
Junior Subordinated Debt Security affected thereby (subject to, in the case of
any series of Junior Subordinated Debt Securities held as trust assets of a CCCI
Trust and with respect to which a Security Exchange has not theretofore
occurred, such consent of the holders of the Preferred Securities and the Common
Securities of such CCCI Trust as may be required under the Declaration of Trust
of such CCCI Trust) which would (i) change the maturity of any payment of
principal of, or any premium on, or any installment of interest on any Junior
Subordinated Debt Security, or reduce the principal amount thereof or the
interest or any premium thereon, or change the method of computing the amount of
principal thereof or interest thereon on any date or change any place of payment
where, or the coin or currency in which, any Junior Subordinated Debt Security
or any premium or interest thereon is payable, or impair the right to institute
suit for the enforcement of any such payment on or after the maturity thereof
(or, in the case of redemption or repayment, on or after the redemption date or
the repayment date, as the case may be), (ii) reduce the percentage in principal
amount of the outstanding Junior Subordinated Debt Securities of any series, the
consent of whose holders is required for any such modification, or the consent
of whose holders is required for any waiver of compliance with certain
provisions of the Junior Subordinated Indenture or certain defaults thereunder
and their consequences provided for in such Indenture, or (iii) modify any of
the provisions of certain Sections of the Junior Subordinated Indenture,
including the provisions summarized in this paragraph, except to increase any
such percentage or to provide that certain other provisions of the Junior
Subordinated Indenture cannot be modified or waived without the consent of the
holder of each outstanding Junior Subordinated Debt Security affected thereby.
SATISFACTION AND DISCHARGE OF THE JUNIOR SUBORDINATED INDENTURE; DEFEASANCE
The Junior Subordinated Indenture shall generally cease to be of any
further effect with respect to a series of Junior Subordinated Debt Securities
if (i) the Company has delivered to the Junior Subordinated Indenture Trustee
for cancellation all Junior Subordinated Debt Securities of such series (with
certain limited exceptions) or (ii) all Junior Subordinated Debt Securities of
such series not theretofore delivered to the Junior Subordinated Indenture
Trustee for cancellation shall have become due and payable, or are by their
terms to become due and payable within one year or are to be called for
redemption within one year, and the Company shall have deposited with the Junior
Subordinated Indenture Trustee as trust funds the entire amount sufficient (in
the opinion of a nationally recognized firm of independent public accountants
expressed in a written certification thereof delivered to the Junior
Subordinated Indenture Trustee) without consideration of any reinvestment and
after payment of all taxes or other charges and assessments in respect thereof
payable by the Junior Subordinated Indenture Trustee to pay at maturity or upon
redemption all such Junior Subordinated Debt Securities, no default with respect
to the Junior Subordinated Debt Securities has occurred and is continuing on the
date of such deposit, such deposit does not result in a breach or violation of,
or constitute a default under, the Junior Subordinated Indenture or any other
agreement or instrument to which the Company is a party and the Company
delivered an officers' certificate and an opinion of counsel each stating that
such conditions have been complied with (and if, in either case, the Company
shall also pay or cause to be paid all other sums payable under the Junior
Subordinated Indenture by the Company).
In addition, the Company shall have a "legal defeasance option" (pursuant
to which it may terminate, with respect to the Junior Subordinated Debt
Securities of a particular series, all of its obligations under such Junior
Subordinated Debt Securities and the Junior Subordinated Indenture with respect
to such Junior
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Subordinated Debt Securities) and a "covenant defeasance option" (pursuant to
which it may terminate, with respect to the Junior Subordinated Debt Securities
of a particular series, its obligations with respect to such Junior Subordinated
Debt Securities under certain specified covenants contained in the Junior
Subordinated Indenture). If the Company exercises its legal defeasance option
with respect to a series of Junior Subordinated Debt Securities, payment of such
Junior Subordinated Debt Securities may not be accelerated because of an Event
of Default. If the Company exercises its covenant defeasance option with respect
to a series of Junior Subordinated Debt Securities, payment of such Junior
Subordinated Debt Securities may not be accelerated because of an Event of
Default related to the specified covenants.
The Company may exercise its legal defeasance option or its covenant
defeasance option with respect to the Junior Subordinated Debt Securities of a
series only if (i) the Company irrevocably deposits in trust with the Junior
Subordinated Indenture Trustee cash or U.S. Government Obligations (as defined
in the Junior Subordinated Indenture) for the payment of principal, premium, if
any, and interest with respect to such Junior Subordinated Debt Securities to
maturity or redemption, as the case may be, (ii) the Company delivers to the
Junior Subordinated Indenture Trustee a certificate from a nationally recognized
firm of independent public accountants expressing their opinion that the
payments of principal and interest when due and without reinvestment on the
deposited U.S. Government Obligations plus any deposited money without
investment will provide cash at such times and in such amounts as will be
sufficient to pay the principal, premium, if any, and interest when due with
respect to all the Junior Subordinated Debt Securities of such series to
maturity or redemption, as the case may be, (iii) 91 days pass after the deposit
is made and during the 91-day period no default described in clause (v) under
"-- Events of Default, Waiver and Notice Thereof; Junior Subordinated Debt
Securities in Foreign Currencies" above with respect to the Company occurs that
is continuing at the end of such period, (iv) no Default has occurred and is
continuing on the date of such deposit and after giving effect thereto, (v) the
deposit does not constitute a default under any other agreement binding on the
Company, (vi) the Company delivers to the Junior Subordinated Indenture Trustee
an opinion of counsel to the effect that the trust resulting from the deposit
does not constitute, or is qualified as, a regulated investment company under
the Investment Company Act of 1940, (vii) the Company shall have delivered to
the Junior Subordinated Indenture Trustee an opinion of counsel addressing
certain federal income tax matters relating to the defeasance, and (viii) the
Company delivers to the Junior Subordinated Indenture Trustee an officers'
certificate and an opinion of counsel, each stating that all conditions
precedent to the defeasance and discharge of the Junior Subordinated Debt
Securities of such series as contemplated by the Junior Subordinated Indenture
have been complied with.
The Junior Subordinated Indenture Trustee shall hold in trust cash or U.S.
Government Obligations deposited with it as described above and shall apply the
deposited cash and the proceeds from deposited U.S. Government Obligations to
the payment of principal, premium, if any, and interest with respect to the
Junior Subordinated Debt Securities of the defeased series.
CONCERNING THE JUNIOR SUBORDINATED INDENTURE TRUSTEE
The Junior Subordinated Indenture Trustee for the Junior Subordinated Debt
Securities will be identified in the relevant Prospectus Supplement. In certain
instances, the Company or the holders of a majority of the then outstanding
principal amount of the Junior Subordinated Debt Securities issued under an
Junior Subordinated Indenture may remove the Junior Subordinated Indenture
Trustee and appoint a successor Junior Subordinated Indenture Trustee. The
Junior Subordinated Indenture Trustee may become the owner or pledgee of any of
the Junior Subordinated Debt Securities with the same rights, subject to certain
conflict of interest restrictions, it would have if it were not the Junior
Subordinated Indenture Trustee. The Junior Subordinated Indenture Trustee and
any successor trustee must be a corporation organized and doing business as a
commercial bank or trust company under the laws of the United States or of any
state thereof, authorized under such laws to exercise corporate trust powers,
having a combined capital and surplus of at least $50,000,000 and subject to
examination by federal or state authority. From time to time and subject to
applicable law relating to conflicts of interest, the Junior Subordinated
Indenture Trustee may also serve as trustee under other indentures relating to
Debt Securities or Junior Subordinated Debt Securities issued by the Company or
affiliated companies and may engage in commercial transactions with the Company
and
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affiliated companies. Initially, the Junior Subordinated Indenture Trustee is
The Bank of New York, who currently serves as the transfer agent and registrar
for the Common Stock and is a lender to the Company under the Company's Amended
and Restated Credit Agreement dated April 10, 1997.
CERTAIN COVENANTS OF THE COMPANY APPLICABLE TO THE JUNIOR SUBORDINATED DEBT
SECURITIES
If Junior Subordinated Debt Securities are issued to a CCCI Trust in
connection with the issuance of Preferred Securities by such CCCI Trust, the
Company covenants in the Junior Subordinated Indenture that, so long as the
Preferred Securities of such CCCI Trust remain outstanding, the Company will not
declare or pay any dividends on, or redeem, purchase, acquire or make a
distribution or liquidation payment with respect to, any Common Stock or
Preferred Stock or make any guarantee payments with respect thereto if at such
time (i) the Company shall be in default with respect to its Guarantee Payments
(as defined herein) or other payment obligations under the related Guarantee,
(ii) there shall have occurred any Junior Subordinated Indenture Event of
Default with respect to such Junior Subordinated Debt Securities, or (iii) in
the event that Junior Subordinated Debt Securities are issued to the applicable
CCCI Trust in connection with the issuance of Preferred Securities by such CCCI
Trust, the Company shall have given notice of its election to defer payments of
interest on such Junior Subordinated Debt Securities by extending the interest
payment period as provided in the terms of the Junior Subordinated Debt
Securities and such period, or any extension thereof, is continuing; provided,
however, that the foregoing restrictions shall not apply to (a) dividends,
redemptions, purchases, acquisitions, distributions or payments made by the
Company by way of issuance of shares of its capital stock, (b) any declaration
of a dividend under a shareholder rights plan or in connection with the
implementation of a shareholder rights plan, the issuance of capital stock of
the Company under a shareholder rights plan or the redemption or repurchase of
any such right distributed pursuant to a shareholder rights plan, (c) payments
of accrued dividends by the Company upon the redemption, exchange or conversion
of any Preferred Stock as may be outstanding from time to time in accordance
with the terms of such Preferred Stock, (d) cash payments made by the Company in
lieu of delivering fractional shares upon the redemption, exchange or conversion
of any Preferred Stock as may be outstanding from time to time in accordance
with the terms of such Preferred Stock, (e) payments under the Guarantees, or
(f) purchases of Common Stock related to the issuance of Common Stock or rights
under any of the Company's benefit plans for its directors, officers or
employees, or related to the issuance of Common Stock or rights under a dividend
reinvestment and stock purchase plan. In addition, if Junior Subordinated Debt
Securities are issued to a CCCI Trust in connection with the issuance of
Preferred Securities by such CCCI Trust, for so long as the Preferred Securities
of such CCCI Trust remain outstanding, the Company has agreed (1) to remain the
sole direct or indirect owner of all the outstanding Common Securities issued by
such CCCI Trust and not to cause or permit such Common Securities to be
transferred except to the extent permitted by the Declaration of such CCCI
Trust; provided that any permitted successor of the Company under the Junior
Subordinated Indenture may succeed to the Company's ownership of such Common
Securities, (2) to comply fully with all its obligations and agreements under
such Declaration and (3) not to take any action which would cause such CCCI
Trust to cease to be treated as a grantor trust for federal income tax purposes,
except in connection with a distribution of Junior Subordinated Debt Securities.
SUBORDINATION
The Junior Subordinated Debt Securities will be subordinated and junior in
right of payment to certain other indebtedness of the Company to the extent set
forth in the applicable Prospectus Supplement.
The payment of the principal of, premium, if any, and interest on the
Junior Subordinated Debt Securities will be subordinated in right of payment to
the prior payment in full of all Senior Indebtedness of the Company and pari
passu with the Company's trade creditors. No payment on account of principal of,
premium, if any, or interest on the Junior Subordinated Debt Securities and no
acquisition of, or payment on account of any sinking fund for, the Junior
Subordinated Debt Securities may be made unless full payment of amounts then due
for principal, premium, if any, and interest then due on all Senior Indebtedness
by reason of the maturity thereof (by lapse of time, acceleration or otherwise)
has been made or duly provided for in cash or in a manner satisfactory to the
holders of such Senior Indebtedness. In addition, the Junior Subordinated
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Indenture provides that if a default has occurred giving the holders of such
Senior Indebtedness the right to accelerate the maturity thereof, or an event
has occurred which, with the giving of notice, or lapse of time, or both, would
constitute such an event of default, then unless and until such event shall have
been cured or waived or shall have ceased to exist, no payment on account of
principal, premium, if any, or interest on the Junior Subordinated Debt
Securities and no acquisition of, or payment on account of a sinking fund for,
the Junior Subordinated Debt Securities may be made. The Company shall give
prompt written notice to the Junior Subordinated Indenture Trustee of any
default under any Senior Indebtedness or under any agreement pursuant to which
Senior Indebtedness may have been issued. The Junior Subordinated Indenture
provisions described in this paragraph, however, do not prevent the Company from
making a sinking fund payment with Junior Subordinated Debt Securities acquired
prior to the maturity of Senior Indebtedness or, in the case of default, prior
to such default and notice thereof. Upon any distribution of its assets in
connection with any dissolution, liquidation or reorganization of the Company,
all Senior Indebtedness must be paid in full before the holders of the Junior
Subordinated Debt Securities are entitled to any payments whatsoever. As a
result of these subordination provisions, in the event of the Company's
insolvency, holders of the Junior Subordinated Debt Securities may recover
ratably less than senior creditors of the Company.
For purposes of the description of the Junior Subordinated Debt Securities,
the term "Senior Indebtedness" means the principal of and premium, if any, and
interest on the following, whether outstanding on the date of execution of the
Junior Subordinated Indenture or thereafter incurred or created, (i)
indebtedness of the Company for money borrowed by the Company (including
purchase money obligations with an original maturity in excess of one year) or
evidenced by securities (other than the Junior Subordinated Debt Securities),
notes, bankers' acceptances or other corporate debt securities or similar
instruments issued by the Company; (ii) obligations with respect to letters of
credit; (iii) indebtedness of the Company constituting a guarantee of
indebtedness of others of the type referred to in the preceding clauses (i) and
(ii); or (iv) renewals, extensions or refundings of any of the indebtedness
referred to in the preceding clauses (i), (ii) and (iii) unless, in the case of
any particular indebtedness, renewal, extension or refunding, under the express
provisions of the instrument creating or evidencing the same, or pursuant to
which the same is outstanding, such indebtedness or such renewal, extension or
refunding thereof is not superior in right of payment to the Junior Subordinated
Debt Securities.
DESCRIPTION OF PREFERRED STOCK
The Board of Directors has the authority to issue up to 2,000,000 shares of
Preferred Stock, in one or more series, and to fix the rights, preferences,
privileges and qualifications thereof without any further vote or action by the
shareholders. The Board of Directors has submitted a proposal to the
shareholders to approve an amendment to the Company's Restated Articles of
Incorporation to increase the authorized number of shares of Preferred Stock
from 2,000,000 shares to 10,000,000 shares. The issuance of Preferred Stock
could decrease the amount of earnings and assets available for distribution to
holders of Common Stock, and adversely affect the rights and powers, including
voting rights, of such holders and may have the effect of delaying, deferring or
preventing a change in control of the Company. No shares of Preferred Stock have
ever been issued. The particular terms of any series of Preferred Stock will be
described in the applicable Prospectus Supplement.
DESCRIPTION OF COMMON STOCK
The Board of Directors has the authority to issue up to 150,000,000 shares
of Common Stock. As of March 6, 1998, 98,343,675 shares of Common Stock were
outstanding. The Board of Directors has submitted a proposal to the shareholders
to approve an amendment to the Company's Restated Articles of Incorporation to
increase the authorized number of shares of Common Stock from 150,000,000 shares
to 600,000,000 shares. Holders of Common Stock are entitled to one vote per
share on all matters submitted to a vote of shareholders of the Company and to
ratably receive dividends, if any, as may be declared from time to time by the
Board of Directors from funds legally available therefor, subject to the payment
of any preferential dividends declared with respect to any Preferred Stock that
from time to time may be outstanding. Upon liquidation, dissolution or winding
up of the Company, holders of Common Stock are entitled to share ratably in any
assets available
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for distribution to shareholders after payment of all obligations of the
Company, subject to the rights to receive preferential distributions of the
holders of any shares of Preferred Stock then outstanding.
Shareholders do not have cumulative voting rights or preemptive or other
rights to acquire or subscribe to additional, unissued or treasury shares. The
shares of Common Stock currently outstanding are, and the shares of Common Stock
offered hereby will be, upon issuance thereof, validly issued, fully paid and
nonassessable.
REPURCHASE AGREEMENT
In May 1977, the Company and its then shareholders, including L. Lowry Mays
and B.J. McCombs, entered into a Buy-Sell Agreement (the "Repurchase Agreement")
restricting the disposition of the outstanding shares of Common Stock owned by
L. Lowry Mays and B.J. McCombs and their heirs, legal representatives,
successors and assigns (collectively, the "Restricted Parties"). The Repurchase
Agreement provides that in the event that a Restricted Party desires to dispose
of his shares, other than by disposition by will or intestacy or through gifts
to such Restricted Party's spouse or children, such shares must be offered for a
period of 30 days to the Company. Any shares not purchased by the Company must
then be offered for a period of 30 days to the other Restricted Parties. If all
of the offered shares are not purchased by the Company or the other Restricted
Parties, the Restricted Party offering his shares may sell them to a Third Party
during a period of 90 days thereafter at a price and on terms not more favorable
than those offered to the Company and the other Restricted Parties. In addition,
a Restricted Party may not individually or in concert with others sell any
shares so as to deliver voting control to a Third Party without providing in any
such sale that all Restricted Parties will be offered the same price and terms
for their shares. The Repurchase Agreement will continue in effect following the
Offering and may preserve the control of the present principal shareholders.
TEXAS BUSINESS COMBINATION LAW
The Company will be governed by the provisions of the Texas Business
Combination Law, Part 13 of the Texas Business Corporation Act, which takes
effect on September 1, 1997. In general, the law prohibits a Texas "issuing
public corporation" from engaging in a "business combination" with an
"affiliated shareholder," or an affiliate or associate thereof, for a period of
three years after the date of the transaction in which the person became an
affiliate shareholder, unless the business combination is approved in a
prescribed manner. "Business combinations" include mergers, asset sales and
other transactions resulting in a financial benefit to the affiliated
shareholder. An "affiliated shareholder" is a person who, together with
affiliates and associates, owns (or within three years, did own) 20% or more of
the corporation's voting stock. The applicability of the Texas Business
Combination Law to the Company may have an anti-takeover effect.
FOREIGN OWNERSHIP
As a consequence of the restrictions imposed by the Communications Act of
1934 on ownership of Common Stock by aliens, the Company's bylaws were amended
effective December 31, 1983 to provide that (i) not more than one-fifth of the
shares outstanding shall at any time be owned of record, or voted, by or for the
account of aliens, their representatives, a foreign government or a corporation
organized under the laws of a foreign country, (ii) the Company shall not be
owned or controlled directly or indirectly by any other corporation of which any
officer or more than one-fourth of the directors are aliens or of which more
than one-fourth of the shares are owned of record or voted by aliens, (iii) no
person who is an alien may be elected or serve as an officer or director of the
Company, and (iv) if the stock records of the Company shall at any time reflect
one-fifth ownership, no transfers of additional shares to aliens shall be made
and, if it shall thereafter be found that any such additional shares are in fact
held by or for the account of an alien, such shares shall not be entitled to
vote, to receive dividends or to have any other rights. The holder of such
shares will be required to transfer them to a United States citizen or to the
Company. This restriction will be applicable to the shares of Common Stock
offered hereby and to the issuance or transfer of such shares after the date of
this Prospectus. The Company's stock certificates may bear a legend setting
forth this restriction. Since the bylaws were amended, the Communications Act of
1934 has been revised to remove the limitations on alien officers and directors.
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DESCRIPTION OF WARRANTS
The Company may issue Warrants for the purchase of Debt Securities or
Junior Subordinated Debt Securities, or shares of Preferred Stock or Common
Stock. Warrants may be issued independently or together with any Debt
Securities, Junior Subordinated Debt Securities, or shares of Preferred Stock or
Common Stock offered by any Prospectus Supplement and may be attached to or
separate from such Debt Securities, Junior Subordinated Debt Securities, or
shares of Preferred Stock or Common Stock. The Warrants are to be issued under
Warrant Agreements to be entered into between the Company and The Bank of New
York, as Warrant Agent, or such other bank or trust company as is named in the
Prospectus Supplement relating to the particular issue of Warrants (the "Warrant
Agent"). The Warrant Agent will act solely as an agent of the Company in
connection with the Warrants and will not assume any obligation or relationship
of agency or trust for or with any holders of Warrants or beneficial owners of
Warrants. The following summaries of certain provisions of the form of Warrant
Agreement and Warrants do not purport to be complete and are subject to, and are
qualified in their entirety by reference to, all the provisions of the
applicable Warrant Agreement and the Warrants.
GENERAL
If Warrants are offered, the Prospectus Supplement will describe the terms
of the Warrants, including the following: (i) the offering price; (ii) the
currency, currencies or currency units for which Warrants may be purchased;
(iii) the designation, aggregate principal amount, currency, currencies or
currency units and terms of the Debt Securities or Junior Subordinated Debt
Securities purchasable upon exercise of the Debt Warrants and the price at which
such Debt Securities or Junior Subordinated Debt Securities may be purchased
upon such exercise; (iv) the designation, number of shares and terms of the
Preferred Stock purchasable upon exercise of the Preferred Stock Warrants and
the price at which such shares of Preferred Stock may be purchased upon such
exercise; (v) the designation, number of shares and terms of the Common Stock
purchasable upon exercise of the Common Stock Warrants and the price at which
such shares of Common Stock may be purchased upon such exercise; (vi) if
applicable, the designation and terms of the Debt Securities, Junior
Subordinated Debt Securities, Preferred Stock or Common Stock with which the
Warrants are issued and the number of Warrants issued with each such Debt
Security, Junior Subordinated Debt Security or share of Preferred Stock or
Common Stock; (vii) if applicable, the date on and after which the Warrants and
the related Debt Securities, Junior Subordinated Debt Securities, Preferred
Stock or Common Stock will be separately transferable; (viii) the date on which
the right to exercise the Warrants shall commence and the date (the "Expiration
Date") on which such right shall expire; (ix) whether the Warrants will be
issued in registered or bearer form; (x) a discussion of certain federal income
tax, accounting and other special considerations, procedures and limitations
relating to the Warrants; and (xi) any other terms of the Warrants.
Warrants may be exchanged for new Warrants of different denominations, may
(if in registered form) be presented for registration of transfer, and may be
exercised at the corporate trust office of the Warrant Agent or any other office
indicated in the Prospectus Supplement. Before the exercise of their Warrants,
holders of Warrants will not have any of the rights of holders of the Debt
Securities, Junior Subordinated Debt Securities or shares of Preferred Stock or
Common Stock purchasable upon such exercise, including the right to receive
payments of principal of, any premium on, or any interest on, the Debt
Securities or Junior Subordinated Debt Securities purchasable upon such exercise
or to enforce the covenants in the Indenture or to receive payments of
dividends, if any, on the Preferred Stock or Common Stock purchasable upon such
exercise or to exercise any applicable right to vote. If the Company maintains
the ability to reduce the exercise price of any Stock Warrant and such right is
triggered, the Company will comply with the federal securities laws, including
Rule 13e-4 under the Exchange Act, to the extent applicable.
EXERCISE OF WARRANTS
Each Warrant will entitle the holder to purchase such principal amount of
Debt Securities or Junior Subordinated Debt Securities or such number of shares
of Preferred Stock or Common Stock at such exercise price as shall in each case
be set forth in, or calculable from, the Prospectus Supplement relating to the
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Warrant. Warrants may be exercised at such times as are set forth in the
Prospectus Supplement relating to such Warrants. After the close of business on
the Expiration Date (or such later date to which such Expiration Date may be
extended by the Company), unexercised Warrants will become void.
Subject to any restrictions and additional requirements that may be set
forth in the Prospectus Supplement relating thereto, Warrants may be exercised
by delivery to the Warrant Agent of the certificate evidencing such Warrants
properly completed and duly executed and of payment as provided in the
Prospectus Supplement of the amount required to purchase the Debt Securities,
Junior Subordinated Debt Securities or shares of Preferred Stock or Common Stock
purchasable upon such exercise. The exercise price will be the price applicable
on the date of payment in full, as set forth in the Prospectus Supplement
relating to the Warrants. Upon receipt of such payment and the certificate
representing the Warrants to be exercised, properly completed and duly executed
at the corporate trust office of the Warrant Agent or any other office indicated
in the Prospectus Supplement, the Company will, as soon as practicable, issue
and deliver the Debt Securities, Junior Subordinated Debt Securities or shares
of Preferred Stock or Common Stock purchasable upon such exercise. If fewer than
all of the Warrants represented by such certificate are exercised, a new
certificate will be issued for the remaining amount of Warrants.
ADDITIONAL PROVISIONS
The exercise price payable and the number of shares of Common or Preferred
Stock purchasable upon the exercise of each Stock Warrant will be subject to
adjustment in certain events, including the issuance of a stock dividend to
holders of Common or Preferred Stock, respectively, or a combination,
subdivision or reclassification of Common or Preferred Stock, respectively. In
lieu of adjusting the number of shares of Common or Preferred Stock purchasable
upon exercise of each Stock Warrant, the Company may elect to adjust the number
of Stock Warrants. No adjustment in the number of shares purchasable upon
exercise of the Stock Warrants will be required until cumulative adjustments
require an adjustment of at least 1% thereof. The Company may, at its option,
reduce the exercise price at any time. No fractional shares will be issued upon
exercise of Stock Warrants, but the Company will pay the cash value of any
fractional shares otherwise issuable. Notwithstanding the foregoing, in case of
any consolidation, merger, or sale or conveyance of the property of the Company
as an entirety or substantially as an entirety, the holder of each outstanding
Stock Warrant shall have the right upon the exercise thereof to the kind and
amount of shares of stock and other securities and property (including cash)
receivable by a holder of the number of shares of Common Stock or Preferred
Stock into which such Stock Warrants were exercisable immediately prior thereto.
NO RIGHTS AS SHAREHOLDERS
Holders of Stock Warrants will not be entitled, by virtue of being such
holders, to vote, to consent, to receive dividends, to receive notice as
shareholders with respect to any meeting of shareholders for the election of
directors of the Company or any other matter, or to exercise any rights
whatsoever as shareholders of the Company.
DESCRIPTION OF STOCK PURCHASE
CONTRACTS AND STOCK PURCHASE UNITS
The Company may issue Stock Purchase Contracts, which are contracts
obligating holders to purchase from the Company, and the Company to sell to the
holders, a specified number of shares of Common Stock or Preferred Stock at a
future date or dates. The price per share of Common Stock or Preferred Stock may
be fixed at the time the Stock Purchase Contracts are issued or may be
determined by reference to a specific formula set forth in the Stock Purchase
Contracts. Any such formula may include anti-dilution provisions to adjust the
number of shares issuable pursuant to Stock Purchase Contracts upon certain
events. The Stock Purchase Contracts may be issued separately or as a part of
Stock Purchase Units each representing ownership of a Stock Purchase Contract
and Debt Securities, U.S. Obligations or Preferred Securities securing the
holders' obligations to purchase the Common Stock or the Preferred Stock under
the Purchase Contracts.
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Except as otherwise described in the applicable Prospectus Supplement, in
the case of Stock Purchase Units that include U.S. Obligations, unless a holder
of Stock Purchase Units settles its obligations under the Stock Purchase
Contracts early through the delivery of consideration to the Company or its
agent in the manner discussed below, the principal of such U.S. Obligations,
when paid at maturity, will automatically be applied to satisfy the holder's
obligation to purchase Common Stock or Preferred Stock under the Stock Purchase
Contracts.
Except as otherwise described in the applicable Prospectus Supplement, in
the case of Stock Purchase Units that include Debt Securities or Preferred
Securities, in the absence of any such early settlement or the election by a
holder to pay the consideration specified in the Stock Purchase Contracts, the
Debt Securities or Preferred Securities will automatically be presented to the
applicable CCCI Trust for redemption at 100% of face or liquidation value and
the CCCI Trust will present Junior Subordinated Debt Securities in an equal
principal amount to the Company for redemption at 100% of principal amount.
Amounts received in respect of such redemption will automatically be transferred
to the Company and applied to satisfy in full the holder's obligation to
purchase Common Stock or Preferred Stock under the Stock Purchase Contracts. The
Stock Purchase Contracts may require the Company to make periodic payments to
the holders of the Stock Purchase Units or vice versa, and such payments may be
unsecured or refunded on some basis. The Stock Purchase Contracts may require
holders to secure their obligations thereunder in a specified manner.
Except as otherwise described in the applicable Prospectus Supplement,
holders of Stock Purchase Units may be entitled to settle the underlying Stock
Purchase Contracts prior to the stated settlement date by surrendering the
certificate evidencing the Stock Purchase Units, accompanied by the payment due,
in such form and calculated pursuant to such formula as may be prescribed in the
Stock Purchase Contracts and described in the applicable Prospectus Supplement.
Upon early settlement, the holder would receive the number of shares of Common
Stock or Preferred Stock deliverable under such Stock Purchase Contracts,
subject to adjustment in certain cases. Holders of Stock Purchase Units may be
entitled to exchange their Stock Purchase Units together with appropriate
collateral, for separate Stock Purchase Contracts and Preferred Securities, Debt
Securities, Junior Subordinated Debt Securities or U.S. Obligations. In the
event of either such early settlement or exchange, the Preferred Securities,
Debt Securities, Junior Subordinated Debt Securities or debt obligations that
were pledged as security for the obligation of the holder to perform under the
Stock Purchase Contracts would be transferred to the holder free and clear of
the Company's security interest therein.
The applicable Prospectus Supplement will describe the terms of any Stock
Purchase Contracts or Stock Purchase Units including differences, if any, from
the term described above.
DESCRIPTION OF PREFERRED SECURITIES
PREFERRED SECURITIES
Each CCCI Trust may issue, from time to time, only one series of Preferred
Securities having terms described in the Prospectus Supplement relating thereto.
The Declaration of each CCCI Trust authorizes the Regular Trustees of such CCCI
Trust to issue on behalf of such CCCI Trust one series of Preferred Securities.
Each Declaration will be qualified as an indenture under the Trust Indenture
Act. The Preferred Securities will have such terms, including distributions,
redemption, voting, liquidation rights and such other preferred, deferred or
other special rights or such restrictions as shall be set forth in the related
Declaration or made part of such Declaration by the Trust Indenture Act.
Reference is made to the Prospectus Supplement relating to the Preferred
Securities of a CCCI Trust for specific terms, including (i) the specific
designation of such Preferred Securities, (ii) the number of Preferred
Securities issued by such CCCI Trust, (iii) the annual distribution rate (or
method of calculation thereof) for Preferred Securities issued by such CCCI
Trust, the date or dates upon which such distributions shall be payable and the
record date or dates for the payment of such distributions, (iv) whether
distributions on Preferred Securities issued by such CCCI Trust shall be
cumulative, and, in the case of Preferred Securities having such cumulative
distribution rights, the date or dates or method of determining the date or
dates from which distributions on Preferred Securities issued by
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such CCCI Trust shall be cumulative, (v) the amount or amounts which shall be
paid out of the assets of such CCCI Trust to the holders of Preferred Securities
of such CCCI Trust upon voluntary or involuntary liquidation, dissolution,
winding-up or termination of such CCCI Trust, (vi) the obligation or right, if
any, of such CCCI Trust to purchase or redeem Preferred Securities issued by
such CCCI Trust and the price or prices at which, the period or periods within
which and the terms and conditions upon which Preferred Securities issued by
such CCCI Trust shall or may be purchased or redeemed, in whole or in part,
pursuant to such obligation or right, (vii) the voting rights, if any, of
Preferred Securities issued by such CCCI Trust in addition to those required by
law, including the number of votes per Preferred Security and any requirement
for the approval by the holders of Preferred Securities, or of Preferred
Securities issued by one or more CCCI Trusts, or of both, as a condition to
specified actions or amendments to the Declaration of such CCCI Trust, (viii)
the terms and conditions upon which the Preferred Securities may be convertible
into or exchanged for Common Stock, Preferred Stock, Debt Securities, Junior
Subordinated Debt Securities, or indebtedness or other securities of any kind of
the Company; and (ix) any other relevant rights, preferences, privileges,
limitations or restrictions of Preferred Securities issued by such CCCI Trust
consistent with the Declaration of such CCCI Trust or with applicable law. All
Preferred Securities offered hereby will be guaranteed by the Company as and to
the extent set forth below under "Description of the Guarantees." Certain
federal income tax considerations applicable to any offering of Preferred
Securities will be described in the Prospectus Supplement relating thereto.
In connection with the issuance of Preferred Securities, each CCCI Trust
will issue one series of Common Securities. The Declaration of each CCCI Trust
authorizes the Regular Trustees of such CCCI Trust to issue on behalf of such
CCCI Trust one series of Common Securities having such terms including
distributions, redemption, voting, liquidation rights or such restrictions as
shall be set forth therein. The terms of the Common Securities issued by a CCCI
Trust will be substantially identical to the terms of the Preferred Securities
issued by such CCCI Trust and the Common Securities will rank pari passu and
payments will be made thereon on a pro rata basis with the Preferred Securities
except that, if a Declaration Event of Default occurs and is continuing, the
rights of the holders of such Common Securities to payment in respect of
distributions and payments upon liquidation, redemption and maturity will be
subordinated to the rights of the holders of such Preferred Securities. Except
in certain limited circumstances, the Common Securities issued by a CCCI Trust
will also carry the right to vote and to appoint, remove or replace any of the
Trustees of such CCCI Trust. All the Common Securities of a CCCI Trust will be
directly or indirectly owned by the Company.
As long as payments of interest and other payments are made when due on the
Junior Subordinated Debt Securities, such payments will be sufficient to cover
distributions and other payments due on the Preferred Securities primarily
because (i) the aggregate principal amount of Junior Subordinated Debt
Securities held as trust assets will be equal to the sum of the aggregate stated
liquidation amount of the Preferred Securities; and (ii) the interest rate and
interest and other payment dates on the Junior Subordinated Debt Securities will
match the distribution rate and distribution and other payment dates for the
Preferred Securities.
If an Event of Default with respect to the Declaration of any CCCI Trust
occurs and is continuing, then the holders of Preferred Securities of such CCCI
Trust would rely on the enforcement by the Property Trustee of its rights as a
holder of the Junior Subordinated Debt Securities deposited in such CCCI Trust
against the Company. In addition, the holders of a majority in liquidation
amount of such Preferred Securities will have the right to direct the time,
method, and place of conducting any proceeding for any remedy available to the
Property Trustee or to direct the exercise of any trust or power conferred upon
the Property Trustee under such Declaration, including the right to direct the
Property Trustee to exercise the remedies available to it as a holder of such
Junior Subordinated Debt Securities. If the Property Trustee fails to enforce
its rights under such Junior Subordinated Debt Securities deposited in such CCCI
Trust, any holder of such Preferred Securities may, to the extent permitted by
applicable law, after a period of 60 days has elapsed from such holder's written
request, institute a legal proceeding against the Company to enforce the
Property Trustee's rights under such Junior Subordinated Debt Securities without
first instituting any legal proceeding against the Property Trustee or any other
person or entity. If an Event of Default with respect to the Declaration of any
CCCI Trust occurs and is continuing and such event is attributable to the
failure of the Company to pay
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interest or principal on the Junior Subordinated Debt Securities on the date
such interest or principal is otherwise payable (or in the case of redemption,
on the redemption date), then a holder of Preferred Securities of such CCCI
Trust may also directly institute a proceeding for enforcement of payment to
such holder of the principal of or interest on such Junior Subordinated Debt
Securities having a principal amount equal to the aggregate liquidation amount
of such Preferred Securities held by such holder (a "Direct Action") on or after
the respective due date specified in such Junior Subordinated Debt Securities
without first (i) directing the Property Trustee to enforce the terms of such
Junior Subordinated Debt Securities or (ii) instituting a legal proceeding
against the Company to enforce the Property Trustee's rights under such Junior
Subordinated Debt Securities. In connection with such Direct Action, the Company
will be subrogated to the rights of such holder of such Preferred Securities
under such Declaration to the extent of any payment made by the Company to such
holder of such Preferred Securities in such Direct Action. The holders of
Preferred Securities of a CCCI Trust will not be able to exercise directly any
other remedy available to the holders of the Junior Subordinated Debt Securities
unless the Property Trustee first fails to do so.
Certain federal income tax considerations applicable to an investment in
Preferred Securities will be described in the Prospectus Supplement relating
thereto.
The Property Trustee and its affiliates provide customary commercial
banking services to the Company and certain of its subsidiaries and participate
in various financing agreements of the Company in the ordinary course of their
business. Initially, the Property Trustee is The Bank of New York, who currently
serves as the transfer agent and registrar for the Common Stock and is a lender
to the Company under the Company's Amended and Restated Credit Agreement dated
April 10, 1997.
DESCRIPTION OF GUARANTEES
Set forth below is a summary of information concerning the Guarantees that
will be executed and delivered by the Company for the benefit of the holders
from time to time of Preferred Securities of a CCCI Trust. Each Preferred
Security Guarantee will be separately qualified under the Trust Indenture Act
and will be held by The Bank of New York, acting in its capacity as indenture
trustee with respect thereto (the "Guarantee Trustee"), for the benefit of
holders of the Preferred Securities of the applicable CCCI Trust. The terms of
each Guarantee will be those set forth in such Guarantee and those made part of
such Guarantee by the Trust Indenture Act. This description summarizes the
material terms of the Guarantees and is qualified in its entirety by reference
to the form of Guarantee, which is filed as an exhibit to the Registration
Statement of which this Prospectus forms a part, and the Trust Indenture Act.
GENERAL
Pursuant to each Guarantee, the Company will irrevocably and
unconditionally agree, to the extent set forth therein, to pay in full, to the
holders of the Preferred Securities issued by the applicable CCCI Trust, the
Guarantee Payments (as defined herein), to the extent not paid by such CCCI
Trust, regardless of any defense, right of set-off or counterclaim that such
CCCI Trust may have or assert. The following distributions and other payments
with respect to Preferred Securities issued by a CCCI Trust to the extent not
made or paid by such CCCI Trust (the "Guarantee Payments"), will be subject to
the Guarantee (without duplication): (i) any accrued and unpaid distributions on
such Preferred Securities, but only if and to the extent that in each case the
Company has made a payment to the Property Trustee of interest on the Junior
Subordinated Debt Securities, (ii) the redemption price, including all accrued
and unpaid distributions to the date of redemption, with respect to any
Preferred Securities called for redemption by such CCCI Trust, but only if and
to the extent that in each case the Company has made a payment to the Property
Trustee of interest or principal on the Junior Subordinated Debt Securities
deposited in such CCCI Trust as trust assets, and (iii) upon a voluntary or
involuntary liquidation, dissolution, winding-up or termination of such CCCI
Trust (other than in connection with the distribution of such Junior
Subordinated Debt Securities to the holders of such Preferred Securities or the
redemption of all such Preferred Securities upon the maturity or redemption of
such Junior Subordinated Debt Securities) the lesser of (a) the aggregate of the
liquidation amount and all accrued and unpaid distributions on such Preferred
Securities to the date of payment, to the
30
<PAGE> 96
extent such CCCI Trust has funds available therefor, and (b) the amount of
assets of such CCCI Trust remaining available for distribution to holders of
such Preferred Securities upon liquidation of such CCCI Trust. The Company's
obligation to make a Guarantee Payment may be satisfied by direct payment of the
required amounts by the Company to the holders of the applicable Preferred
Securities or by causing the applicable CCCI Trust to pay such amounts to such
holders.
The Guarantee is a full and unconditional guarantee from the time of
issuance of the applicable Preferred Securities, but the Guarantee covers
distributions and other payments on such Preferred Securities only if and to the
extent that the Company has made a payment to the Property Trustee of interest
or principal on the Junior Subordinated Debt Securities deposited in the
applicable CCCI Trust as trust assets. If the Company does not make interest or
principal payments on the Junior Subordinated Debt Securities deposited in the
applicable CCCI Trust as trust assets, the Property Trust will not make
distributions on the Preferred Securities of such CCCI Trust and the CCCI Trust
will not have funds available therefor.
The Company's obligations under the Declaration for each CCCI Trust, the
Guarantee issued with respect to Preferred Securities issued by such CCCI Trust,
the Junior Subordinated Debt Securities purchased by such CCCI Trust and the
Junior Subordinated Indenture in the aggregate will provide a full and
unconditional guarantee on a subordinated basis by the Company of payments due
on the Preferred Securities issued by such CCCI Trust.
CERTAIN COVENANTS OF THE COMPANY
In each Guarantee, the Company will covenant that, so long as any Preferred
Securities issued by the applicable CCCI Trust remain outstanding, the Company
will not declare or pay any dividends on, or redeem, purchase, acquire or make a
distribution or liquidation payment with respect to, any Common Stock or
Preferred Stock or make any guarantee payment with respect thereto, if at such
time (i) the Company shall be in default with respect to its Guarantee Payments
or other payment obligations under such Guarantee, (ii) there shall have
occurred any Event of Default under the related Declaration or (iii) in the
event that Junior Subordinated Debt Securities are issued to the applicable CCCI
Trust in connection with the issuance of Preferred Securities by such CCCI
Trust, the Company shall have given notice of its election to defer payments of
interest on such Junior Subordinated Debt Securities by extending the interest
payment period as provided in the terms of the Junior Subordinated Debt
Securities and such period, or any extension thereof, is continuing; provided,
however, that the foregoing restrictions shall not apply to (a) dividends,
redemptions, purchases, acquisitions, distributions or payments made by the
Company by way of issuance of shares of its capital stock, (b) any declaration
of a dividend under a shareholder rights plan or in connection with the
implementation of a shareholder rights plan, the issuance of capital stock of
the Company under a shareholder rights plan or the redemption or repurchase of
any such right distributed pursuant to a shareholder rights plan, (c) payments
of accrued dividends by the Company upon the redemption, exchange or conversion
of any Preferred Stock as may be outstanding from time to time in accordance
with the terms of such Preferred Stock, (d) cash payments made by the Company in
lieu of delivering fractional shares upon the redemption, exchange or conversion
of any Preferred Stock as may be outstanding from time to time in accordance
with the terms of such Preferred Stock, (e) payments under the Guarantees, or
(f) purchases of Common Stock related to the issuance of Common Stock or rights
under any of the Company's benefit plans for its directors, officers or
employees, or related to the issuance of Common Stock or rights under a dividend
reinvestment and stock purchase plan. In addition, so long as any Preferred
Securities of a CCCI Trust remain outstanding, the Company has agreed (1) to
remain the sole direct or indirect owner of all the outstanding Common
Securities issued by such CCCI Trust and not to cause or permit such Common
Securities to be transferred except to the extent permitted by the Declaration
of such CCCI Trust, provided that any permitted successor of the Company under
the Junior Subordinated Indenture may succeed to the Company's ownership of such
Common Securities, and (2) to use reasonable efforts to cause such CCCI Trust to
continue to be treated as a grantor trust for federal income tax purposes,
except in connection with a distribution of Junior Subordinated Debt Securities.
31
<PAGE> 97
AMENDMENTS AND ASSIGNMENT
Except with respect to any changes that do not adversely affect the rights
of holders of the applicable Preferred Securities (in which case no consent will
be required), each Guarantee may be amended only with the prior approval of the
holders of not less than 66 2/3% in liquidation amount of the outstanding
Preferred Securities issued by the applicable CCCI Trust. The manner of
obtaining any such approval of holders of such Preferred Securities will be set
forth in an accompanying Prospectus Supplement. All guarantees and agreements
contained in a Guarantee shall bind the successors, assignees, receivers,
trustees and representatives of the Company and shall inure to the benefit of
the holders of the Preferred Securities of the applicable CCCI Trust then
outstanding. Except in connection with a consolidation, merger, conveyance, or
transfer of assets involving the Company that is permitted under the Junior
Subordinated Indenture, the Company may not assign its obligations under any
Guarantee.
TERMINATION OF THE GUARANTEES
Each Guarantee will terminate and be of no further force and effect as to
the Preferred Securities issued by the applicable CCCI Trust upon full payment
of the redemption price of all Preferred Securities of such CCCI Trust, or upon
distribution of the Junior Subordinated Debt Securities to the holders of the
Preferred Securities of such CCCI Trust in exchange for all the Preferred
Securities issued by such CCCI Trust, or upon full payment of the amounts
payable upon liquidation of such CCCI Trust. Notwithstanding the foregoing, each
Guarantee will continue to be effective or will be reinstated, as the case may
be, if at any time any holder of Preferred Securities issued by the applicable
CCCI Trust must restore payment of any sums paid under such Preferred Securities
or such Guarantee.
STATUS OF THE GUARANTEES
The Company's obligations under each Guarantee to make the Guarantee
Payments will constitute an unsecured obligation of the Company and will rank
(i) subordinate and junior in right of payment to all other indebtedness,
liabilities and obligations of the Company and any guarantees, endorsements or
other contingent obligations of the Company in respect of such indebtedness,
liabilities or obligations, including the Junior Subordinated Debt Securities,
except those made pari passu or subordinate by their terms, and (ii) senior to
all capital stock now or hereafter issued by the Company and to any guarantee
now or hereafter entered into by the Company in respect of any of its capital
stock. The Company's obligations under each Guarantee will rank pari passu with
each other Guarantee. Because the Company is a holding company, the Company's
obligations under each Guarantee are also effectively subordinated to all
existing and future liabilities, including trade payables, of the Company's
subsidiaries, except to the extent that the Company is a creditor of the
subsidiaries recognized as such. Each Declaration provides that each holder of
Preferred Securities issued by the applicable CCCI Trust, by acceptance thereof,
agrees to the subordination provisions and other terms of the related Guarantee.
Each Guarantee will constitute a guarantee of payment and not of collection
(that is, the guaranteed party may institute a legal proceeding directly against
the Company to enforce its rights under such Guarantee without first instituting
a legal proceeding against any other person or entity). Each Guarantee will be
deposited with the Guarantee Trustee, to be held for the benefit of the holders
of the Preferred Securities issued by the applicable CCCI Trust. The Guarantee
Trustee shall enforce such Guarantee on behalf of the holders of such Preferred
Securities. The holders of not less than a majority in aggregate liquidation
amount of the Preferred Securities issued by the applicable CCCI Trust have the
right to direct the time, method and place of conducting any proceeding for any
remedy available in respect of the related Guarantee, including the giving of
directions to the Guarantee Trustee. If the Guarantee Trustee fails to enforce a
Guarantee as above provided, any holder of Preferred Securities issued by the
applicable CCCI Trust may institute a legal proceeding directly against the
Company to enforce its rights under such Guarantee, without first instituting a
legal proceeding against the applicable CCCI Trust, or any other person or
entity. Notwithstanding the foregoing, if the Company has failed to make a
Guarantee Payment, a holder of Preferred Securities may directly institute a
proceeding against the Company for enforcement of such holder's right to receive
payment
32
<PAGE> 98
under the Guarantee. The Company waives any right or remedy to require that any
action be brought first against a CCCI Trust or any other person or entity
before proceeding directly against the Company.
MISCELLANEOUS
The Company will be required to provide annually to the Guarantee Trustee a
statement as to the performance by the Company of certain of its obligations
under each Guarantee and as to any default in such performance. The Company is
required to file annually with the Guarantee Trustee an officer's certificate as
to the Company's compliance with all conditions to be complied with by it under
each Guarantee.
The Guarantee Trustee, prior to the occurrence of a default, undertakes to
perform only such duties as are specifically set forth in the applicable
Guarantee and, after default with respect to a Guarantee, shall exercise the
same degree of care as a prudent individual would exercise under the
circumstances in the conduct of his or her own affairs. Subject to such
provision, the Guarantee Trustee is under no obligation to exercise any of the
powers vested in it by a Preferred Securities Guarantee at the request of any
holder of Preferred Securities unless it is offered reasonable security and
indemnity against the costs, expenses and liabilities that might be incurred
thereby.
ERISA MATTERS
The Company and its affiliates may each be considered a "party in interest"
(within the meaning of the Employee Retirement Income Security Act of 1974, as
amended ("ERISA")) or a "disqualified person" (within the meaning of Section
4975 of the Internal Revenue Code of 1986, as amended (the "Code")) with respect
to many employee benefit plans ("Plans") that are subject to ERISA. The purchase
of Offered Securities by a Plan that is subject to the fiduciary responsibility
provisions of ERISA or the prohibited transaction provisions of Section 4975 of
the Code (including individual retirement arrangements and other plans described
in Section 4975(e)(1) of the Code) and with respect to which the Company or any
affiliate of the Company is a service provider (or otherwise is a party in
interest or a disqualified person) may constitute or result in a prohibited
transaction under ERISA or Section 4975 of the Code, unless such Offered
Securities are acquired pursuant to and in accordance with an applicable
exemption. Any pension or other employee benefit plan proposing to acquire any
Offered Securities should consult with its counsel.
PLAN OF DISTRIBUTION
The Company or the CCCI Trusts may sell the Offered Securities offered
hereby (i) through underwriters or dealers, (ii) through agents, (iii) directly
to purchasers, or (iv) through a combination of any such methods of sale. Any
such underwriter, dealer or agent may be deemed to be an underwriter within the
meaning of the Securities Act. The Prospectus Supplement relating to the Offered
Securities will set forth their offering terms, including the name or names of
any underwriters, dealers or agents, the purchase price of the Offered
Securities and the proceeds to the Company or the CCCI Trusts from such sale,
any underwriting discounts, commissions and other items constituting
compensation to underwriters, dealers or agents, any initial public offering
price, any discounts or concessions allowed or reallowed or paid by underwriters
or dealers to other dealers, and any securities exchanges on which the Offered
Securities may be listed.
If underwriters or dealers are used in the sale, the Offered Securities
will be acquired by the underwriters or dealers for their own account and may be
resold from time to time in one or more transactions, at a fixed price or
prices, which may be changed, or at market prices prevailing at the time of
sale, or at prices related to such prevailing market prices, or at negotiated
prices. The Offered Securities may be offered to the public either through
underwriting syndicates represented by one or more managing underwriters or
directly by one or more of such firms. Unless otherwise set forth in the
Prospectus Supplement, the obligations of underwriters or dealers to purchase
the Offered Securities will be subject to certain conditions precedent and the
underwriters or dealers will be obligated to purchase all the Offered Securities
if any are purchased. Any public offering price and any discounts or concessions
allowed or reallowed or paid by underwriters or dealers to other dealers may be
changed from time to time.
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<PAGE> 99
Offered Securities may be sold directly by the Company or the CCCI Trusts
or through agents designated by the Company or the CCCI Trusts from time to
time. Any agent involved in the offer or sale of the Offered Securities in
respect of which this Prospectus is delivered will be named, and any commissions
payable by the Company or the CCCI Trusts to such agent will be set forth, in
the Prospectus Supplement. Unless otherwise indicated in the Prospectus
Supplement, any such agent will be acting on a best efforts basis for the period
of its appointment.
If so indicated in the Prospectus Supplement, the Company or the CCCI
Trusts will authorize underwriters, dealers or agents to solicit offers by
certain specified institutions to purchase Offered Securities from the Company
or the CCCI Trusts at the public offering price set forth in the Prospectus
Supplement pursuant to delayed delivery contracts providing for payment and
delivery on a specified date in the future. Such contracts will be subject to
any conditions set forth in the Prospectus Supplement and the Prospectus
Supplement will set forth the commission payable for solicitation of such
contracts. The underwriters and other persons soliciting such contracts will
have no responsibility for the validity or performance of any such contracts.
Underwriters, dealers and agents may be entitled under agreements entered
into with the Company or the CCCI Trusts to indemnification by the Company or
the CCCI Trusts against certain civil liabilities, including liabilities under
the Securities Act, or to contribution by the Company or the CCCI Trusts to
payments they may be required to make in respect thereof. The terms and
conditions of such indemnification will be described in an applicable Prospectus
Supplement. Underwriters, dealers and agents may be customers of, engage in
transactions with, or perform services for, the Company or the CCCI Trusts in
the ordinary course of business.
Each series of Offered Securities will be a new issue of securities with no
established trading market. Any underwriters to whom Offered Securities are sold
by the Company or the CCCI Trusts for public offering and sale may make a market
in such Offered Securities, but such underwriters will not be obligated to do so
and may discontinue any market making at any time without notice. No assurance
can be given as to the liquidity of the trading market for any Offered
Securities.
Any underwriter may engage in stabilizing and syndicate covering
transactions in accordance with Rule 104 under the Exchange Act. Rule 104
permits stabilizing bids to purchase the underlying security so long as the
stabilizing bids do not exceed a specified maximum. The underwriters may
over-allot shares of the Common Stock in connection an offering of Common Stock,
thereby creating a short position in the underwriters' account. Syndicate
covering transactions involve purchases of the Debt Securities or Junior
Subordinated Debt Securities in the open market after the distribution has been
completed in order to cover syndicate short positions. Stabilizing and syndicate
covering transactions may cause the price of the Debt Securities or Junior
Subordinated Debt Securities to be higher than it would otherwise be in the
absence of such transactions. These transactions, if commenced, may be
discontinued at any time.
LEGAL OPINIONS
The validity of the Company Securities will be passed upon for the Company
by its special counsel, Akin, Gump, Strauss, Hauer & Feld, L.L.P. (a partnership
including professional corporations), San Antonio, Texas. Certain matters of
Delaware law relating to the validity of the Preferred Securities will be passed
upon for the Company and the CCCI Trusts by Morris, Nichols, Arsht & Tunnell,
Wilmington, Delaware, special Delaware counsel to the Company and the CCCI
Trusts. The validity of the Offered Securities will be passed upon for the
underwriters, dealers or agents, if any, by Cravath, Swaine & Moore, New York,
New York. Alan D. Feld, the sole shareholder of a professional corporation which
is a partner of Akin, Gump, Strauss, Hauer & Feld, L.L.P., is a director of the
Company and owns approximately 90,000 shares of Common Stock (including
presently exercisable nonqualified options to acquire approximately 51,000
shares).
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<PAGE> 100
EXPERTS
The consolidated financial statements incorporated in this Prospectus by
reference to the audited financial statements of Universal Outdoor Holdings,
Inc. as of December 31, 1997 and 1996 and for each of the three years in the
period ended December 31, 1997, have been so incorporated in reliance on the
report of Price Waterhouse LLP, independent accountants, given on the authority
of said firm as experts in auditing and accounting.
The consolidated financial statements of the Company included in the
Company's Current Report on form 8-K dated March 12, 1998, have been audited by
Ernst & Young LLP, independent auditors, as set forth in their report thereon
included therein and incorporated herein by reference which, as to the years
1996 and 1997, are based in part on the reports of KPMG and KPMG Peat Marwick
LLP, respectively, independent auditors. The financial statements referred to
above are incorporated herein by reference in reliance upon such reports given
upon the authority of such firms as experts in accounting and auditing.
The 1996 consolidated financial statements of Australian Radio Network Pty.
Ltd. not separately presented in the Company's Current Report on Form 8-K dated
March 12, 1998, have been audited by KPMG, independent auditors, as set forth in
their report dated March 4, 1997 included in the Company's Annual Report on Form
10-K for the year ended December 31, 1996 and incorporated herein by reference.
Such report referred to above is incorporated herein by reference in reliance
upon the authority of such firm as experts in accounting and auditing.
The consolidated financial statements of Heftel Broadcasting Corporation
and subsidiaries as of and for the year ended December 31, 1997 (not separately
presented in the Company's Current Report on Form 8-K dated March 12, 1998) are
incorporated by reference herein in reliance upon the report of KPMG Peat
Marwick LLP, independent certified public accountants, and upon the authority of
that Firm as experts in accounting and auditing.
The financial statements incorporated in this Prospectus by reference to
the audited historical financial statements of Paxson Radio (a division of
Paxson Communications Corporation) for the year ended December 31, 1996 included
in the Company's Current Report on Form 8-K dated December 22, 1997 have been so
incorporated in reliance on the report of Price Waterhouse LLP, independent
accountants, given on the authority of said firm as experts in auditing and
accounting.
The consolidated financial statements of Eller Media as of December 31,
1996 and 1995 and for the year ended December 31, 1996 and for the period from
August 18, 1995 through December 31, 1995, together with the consolidated
financial statements of PMG Holdings, Inc. and subsidiaries and the combined
financial statements of Eller Investment Company, Inc. for the period from
January 1, 1995 to August 17, 1995, incorporated by reference in this
Registration Statement and elsewhere in the registration statement are included
in the Company's current report on Form 8-K, filed on April 17, 1997, have been
audited by Arthur Andersen LLP, independent public accountants, as indicated in
their report with respect thereto, and are incorporated by reference herein.
The combined financial statements of Eller Investment Company, Inc. as of
and for the year ended December 31, 1994, incorporated by reference in this
Registration Statement are included in the Company's current report on Form 8-K,
filed April 17, 1997, have been audited by Arthur Andersen LLP, independent
public accountants, as indicated in their report with respect thereto and are
incorporated by reference herein.
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<PAGE> 101
======================================================
NO DEALER, SALESPERSON OR OTHER PERSON HAS BEEN AUTHORIZED IN CONNECTION
WITH THE OFFERING MADE HEREBY TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATION NOT CONTAINED OR INCORPORATED IN THIS PROSPECTUS AND, IF GIVEN OR
MADE, SUCH INFORMATION OR REPRESENTATION MUST NOT BE RELIED UPON AS HAVING BEEN
AUTHORIZED BY THE COMPANY OR ANY UNDERWRITER. NEITHER THE DELIVERY OF THIS
PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL UNDER ANY CIRCUMSTANCES CREATE ANY
IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE AFFAIRS OF THE COMPANY SINCE
THE DATES HEREOF OR THEREOF. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO
SELL OR A SOLICITATION OF ANY OFFER TO BUY ANY OF THE SECURITIES OFFERED HEREBY
TO ANY PERSON OR BY ANYONE IN ANY JURISDICTION IN WHICH IT IS UNLAWFUL TO MAKE
SUCH OFFER OR SOLICITATION. NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY SALE
MADE HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THE
INFORMATION CONTAINED HEREIN IS CORRECT AS OF ANY DATE SUBSEQUENT TO THE DATE
HEREOF.
---------------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Available Information.................. 3
Incorporation of Certain Documents by
Reference............................ 3
The Company............................ 4
The CCCI Trusts........................ 4
Ratio of Earnings to Combined Fixed
Charges and Preferred Stock
Dividends............................ 5
Use of Proceeds........................ 5
Holding Company Structure.............. 6
General Description of the Securities
and Risk Factors..................... 6
Description of Debt Securities......... 6
Description of Junior Subordinated Debt
Securities........................... 16
Description of Preferred Stock......... 24
Description of Common Stock............ 24
Description of Warrants................ 26
Description of Stock Purchase Contracts
and Stock Purchase Units............. 27
Description of Preferred Securities.... 28
Description of Guarantees.............. 30
ERISA Matters.......................... 33
Plan of Distribution................... 33
Legal Opinions......................... 34
Experts................................ 35
</TABLE>
======================================================
======================================================
$1,500,000,000
CLEAR CHANNEL
COMMUNICATIONS, INC.
DEBT SECURITIES
JUNIOR SUBORDINATED DEBT SECURITIES
PREFERRED STOCK
COMMON STOCK
WARRANTS
STOCK PURCHASE CONTRACTS
STOCK PURCHASE UNITS
CCCI CAPITAL TRUST I
CCCI CAPITAL TRUST II
CCCI CAPITAL TRUST III
PREFERRED SECURITIES
GUARANTEED TO THE EXTENT
SET FORTH HEREIN BY
CLEAR CHANNEL
COMMUNICATIONS, INC.
---------------------
PROSPECTUS
---------------------
, 1998
======================================================
<PAGE> 102
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The estimated expenses (other than underwriting discounts and commissions)
in connection with the issuance and distribution of the Offered Securities
registered hereby are as follows:
<TABLE>
<S> <C>
SEC registration fee........................................ $ 235,023
Trustee's fees and expenses................................. 50,000
Rating Agency fees.......................................... 150,000
Legal fees and expenses..................................... 250,000
Accounting fees and expenses................................ 100,000
Printing and engraving expenses............................. 200,000
Miscellaneous............................................... 114,977
----------
Total............................................. $1,100,000
==========
</TABLE>
The foregoing expenses will be paid by the registrants.
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS OF THE COMPANY.
Article 2.02-1 of the Texas Business Corporation Act provides for
indemnification of directors and officers in certain circumstances. In addition,
the Texas Miscellaneous Corporation Law provides that a corporation may amend
its Articles of Incorporation to provide that no director shall be liable to the
Company or its shareholders for monetary damages for an act or omission in the
director's capacity as a director, provided that the liability of a director is
not eliminated or limited (i) for any breach of the director's duty of loyalty
to the Company or its shareholders, (ii) for acts or omissions not in good faith
or which involve intentional misconduct or knowing violation of law, (iii) any
transaction from which such director derived an improper personal benefit, or
(iv) an act or omission for which the liability of a director is expressly
provided by an applicable statute. The Company has amended its Articles of
Incorporation and added Article Eleven adopting such limitations on a director's
liability. The Company's Articles of Incorporation also provide in Article Nine,
for indemnification of directors or officers in connection with the defense or
settlement of suits brought against them in their capacities as directors or
officers of the Company, except in respect of liabilities arising from gross
negligence or willful misconduct in the performance of their duties.
Article IX(8) of the Company's bylaws provides for indemnification of any
person made a party to a proceeding by reason of such person's status as a
director, officer, employee, partner or trustee of the Company, except in
respect of liabilities arising from negligence or misconduct in the performance
of their duties.
The Underwriting Agreement provides for indemnification by the underwriters
of the registrants, their directors, officers, and trustees, and by the
registrants of the underwriters, for certain liabilities, including liabilities
arising under the Securities Act.
An insurance policy obtained by the registrant provides for indemnification
of officers and directors of the Company and certain other persons against
liabilities and expenses incurred by any of them in certain stated proceedings
and under certain stated conditions.
INDEMNIFICATION OF TRUSTEES OF THE CCCI TRUSTS.
Each Declaration pursuant to which each CCCI Trust is organized will
provide that no Regular Trustee, or affiliate of any Regular Trustee, or
officer, director, shareholder, member, partner, employee, representative or
agent of any Regular Trustee or of any such affiliate, or employee or agent of
the applicable CCCI Trust or its affiliates (each an "Indemnified Person") shall
be liable, responsible or accountable in damages or otherwise to such CCCI Trust
or any employee or agent of such CCCI Trust or its affiliates for any loss,
II-1
<PAGE> 103
damage or claim incurred by reason of any act or omission performed or omitted
by such Indemnified Person in good faith on behalf of such CCCI Trust and in a
manner such Indemnified Person reasonably believed to be within the scope of the
authority conferred on such Indemnified Person by such Declaration or by law,
except that an Indemnified Person shall be liable for any such loss, damage or
claim incurred by reason of such Indemnified Person's gross negligence or
willful misconduct with respect to such act or omission. Each Declaration also
provides that to the fullest extent permitted by applicable law, the Company
shall indemnify and hold harmless each Indemnified Person from and against any
loss, damage or claim incurred by such Indemnified Person by reason of any act
or omission performed or omitted by such Indemnified Person in good faith on
behalf of the applicable CCCI Trust and in a manner such Indemnified Person
reasonably believed to be within the scope of authority conferred on such
Indemnified Person by such Declaration, except that no Indemnified Person shall
be entitled to be indemnified in respect of any loss, damage or claim incurred
by such Indemnified Person by reason of gross negligence or willful misconduct
with respect to such act or omission. Each Declaration further provides that, to
the fullest extent permitted by applicable law, expenses (including legal fees)
incurred by an Indemnified Person in defending any claim, demand, action, suit
or proceeding shall, from time to time, be advanced by the Company prior to the
final disposition of such claim, demand, action, suit or proceeding upon receipt
of an undertaking by or on behalf of the Indemnified Person to repay such amount
if it shall be determined that the Indemnified Person is not entitled to be
indemnified for the underlying cause of action as authorized by such
Declaration.
ITEM 16. EXHIBITS
<TABLE>
<CAPTION>
EXHIBITS
--------
<C> <S>
1.1+ -- Form of Underwriting Agreement (Equity).
1.2+ -- Form of Underwriting Agreement (Debt).
1.3** -- Form of Underwriting Agreement (Preferred Securities).
1.4** -- Form of Underwriting Agreement (Stock Purchase
Contracts).
1.5** -- Form of Underwriting Agreement (Stock Purchase Units).
2.1 -- Stock Purchase Agreement by and among Clear Channel
Communications, Inc. Eller Media Corporation and the
Stockholders of Eller Media Corporation, dated February
25, 1997. (Incorporated by reference to the exhibits of
the Company's Form 10-K dated March 31, 1997.)
2.2 -- Amendment to Stock Purchase Agreement by and among Clear
Channel Communications, Inc. Eller Media Corporation and
the Stockholders of Eller Media Corporation, dated April
10, 1997. (Incorporated by reference to the exhibits of
the Company's Current Report on Form 8-K dated April 17,
1997.)
2.3 -- Registration Rights Agreement by and between Clear
Channel Communications, Inc., and the Stockholders of
Eller Media Corporation, dated April 10, 1997.
(Incorporated by reference to the exhibits of the
Company's Current Report on Form 8-K dated April 17,
1997.)
2.4 -- Stockholders Agreement by and between Clear Channel
Communications, Inc., and EM Holdings LLC, dated April
10, 1997. (Incorporated by reference to the exhibits of
the Company's Current Report on Form 8-K dated April 17,
1997.)
2.5 -- Escrow Agreement by and among Eller Media Corporation,
Clear Channel Communications, Inc., EM Holdings LLC, and
Chase Trust Company of California, dated April 10, 1997.
(Incorporated by reference to the exhibits of the
Company's Current Report on Form 8-K dated April 17,
1997.)
2.6+ -- Asset Purchase Agreement by and among Paxson
Communications Corporation, Clear Channel Metroplex,
Inc., Clear Channel Metroplex Licenses, Inc., and Clear
Channel Communications, Inc., dated August 25, 1997.
2.7+ -- Asset Purchase Agreement by and among Paxson
Communications Corporation, L. Paxson, Inc., Clear
Channel Metroplex, Inc., Clear Channel Metroplex
Licenses, Inc., and Clear Channel Communications, Inc.,
dated August 25, 1997.
</TABLE>
II-2
<PAGE> 104
<TABLE>
<CAPTION>
EXHIBITS
--------
<C> <S>
2.8 -- Agreement and Plan of Merger dated as of October 23,
1997, among Universal Outdoor Holdings, Inc., the
Company, and UH Merger Sub, Inc. (Incorporated by
reference to the exhibits of the Company's Current Report
on Form 8-K dated November 3, 1997.)
2.9 -- Voting Agreement dated as of October 23, 1997, by and
among the Company and Daniel L. Simon. (Incorporated by
reference to the exhibits of the Company Current Report
on Form 8-K dated November 3, 1997.)
2.10 -- Voting Agreement dated as of October 23, 1997, by and
among the Company and Brian T. Clingen. (Incorporated by
reference to the exhibits of the Company's Current Report
on Form 8-K dated November 3, 1997.)
2.11 -- Resale Agreement dated as of October 23, 1997, by and
among the Company and Daniel L. Simon. (Incorporated by
reference to the Company's Registration Statement on Form
S-4 (File No. 333-43747)).
3.1+ -- Current Articles of Incorporation of the Company.
3.2+ -- Second Amended and Restated Bylaws of the Company.
4.1 -- Buy-Sell Agreement by and between Clear Channel
Communications, Inc., L. Lowry Mays, B. J. McCombs, John
M. Schaefer, and John W. Barger, dated May 31, 1977.
(Incorporated by reference to the exhibits of the
Company's Registration Statement on Form S-1 (Reg. No.
33-289161) dated April 19, 1984).
4.2 -- Third Amended and Restated Credit Agreement by and among
Clear Channel Communications, Inc., NationsBank of Texas,
N.A., as administrative lender, the First National Bank
of Boston, as documentation agent, the Bank of Montreal
and Toronto Dominion (Texas), Inc., as co-syndication
agents, and certain other lenders dated April 10, 1997.
(Incorporated by reference to the exhibits of the
Company's Amendment No. 1 to the Registration Statement
on Form S-3 (Reg. No. 333-25497) dated May 9, 1997).
4.3+ -- Form of Senior Indenture.
4.4 -- Form of Senior Debt Security (included in Form of Senior
Indenture filed as Exhibit 4.3).
4.5+ -- Form of Subordinated Indenture.
4.6 -- Form of Subordinated Debt Security (included in Form of
Subordinated Indenture filed as Exhibit 4.5).
4.7+ -- Form of Junior Subordinated Indenture.
4.8 -- Form of Junior Subordinated Debt Security (included in
Form of Junior Subordinated Indenture filed as Exhibit
4.7).
4.9 -- Form of Preferred Securities Certificate (included in
Forms of Amended and Restated Declaration of CCCI Capital
Trusts I, II, and III filed as Exhibits 4.18, 4.19, and
4.20, respectively).
4.10+ -- Form of Warrant Agreement.
4.11+ -- Form of Standard Stock Warrant Agreement Provisions.
4.12+ -- Certificate of Trust of CCCI Capital Trust I.
4.13+ -- Certificate of Trust of CCCI Capital Trust II.
4.14+ -- Certificate of Trust of CCCI Capital Trust III.
4.15+ -- Declaration of CCCI Capital Trust I.
4.16+ -- Declaration of CCCI Capital Trust II.
4.17+ -- Declaration of CCCI Capital Trust III.
4.18+ -- Form of Amended and Restated Declaration of CCCI Capital
Trust I.
4.19+ -- Form of Amended and Restated Declaration of CCCI Capital
Trust II.
4.20+ -- Form of Amended and Restated Declaration of CCCI Capital
Trust III.
4.21+ -- Form of Pledge Agreement.
4.22+ -- Form of Deposit Agreement.
4.23+ -- Form of Stock Purchase Contract Agreement.
4.24+ -- Form of Guarantee of CCCI Capital Trust I.
</TABLE>
II-3
<PAGE> 105
<TABLE>
<CAPTION>
EXHIBITS
--------
<C> <S>
4.25+ -- Form of Guarantee of CCCI Capital Trust II.
4.26+ -- Form of Guarantee of CCCI Capital Trust III.
5.1++ -- Opinion of Akin, Gump, Strauss, Hauer & Feld, L.L.P.,
special counsel for the Company, regarding the Senior
Debt Securities, the Subordinated Debt Securities, the
Preferred Stock, the Common Stock, the Warrants, the
Stock Purchase Contracts, and the Stock Purchase Units.
5.2* -- Opinion of Morris, Nichols, Arsht & Tunnell, special
Delaware counsel for the Company and the CCCI Trusts,
regarding the Preferred Securities.
12* -- Computation of Ratio of Earnings to Fixed Charges.
23.1* -- Consent of Ernst & Young LLP.
23.2* -- Consent of KPMG.
23.3* -- Consent of KPMG Peat Marwick LLP.
23.4* -- Consent of Arthur Andersen LLP.
23.5* -- Consent of Price Waterhouse LLP.
23.6* -- Consent of Price Waterhouse LLP.
23.7 -- Consent of Akin, Gump, Strauss, Hauer & Feld, L.L.P.
(included in opinion filed as Exhibit 5.1).
23.8 -- Consent of Morris, Nichols, Arsht & Tunnell (to be
included in opinion filed as Exhibit 5.2).
24 -- Power of Attorney for Clear Channel Communications, Inc.
(included on previously filed Signature Page).
25.1+ -- Statement on Form T-1 of the eligibility of The Bank of
New York, as trustee under the Senior Indenture.
25.2+ -- Statement on Form T-1 of the eligibility of The Bank of
New York, as trustee under the Subordinated Indenture.
25.3+ -- Statement on Form T-1 of the eligibility of The Bank of
New York, as trustee under the Junior Subordinated
Indenture.
25.4+ -- Statement on Form T-1 of the eligibility of The Bank of
New York, as trustee under the Declaration of Trust of
CCCI Capital Trust I.
25.5+ -- Statement on Form T-1 of the eligibility of The Bank of
New York, as trustee under the Declaration of Trust of
CCCI Capital Trust II.
25.6+ -- Statement on Form T-1 of the eligibility of The Bank of
New York, as trustee under the Declaration of Trust of
CCCI Capital Trust III.
25.7+ -- Statement on Form T-1 of the eligibility of The Bank of
New York, as trustee under the Trust Guarantee of the
Company for the benefit of the holders of Preferred
Securities of the CCCI Capital Trust I.
25.8+ -- Statement on Form T-1 of the eligibility of The Bank of
New York, as trustee under the Trust Guarantee of the
Company for the benefit of the holders of Preferred
Securities of the CCCI Capital Trust II.
25.9+ -- Statement on Form T-1 of the eligibility of The Bank of
New York, as trustee under the Trust Guarantee of the
Company for the benefit of the holders of Preferred
Securities of the CCCI Capital Trust III.
</TABLE>
- ---------------
* Filed herewith.
** To be filed by subsequent Form 8-K.
+ Incorporated by reference to the exhibits of the Company's Registration
Statement on Form S-3 (Reg. No. 333-33371) dated September 9, 1997.
++ Previously filed.
II-4
<PAGE> 106
ITEM 17. UNDERTAKINGS
The undersigned Registrants hereby undertake:
(1) To file, during any period in which offers or sales are being made of
the securities registered hereby, a post-effective amendment to this
Registration Statement
(i) to include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933;
(ii) to reflect in the Prospectus any facts or events arising after
the effective date of this Registration Statement (or the most recent
post-effective amendment thereof) which, individually or in the aggregate,
represent a fundamental change in the information set forth in the
Registration Statement; provided, however, that notwithstanding the
foregoing, any increase or decrease in volume of securities offered (if the
total dollar value of securities offered would not exceed that which was
registered) and any deviation from the low or high end of the estimated
maximum offering range may be reflected in the form of prospectus filed
with the Securities and Exchange Commission pursuant to Rule 424(b) if, in
the aggregate, the changes in volume and price represent no more than a 20%
change in the maximum aggregate offering price set forth in the
"Calculation of Registration Fee" table in the effective registration
statement; and
(iii) to include any material information with respect to the plan of
distribution not previously disclosed in the Registration Statement or any
material change to such information in the Registration Statement;
provided, however, that the undertakings set forth in clauses (i) and (ii)
above do not apply if the information required to be included in a
post-effective amendment by those clauses is contained in periodic reports
filed by the Company pursuant to Section 13 or 15(d) of the Securities and
Exchange Act of 1934 that are incorporated by reference in this
Registration Statement;
(2) That, for the purpose of determining any liability under the Securities
Act of 1933, each such post-effective amendment shall be deemed to be a new
registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof;
(3) To remove from registration by means of a post-effective amendment any
of the securities being registered which remain unsold at the termination of the
offering; and
(4) That, for the purposes of determining any liability under the
Securities Act of 1933, each filing of the Company's annual report pursuant to
Section 13(a) or 15(d) of the Securities Exchange Act of 1934 that is
incorporated by reference in this Registration Statement shall be deemed to be a
new registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers and controlling persons of the
Registrants pursuant to the provisions described under Item 15 above or
otherwise, the Registrants have been advised that in the opinion of the
Securities and Exchange Commission such indemnification is against public policy
as expressed in the Securities Act of 1933 and is therefore unenforceable. In
the event that a claim for indemnification against such liabilities (other than
the payment by the Registrants of expenses incurred or paid by a director,
officer or controlling person of the Registrants in the successful defense of
any action, suit or proceeding) is asserted against the Registrants by such
director, officer or controlling person in connection with the securities being
registered, the Registrants will, unless in the opinion of their respective
counsels the matter has been settled by controlling precedent, submit to a court
of appropriate jurisdiction the question whether such indemnification by it is
against public policy as expressed in the Securities Act of 1933 and will be
governed by the final adjudication of such issue.
The undersigned registrant hereby undertakes to file an application for the
purpose of determining the eligibility of the trustee to act under subsection
(a) of Section 310 of the Trust Indenture Act in accordance with the rules and
regulations prescribed by the Commission under Section 305(b)(2) of the Act.
II-5
<PAGE> 107
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-3 and has duly caused this Amendment No. 1 to
the Registration Statement to be signed on its behalf by the undersigned,
thereunto duly authorized, in the City of San Antonio, State of Texas, on March
12, 1998.
CLEAR CHANNEL COMMUNICATIONS, INC.
By: /s/ L. LOWRY MAYS
-------------------------------------
L. Lowry Mays
Chief Executive Officer
Pursuant to the requirements of the Securities Act of 1933, this Amendment
No. 1 to the Registration Statement has been signed below by the following
persons in the capacities and on the dates indicated below.
<TABLE>
<CAPTION>
NAME TITLE DATE
---- ----- ----
<C> <S> <C>
/s/ L. LOWRY MAYS Chief Executive Officer and Director March 12, 1998
- ------------------------------------------------
L. Lowry Mays
/s/ RANDALL T. MAYS Senior Vice President/Chief Financial March 12, 1998
- ------------------------------------------------ Officer (Principal Financial
Randall T. Mays Officer)
/s/ HERBERT W. HILL, JR. Senior Vice President/Chief March 12, 1998
- ------------------------------------------------ Accounting Officer (Principal
Herbert W. Hill, Jr. Accounting Officer)
/s/ B. J. MCCOMBS* Director March 12, 1998
- ------------------------------------------------
B.J. McCombs
/s/ ALAN D. FELD* Director March 12, 1998
- ------------------------------------------------
Alan D. Feld
/s/ THEODORE H. STRAUSS* Director March 12, 1998
- ------------------------------------------------
Theodore H. Strauss
/s/ JOHN H. WILLIAMS* Director March 12, 1998
- ------------------------------------------------
John H. Williams
Director
- ------------------------------------------------
Karl Eller
*By: /s/ L. LOWRY MAYS
------------------------------------------
as attorney-in-fact
pursuant to a Power of
Attorney previously filed
</TABLE>
II-6
<PAGE> 108
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, each of CCCI
Capital Trust I, CCCI Capital Trust II and CCCI Capital Trust III certifies that
it has reasonable grounds to believe that it meets all of the requirements for
filing on Form S-3 and has duly caused this Amendment No. 1 to the Registration
Statement to be signed on its behalf by the undersigned thereunto duly
authorized, in the City of San Antonio, Texas on the 12th day of March, 1998.
CCCI CAPITAL TRUST I,
a Delaware business trust
By: CLEAR CHANNEL COMMUNICATIONS, INC.,
as Depositor
By: /s/ L. LOWRY MAYS
------------------------------------------
L. Lowry Mays
Chief Executive Officer
CCCI CAPITAL TRUST II,
a Delaware business trust
By: CLEAR CHANNEL COMMUNICATIONS, INC.,
as Depositor
By: /s/ L. LOWRY MAYS
------------------------------------------
L. Lowry Mays
Chief Executive Officer
CCCI CAPITAL TRUST III,
a Delaware business trust
By: CLEAR CHANNEL COMMUNICATIONS, INC.,
as Depositor
By: /s/ L. LOWRY MAYS
------------------------------------------
L. Lowry Mays
Chief Executive Officer
II-7
<PAGE> 109
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBITS
--------
<C> <S>
1.1+ -- Form of Underwriting Agreement (Equity).
1.2+ -- Form of Underwriting Agreement (Debt).
1.3** -- Form of Underwriting Agreement (Preferred Securities).
1.4** -- Form of Underwriting Agreement (Stock Purchase
Contracts).
1.5** -- Form of Underwriting Agreement (Stock Purchase Units).
2.1 -- Stock Purchase Agreement by and among Clear Channel
Communications, Inc. Eller Media Corporation and the
Stockholders of Eller Media Corporation, dated February
25, 1997. (Incorporated by reference to the exhibits of
the Company's Form 10-K dated March 31, 1997.)
2.2 -- Amendment to Stock Purchase Agreement by and among Clear
Channel Communications, Inc. Eller Media Corporation and
the Stockholders of Eller Media Corporation, dated April
10, 1997. (Incorporated by reference to the exhibits of
the Company's Current Report on Form 8-K dated April 17,
1997.)
2.3 -- Registration Rights Agreement by and between Clear
Channel Communications, Inc., and the Stockholders of
Eller Media Corporation, dated April 10, 1997.
(Incorporated by reference to the exhibits of the
Company's Current Report on Form 8-K dated April 17,
1997.)
2.4 -- Stockholders Agreement by and between Clear Channel
Communications, Inc., and EM Holdings LLC, dated April
10, 1997. (Incorporated by reference to the exhibits of
the Company's Current Report on Form 8-K dated April 17,
1997.)
2.5 -- Escrow Agreement by and among Eller Media Corporation,
Clear Channel Communications, Inc., EM Holdings LLC, and
Chase Trust Company of California, dated April 10, 1997.
(Incorporated by reference to the exhibits of the
Company's Current Report on Form 8-K dated April 17,
1997.)
2.6+ -- Asset Purchase Agreement by and among Paxson
Communications Corporation, Clear Channel Metroplex,
Inc., Clear Channel Metroplex Licenses, Inc., and Clear
Channel Communications, Inc., dated August 25, 1997.
2.7+ -- Asset Purchase Agreement by and among Paxson
Communications Corporation, L. Paxson, Inc., Clear
Channel Metroplex, Inc., Clear Channel Metroplex
Licenses, Inc., and Clear Channel Communications, Inc.,
dated August 25, 1997.
2.8 -- Agreement and Plan of Merger dated as of October 23,
1997, among Universal Outdoor Holdings, Inc., the
Company, and UH Merger Sub, Inc. (Incorporated by
reference to the exhibits of the Company's Current Report
on Form 8-K dated November 3, 1997.)
2.9 -- Voting Agreement dated as of October 23, 1997, by and
among the Company and Daniel L. Simon. (Incorporated by
reference to the exhibits of the Company Current Report
on Form 8-K dated November 3, 1997.)
2.10 -- Voting Agreement dated as of October 23, 1997, by and
among the Company and Brian T. Clingen. (Incorporated by
reference to the exhibits of the Company's Current Report
on Form 8-K dated November 3, 1997.)
2.11 -- Resale Agreement dated as of October 23, 1997, by and
among the Company and Daniel L. Simon. (Incorporated by
reference to the Company's Registration Statement on Form
S-4 (File No. 333-43747)).
3.1+ -- Current Articles of Incorporation of the Company.
3.2+ -- Second Amended and Restated Bylaws of the Company.
</TABLE>
<PAGE> 110
<TABLE>
<CAPTION>
EXHIBITS
--------
<C> <S>
4.1 -- Buy-Sell Agreement by and between Clear Channel
Communications, Inc., L. Lowry Mays, B. J. McCombs, John
M. Schaefer, and John W. Barger, dated May 31, 1977.
(Incorporated by reference to the exhibits of the
Company's Registration Statement on Form S-1 (Reg. No.
33-289161) dated April 19, 1984).
4.2 -- Third Amended and Restated Credit Agreement by and among
Clear Channel Communications, Inc., NationsBank of Texas,
N.A., as administrative lender, the First National Bank
of Boston, as documentation agent, the Bank of Montreal
and Toronto Dominion (Texas), Inc., as co-syndication
agents, and certain other lenders dated April 10, 1997.
(Incorporated by reference to the exhibits of the
Company's Amendment No. 1 to the Registration Statement
on Form S-3 (Reg. No. 333-25497) dated May 9, 1997).
4.3+ -- Form of Senior Indenture.
4.4 -- Form of Senior Debt Security (included in Form of Senior
Indenture filed as Exhibit 4.3).
4.5+ -- Form of Subordinated Indenture.
4.6 -- Form of Subordinated Debt Security (included in Form of
Subordinated Indenture filed as Exhibit 4.5).
4.7+ -- Form of Junior Subordinated Indenture.
4.8 -- Form of Junior Subordinated Debt Security (included in
Form of Junior Subordinated Indenture filed as Exhibit
4.7).
4.9 -- Form of Preferred Securities Certificate (included in
Forms of Amended and Restated Declaration of CCCI Capital
Trusts I, II, and III filed as Exhibits 4.18, 4.19, and
4.20, respectively).
4.10+ -- Form of Warrant Agreement.
4.11+ -- Form of Standard Stock Warrant Agreement Provisions.
4.12+ -- Certificate of Trust of CCCI Capital Trust I.
4.13+ -- Certificate of Trust of CCCI Capital Trust II.
4.14+ -- Certificate of Trust of CCCI Capital Trust III.
4.15+ -- Declaration of CCCI Capital Trust I.
4.16+ -- Declaration of CCCI Capital Trust II.
4.17+ -- Declaration of CCCI Capital Trust III.
4.18+ -- Form of Amended and Restated Declaration of CCCI Capital
Trust I.
4.19+ -- Form of Amended and Restated Declaration of CCCI Capital
Trust II.
4.20+ -- Form of Amended and Restated Declaration of CCCI Capital
Trust III.
4.21+ -- Form of Pledge Agreement.
4.22+ -- Form of Deposit Agreement.
4.23+ -- Form of Stock Purchase Contract Agreement.
4.24+ -- Form of Guarantee of CCCI Capital Trust I.
4.25+ -- Form of Guarantee of CCCI Capital Trust II.
4.26+ -- Form of Guarantee of CCCI Capital Trust III.
5.1++ -- Opinion of Akin, Gump, Strauss, Hauer & Feld, L.L.P.,
special counsel for the Company, regarding the Senior
Debt Securities, the Subordinated Debt Securities, the
Preferred Stock, the Common Stock, the Warrants, the
Stock Purchase Contracts, and the Stock Purchase Units.
5.2* -- Opinion of Morris, Nichols, Arsht & Tunnell, special
Delaware counsel for the Company and the CCCI Trusts,
regarding the Preferred Securities.
</TABLE>
<PAGE> 111
<TABLE>
<CAPTION>
EXHIBITS
--------
<C> <S>
12* -- Computation of Ratio of Earnings to Fixed Charges.
23.1* -- Consent of Ernst & Young LLP.
23.2* -- Consent of KPMG.
23.3* -- Consent of KPMG Peat Marwick LLP.
23.4* -- Consent of Arthur Andersen LLP.
23.5* -- Consent of Price Waterhouse LLP.
23.6* -- Consent of Price Waterhouse LLP.
23.7 -- Consent of Akin, Gump, Strauss, Hauer & Feld, L.L.P.
(included in opinion filed as Exhibit 5.1).
23.8 -- Consent of Morris, Nichols, Arsht & Tunnell (to be
included in opinion filed as Exhibit 5.2).
24 -- Power of Attorney for Clear Channel Communications, Inc.
(included on previously filed Signature Page).
25.1+ -- Statement on Form T-1 of the eligibility of The Bank of
New York, as trustee under the Senior Indenture.
25.2+ -- Statement on Form T-1 of the eligibility of The Bank of
New York, as trustee under the Subordinated Indenture.
25.3+ -- Statement on Form T-1 of the eligibility of The Bank of
New York, as trustee under the Junior Subordinated
Indenture.
25.4+ -- Statement on Form T-1 of the eligibility of The Bank of
New York, as trustee under the Declaration of Trust of
CCCI Capital Trust I.
25.5+ -- Statement on Form T-1 of the eligibility of The Bank of
New York, as trustee under the Declaration of Trust of
CCCI Capital Trust II.
25.6+ -- Statement on Form T-1 of the eligibility of The Bank of
New York, as trustee under the Declaration of Trust of
CCCI Capital Trust III.
25.7+ -- Statement on Form T-1 of the eligibility of The Bank of
New York, as trustee under the Trust Guarantee of the
Company for the benefit of the holders of Preferred
Securities of the CCCI Capital Trust I.
25.8+ -- Statement on Form T-1 of the eligibility of The Bank of
New York, as trustee under the Trust Guarantee of the
Company for the benefit of the holders of Preferred
Securities of the CCCI Capital Trust II.
25.9+ -- Statement on Form T-1 of the eligibility of The Bank of
New York, as trustee under the Trust Guarantee of the
Company for the benefit of the holders of Preferred
Securities of the CCCI Capital Trust III.
</TABLE>
- ---------------
* Filed herewith.
** To be filed by subsequent Form 8-K.
+ Incorporated by reference to the exhibits of the Company's Registration
Statement on Form S-3 (Reg. No. 333-33371) dated September 9, 1997.
++ Previously filed.
<PAGE> 1
EXHIBIT 5.2
[Letterhead of Morris, Nichols, Arsht & Tunnell]
March 12, 1998
The CCCI Trusts
(as defined below)
c/o Clear Channel Communications, Inc.
200 Concord Plaza, Suite 600
San Antonio, Texas 78216
Re: The CCCI Trusts (as defined below)
Ladies and Gentlemen:
We have acted as special Delaware counsel to CCCI Capital Trust I, CCCI
Capital Trust II and CCCI Capital Trust III, each a Delaware statutory business
trust (collectively referred to herein as the "CCCI Trusts" and each,
individually, as a "CCCI Trust"), in connection with certain matters relating to
the creation of the CCCI Trusts and the proposed issuance of Preferred
Securities therein to beneficial owners pursuant to and as described in
Registration Statement Nos. 333-47367, 333-47367-01, 333-47367-02, and
333-47367-03 (and the Prospectus forming a part thereof) on Form S-3 filed with
the Securities and Exchange Commission (the "Commission") by the CCCI Trusts and
Clear Channel Communications, Inc. (the "Company") on March 5, 1998, as amended
by Pre-Effective Amendment No. 1 thereto (as so amended, the "Registration
Statement"). Capitalized terms used herein and not otherwise herein defined are
used with respect to each CCCI Trust as defined in the form of Amended and
Restated Declaration of Trust of such CCCI Trust that was filed as an exhibit to
the Company's Registration Statement on Form S-3 (Reg. No. 333-33371) and
incorporated by reference in the Registration Statement.
In rendering this opinion, we have examined and relied upon copies of the
following documents in the forms provided to us: the Certificate of Trust of
each CCCI Trust as filed in the Office of the Secretary of State of the State of
Delaware (the "State Office") on July 30, 1997 (the Certificate of Trust of each
CCCI Trust is referred to herein as a "Certificate"); the Declaration of Trust
of each CCCI Trust dated as of July 30, 1997 (the Declaration of Trust of each
CCCI Trust is referred to herein as an "Original Governing Instrument"); a draft
form of Amended and Restated Declaration of Trust of each CCCI Trust dated
August 8, 1997 (the draft form of Amended and Restated Declaration for each CCCI
Trust is referred to herein as a "Governing Instrument"); the form of Junior
Subordinated Indenture to be entered into between the Company and the Bank of
New York, as Trustee; the form of Guarantee Agreement to be made by the Company
with respect to each CCCI Trust; the form of Underwriting Agreement relating to
the Preferred Securities to be entered into between the Company, on its own
behalf and on behalf of each CCCI Trust, and the Underwriters (as defined
therein) (the "Underwriting Agreement"); the Registration Statement; and a
certification of good standing of each CCCI Trust obtained as of a recent date
from the State Office. In such examinations, we have assumed the genuineness of
all signatures, the conformity to original documents of all documents submitted
to us as drafts or copies or forms of documents to be executed and the legal
capacity of natural persons to complete the execution of documents. We have
further assumed for purposes of this opinion: (i) the due formation or
organization, valid existence and good standing of each entity (other than the
CCCI Trusts) that is a party to any of the documents reviewed by us under the
laws of the jurisdiction of its respective formation or organization; (ii) the
due authorization, execution and delivery by, or on behalf of, each of the
parties thereto of the above-referenced documents with respect to each CCCI
Trust; (iii) that the Company, the Bank of New York, the Bank of New York
(Delaware) and the appropriate Regular Trustees will duly authorize, execute and
deliver the applicable Governing Instrument, Underwriting Agreement and all
other documents contemplated thereby or by the Registration Statement to be
executed in connection with the issuance by each CCCI Trust of Preferred
Securities, in each case prior to the first issuance of Preferred Securities;
(iv) that the Preferred Securities of each CCCI Trust will be offered and sold
pursuant to the Registration Statement and a prospectus supplement that will be
consistent with, and accurately describe, the
<PAGE> 2
terms of the applicable Governing Instrument and the applicable Guarantee
Agreement relating to each such CCCI Trust and all other relevant documents; (v)
that no event has occurred subsequent to the filing of any Certificate that
would cause a dissolution or liquidation of any CCCI Trust under the applicable
Original Governing Instrument or the applicable Governing Instrument; (vi) that
the activities of each CCCI Trust have been and will be conducted in accordance
with its Original Governing Instrument or its Governing Instrument, as
applicable, and the Delaware Business Trust Act, 12 Del. C. sec.sec. 3801 et
seq. (the "Delaware Act"); (vii) that each Holder of Preferred Securities of a
CCCI Trust has, or prior to the first issuance of Preferred Securities of such
CCCI Trust will have, made payment of the required consideration therefor and
received a Preferred Securities Certificate of such CCCI Trust in consideration
thereof in accordance with the terms and conditions of the applicable Governing
Instrument, the Registration Statement, the applicable prospectus supplement and
Underwriting Agreement and that the Preferred Securities of each CCCI Trust are
otherwise issued and sold in accordance with the terms, conditions, requirements
and procedures set forth in the applicable Governing Instrument, the
Registration Statement, the applicable prospectus supplement and Underwriting
Agreement; and (viii) that the documents examined by us are in full force and
effect, express the entire understanding of the parties thereto with respect to
the subject matter thereof and have not been amended, supplemented or otherwise
modified, except as herein referenced. No opinion is expressed with respect to
the requirements of, or compliance with, federal or state securities or blue sky
laws. We have not participated in the preparation of the Registration Statement
or any other offering material relating to the Preferred Securities, and we
assume no responsibility for their contents. As to any fact material to our
opinion, other than those assumed, we have relied without independent
investigation on the above-referenced documents and certificates and on the
accuracy, as of the date hereof, of the matters therein contained.
Based on and subject to the foregoing, and limited in all respects to
matters of Delaware law, it is our opinion that:
1. Each CCCI Trust is a duly created and validly existing statutory
business trust in good standing under the laws of the State of Delaware.
2. The Preferred Securities of each CCCI Trust, upon issuance, will
constitute validly issued and, subject to the qualifications set forth in
paragraph 3 below, fully paid and non-assessable beneficial interests in
the assets of such CCCI Trust.
3. Under the Delaware Act and the terms of the applicable Governing
Instrument, each Preferred Security Holder of a CCCI Trust, in such
capacity, will be entitled to the same limitation of personal liability as
that extended to stockholders of private corporations for profit organized
under the General Corporation Law of the State of Delaware; provided,
however, we express no opinion with respect to the liability of any
Preferred Security Holder of a CCCI Trust who is, was or may become a named
Trustee of such CCCI Trust. We note that pursuant to Section 11.04 of each
Governing Instrument, each CCCI Trust may withhold amounts otherwise
distributable to a Holder of such CCCI Trust and pay over such amounts to
the applicable jurisdictions in accordance with federal, state and local
law and any amount withheld will be deemed to have been distributed to such
Holder and that, pursuant to each Governing Instrument, Preferred Security
Holders of a CCCI Trust may be obligated to make payments or provide
indemnity or security under the circumstances set forth therein.
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement and to the use of our name under the heading "LEGAL
OPINIONS" in the Prospectus forming a part thereof. In giving this consent, we
do not thereby admit that we come within the category of persons whose consent
is required under Section 7 of the Securities Act of 1933, as amended, or the
rules and regulations of the Commission thereunder. This opinion speaks only as
of the date hereof and is based on our understandings and assumptions as to
present facts, and on our review of the above-referenced documents and the
application of Delaware law as the same exist as of the date hereof, and we
undertake no obligation to update or supplement this opinion after the date
hereof for the benefit of any person or entity with respect to any facts or
circumstances that may hereafter come to our attention or any changes in facts
or law that may hereafter occur or take effect. This opinion is intended solely
for the benefit of the addressees hereof in connection with the matters
contemplated
<PAGE> 3
hereby and may not be relied on by any other person or entity or for any other
purpose without our prior written consent.
Very truly yours,
MORRIS, NICHOLS, ARSHT & TUNNELL
/s/ MORRIS, NICHOLS, ARSHT &
TUNNELL
------------------------------------
<PAGE> 1
EXHIBIT 12
COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES
(IN THOUSANDS EXCEPT RATIO)
<TABLE>
<CAPTION>
12 MONTHS ENDED
------------------------------------------------
1997 1996 1995 1994 1993
------- ------- ------ ------ ------
<S> <C> <C> <C> <C> <C>
Income before income taxes.................. 104,077 71,240 49,817 36,396 15,696
Dividends and other income received from
nonconsolidated affiliates................ 4,624 10,430 1,432 -- --
------- ------- ------ ------ ------
Total............................. 108,701 81,670 51,249 36,396 15,696
FIXED CHARGES
Interest expense............................ 75,076 30,080 20,752 7,669 5,390
Amortization of loan fees................... 1,451 506 1,004 82 5
Interest portion of rentals................. 6,120 424 361 262 188
------- ------- ------ ------ ------
Total fixed charges............... 82,647 31,010 22,117 8,013 5,583
Preferred stock dividends
Tax effect of preferred dividends........... 0 0 0 0 0
After tax preferred dividends............... 0 0 0 0 0
------- ------- ------ ------ ------
Total fixed charges and preferred
dividends................................. 82,647 31,010 22,117 8,013 5,583
------- ------- ------ ------ ------
Total earnings available for
payment of fixed charges........ 191,348 112,680 73,366 44,409 21,279
======= ======= ====== ====== ======
Ratio of earnings to fixed
charges......................... 2.32 3.63 3.32 5.54 3.81
======= ======= ====== ====== ======
Rental fees and charges..................... 76,500 5,299 4,510 3,273 2,344
Interest rate..................... 8% 8% 8% 8% 8%
</TABLE>
<PAGE> 1
EXHIBIT 23.1
CONSENT OF ERNST & YOUNG LLP
We consent to the reference to our firm under the caption "Experts" in the
shelf Registration Statement (Form S-3 No. 333-47367) and related Prospectus of
Clear Channel Communications, Inc. and to the incorporation by reference therein
of our report dated March 11, 1998, with respect to the consolidated financial
statements of Clear Channel Communications, Inc. included in its Current Report
on Form 8-K dated March 12, 1998 filed with the Securities and Exchange
Commission.
/s/ ERNST & YOUNG LLP
ERNST & YOUNG LLP
March 12, 1998
San Antonio, Texas
<PAGE> 1
EXHIBIT 23.2
Board of Directors
Clear Channel Communications, Inc
We consent to the incorporation by reference in the Registration Statement
on form S-3 of our report dated March 4, 1997, relating to the 1996 consolidated
financial statements of Australian Radio Network Pty Limited and its controlled
entities, which report appears in the Annual Report of Clear Channel
Communications, Inc. for the year ended December 31, 1996.
/s/ KPMG
- ------------------------------------
KPMG
Sydney, Australia
March 12, 1998
<PAGE> 1
EXHIBIT 23.3
INDEPENDENT AUDITORS' CONSENT
The Board of Directors
Clear Channel Communications, Inc.:
We consent to (a) the incorporation by reference in this Registration
Statement on Form S-3 (No. 333-47367) of our report on the consolidated
financial statements of Heftel Broadcasting Corporation and subsidiaries as of
and for the year ended December 31, 1997, which report is included in the
Current Report on Form 8-K of Clear Channel Communications, Inc. dated March 12,
1998 and (b) the reference to our firm under the heading "Experts" in the
Prospectus.
KPMG Peat Marwick LLP
Dallas, Texas
March 12, 1998
<PAGE> 1
EXHIBIT 23.4
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation
by reference in this registration statement on Form S-3 of our reports dated
March 14, 1997 and March 9, 1995 covering Eller Media Corporation and Eller
Investment Company, Inc., respectively, included in Clear Channel
Communications, Inc. Current Report on Form 8-K, filed April 17, 1997 and to all
references to our firm included in this registration statement.
/s/ ARTHUR ANDERSEN LLP
------------------------------------
Phoenix, Arizona
March 12, 1998
<PAGE> 1
EXHIBIT 23.5
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in the Prospectus
constituting part of this Registration Statement on Form S-3 of Clear Channel
Communications, Inc. of our report dated March 6, 1998, relating to the
consolidated financial statements of Universal Outdoor Holdings, Inc., which
appears in the Current Report on Form 8-K of Clear Channel Communications, Inc.
dated March 12, 1998. We also consent to the reference to us under the heading
"Experts" in such Prospectus.
/s/ PRICE WATERHOUSE LLP
- ------------------------------------
Chicago, Illinois
March 12, 1998
<PAGE> 1
EXHIBIT 23.6
CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
We hereby consent to the incorporation by reference in the Prospectus
constituting part of this Amendment No. 1 to the Registration Statement on Form
S-3 of Clear Channel Communications, Inc. of our report dated November 3, 1997
relating to the financial statements of Paxson Radio (a division of Paxson
Communications Corporation) included in Clear Channel Communications, Inc.'s
Current Report on Form 8-K dated December 22, 1997. We also consent to the
reference to us under the heading "Experts" in such Prospectus.
/s/ PRICE WATERHOUSE LLP
----------------------------------------
Price Waterhouse LLP
Fort Lauderdale, Florida
March 12, 1998
