<PAGE> 1
Filed Pursuant to Rule 424(b)(5)
Registration Nos. 333-76105, 333-76105-01,
333-76105-02, 333-76105-03
PROSPECTUS SUPPLEMENT TO PROSPECTUS
DATED APRIL 26, 1999
CLEAR CHANNEL LOGO
CLEAR CHANNEL COMMUNICATIONS, INC.
$900,000,000
1.5% SENIOR CONVERTIBLE NOTES DUE 2002
We are offering $900,000,000 of 1.5% senior convertible notes due 2002. You may
convert your convertible notes into shares of our common stock at any time prior
to maturity. The convertible notes will mature on December 1, 2002. The
conversion rate is 9.45 shares per each $1,000 principal amount of convertible
notes, subject to adjustment in certain circumstances. This is equivalent to a
conversion price of $105.78 per share. The common stock trades on the New York
Stock Exchange under the symbol "CCU." On November 18, 1999, the last reported
sale price of the common stock on the New York Stock Exchange was $84.625 per
share.
We will pay interest on the convertible notes on June 1 and December 1 of each
year. The first interest payment will be made on June 1, 2000.
INVESTING IN THE CONVERTIBLE NOTES INVOLVES RISKS WHICH ARE DESCRIBED IN THE
SECTION ENTITLED "RISK FACTORS" BEGINNING ON PAGE S-9 OF THIS PROSPECTUS
SUPPLEMENT.
<TABLE>
<CAPTION>
PROCEEDS, BEFORE
PRICE TO UNDERWRITING EXPENSES, TO
PUBLIC DISCOUNT CLEAR CHANNEL
<S> <C> <C> <C>
Per Convertible Note $1,000 $15 $985
Total $900,000,000 $13,500,000 $886,500,000
</TABLE>
The underwriters may also purchase up to an additional $100,000,000 aggregate
principal amount of the convertible notes within 30 days from the date of this
prospectus supplement to cover over-allotments.
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THE SECURITIES OFFERED IN THIS
PROSPECTUS SUPPLEMENT OR DETERMINED IF THIS PROSPECTUS SUPPLEMENT OR THE
ACCOMPANYING PROSPECTUS IS TRUTHFUL OR COMPLETE. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
Joint Book-Running Managers
DEUTSCHE BANC ALEX. BROWN SALOMON SMITH BARNEY
---------------
BANC OF AMERICA SECURITIES LLC CREDIT SUISSE FIRST BOSTON
GOLDMAN, SACHS & CO. MERRILL LYNCH & CO.
MORGAN STANLEY DEAN WITTER PAINEWEBBER INCORPORATED
SCHRODER & CO. INC.
BANCBOSTON ROBERTSON STEPHENS FIRST UNION SECURITIES, INC.
ING BARINGS THOMAS WEISEL PARTNERS LLC
The date of this prospectus supplement is November 19, 1999.
<PAGE> 2
FORWARD-LOOKING STATEMENTS
This prospectus supplement and the accompanying prospectus include
forward-looking statements. We have based these forward-looking statements on
our current expectations and projections about future events. These
forward-looking statements are subject to risks, uncertainties, and assumptions
about us, including, among other things:
- the impact of general economic conditions in the U.S. and in other
countries in which we currently do business, such as the United Kingdom,
Australia, New Zealand, Mexico and certain other European and Asian
countries;
- competition and general conditions in our broadcasting and outdoor
advertising industries;
- fluctuations in exchange rates and currency values;
- capital expenditure requirements;
- legislative or regulatory requirements, including the policies of the
Federal Communications Commission, the U.S. Department of Justice and the
Federal Trade Commission with respect to the conduct of our business, the
consummation of future acquisitions, including the AMFM merger, and the
extent of the radio station divestitures associated with the AMFM merger;
- interest rates;
- taxes; and
- access to capital markets.
We undertake no obligation to publicly update or revise any forward-looking
statements, whether as a result of new information, future events or other
factors. In light of these risks, uncertainties and assumptions, the
forward-looking events discussed in this prospectus supplement and the
accompanying prospectus might not occur as currently contemplated.
---------------------
You should rely only on the information contained in this prospectus
supplement and the accompanying prospectus. We have not, and the underwriters
have not, authorized any other person to provide you with different information.
If anyone provides you with different or inconsistent information, you should
not rely on it. We are not, and the underwriters are not, making an offer to
sell these securities in any jurisdiction where the offer or sale is not
permitted. You should assume that the information appearing in this prospectus
supplement is accurate as of the date on the front cover of this prospectus
supplement only. Our business, financial condition, results of operations and
prospects may have changed since that date.
S-2
<PAGE> 3
SUMMARY
This summary may not contain all of the information that may be important
to you. You should read the entire prospectus supplement and accompanying
prospectus, including the financial data and related notes, before making an
investment decision. All information set forth in this prospectus supplement has
been adjusted to reflect two-for-one stock splits effected in December 1996 and
July 1998. Unless we state otherwise, the information in this prospectus
supplement assumes no exercise by the underwriters of their option to purchase
an additional $100,000,000 aggregate principal amount of the convertible notes.
CLEAR CHANNEL
We are a diversified media company with two business segments: broadcasting
and outdoor advertising. As of October 15, 1999, we owned, programmed, or sold
airtime for 487 domestic radio stations, two international radio stations and 24
domestic television stations. In addition, as of October 2, 1999, we were one of
the world's largest outdoor advertising companies based on our total advertising
display inventory of approximately 147,000 domestic display faces and
approximately 415,000 international display faces.
During the year ended December 31, 1998, we derived approximately 48% of
our net revenue from broadcasting operations and approximately 52% from outdoor
advertising operations. The revenue composition would differ if we had completed
the acquisitions described below in "Recent Developments" as of January 1, 1998.
A brief description of each of our primary lines of business follows.
BROADCASTING
As of October 15, 1999, we owned, programmed or sold airtime for 325 FM and
164 AM radio stations, 20 television stations and four satellite television
stations. Our radio stations employ a wide variety of programming formats, such
as News/Talk/Sports, Country, Adult Contemporary, Urban and Rock. We also
operate several radio networks and produce more than 50 syndicated programs and
services for more than 4,000 radio stations. Our syndicated programs include
Rush Limbaugh, The Dr. Laura Schlessinger Show and Dr. Dean Edell. In addition,
we currently own the following interests in radio broadcasting companies:
- 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 27.6% non-voting equity interest in Hispanic Broadcasting Corporation,
a leading domestic Spanish-language radio broadcaster;
- a 40% equity interest in Grupo Acir Communicaciones, S.A. de C.V., one of
the largest radio broadcasters in Mexico; and
- a 50% equity interest in Radio Bonton, a.s., which owns an FM radio
station in the Czech Republic.
Our television stations are affiliated with various television networks,
including FOX, UPN, ABC, NBC and CBS. The primary sources of programming for our
ABC, NBC and CBS affiliated television stations are their respective networks,
which produce and distribute programming in exchange for each station's
commitment to air the programming at specified times and for
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<PAGE> 4
commercial announcement time during the programming. We supply the majority of
programming to our FOX and UPN affiliates by selecting and purchasing syndicated
television programs.
OUTDOOR ADVERTISING
As of October 2, 1999, we owned or operated a total of approximately
562,000 advertising display faces and we provided outdoor advertising services
in over 32 domestic markets and 17 foreign countries. Our domestic display faces
include billboards of various sizes and various small display faces on the
interior and exterior of various public transportation vehicles. Our
international display faces include street furniture, transit displays and
billboards of various sizes. We also operate numerous smaller displays such as
cube displays in retail malls and convenience store window displays.
Additionally, we currently own the following interests in outdoor advertising
companies:
- a 50% equity interest in Hainan White Horse Advertising Media Investment
Co. Ltd., which operates street furniture displays in China;
- a 40% equity interest in Expoplakat AS, which operates billboard displays
in Estonia;
- a 50% equity interest in Sirocco International SA, which is developing a
new 8 square meter format network and obtaining concessions for two
square meter format panels in France;
- a 50% equity interest in Adshel Street Furniture Pty., Limited, which
operates street furniture displays in Australia and New Zealand;
- a 30% equity interest in Capital City Posters Pty., Ltd, which operates
street furniture and billboard displays in Singapore; and
- a 31.9% equity interest in Master & More Co., Ltd, which operates
billboard displays in Thailand.
Our principal executive offices are located at 200 Concord Plaza, Suite
600, San Antonio, Texas 78216 (telephone: 210-822-2828).
RECENT DEVELOPMENTS
AMFM MERGER
On October 2, 1999, we entered into an agreement with AMFM Inc. to combine
the two companies by merging one of our wholly-owned subsidiaries with and into
AMFM. We structured the merger as a tax-free, stock-for-stock transaction. Each
share of AMFM common stock will convert into 0.94 shares of our common stock.
Based on the number of shares outstanding as of September 30, 1999 and assuming
that no additional shares of AMFM common stock are issued before the completion
of the merger other than shares currently contemplated to be issued in
connection with the conversion of AMFM's convertible preferred stock, we will
issue approximately 202,757,103 shares of our common stock in the merger to the
shareholders of AMFM. Either company can terminate the merger agreement if the
merger is not completed by March 31, 2001. At November 1, 1999, AMFM had a radio
station portfolio consisting of 456 radio stations in 102 markets in the
continental United States and in Puerto Rico, including 12 radio stations
programmed under time brokerage or joint sales agreements. In addition, AMFM
operates a media representation business and a growing Internet business. We
believe that we will be required to divest between 100 and 125 radio stations in
order to gain regulatory approvals for the merger. See "The AMFM Merger" in this
prospectus supplement.
In addition, we will indirectly assume, or be obligated to refinance,
approximately $5.7 billion of AMFM's long-term debt in connection with the AMFM
merger. See "Risk Factors -- We Will Have
S-4
<PAGE> 5
More Debt Upon Completion of the AMFM Merger" and " -- We May Need to Repay or
Redeem AMFM Indebtedness After the Merger."
We will not complete the AMFM merger before the closing of this offering,
if at all. Numerous conditions must be satisfied before the completion of the
merger, including the receipt of regulatory approvals and shareholder approvals
from the shareholders of both companies and the completion of a review of the
merger by the federal and state antitrust authorities.
The sale of our convertible notes in this offering is not conditioned on
the completion of the proposed merger with AMFM. Purchasers of our convertible
notes in the offering should not assume that the AMFM merger will close in a
timely manner, if at all.
JACOR MERGER
On May 4, 1999, we closed our merger with Jacor Communications, Inc.
Pursuant to the terms of the merger agreement, each share of Jacor common stock
was exchanged for 1.1573151 shares of our common stock. Approximately 60.9
million shares of our common stock were issued in the Jacor merger. We also
indirectly assumed or refinanced Jacor's outstanding debt. At March 31, 1999,
Jacor had total outstanding indebtedness of approximately $1.6 billion,
including publicly traded notes in the aggregate principal amount of $539.6
million and Liquid Yield Option Notes which had an aggregate accreted value of
$308.2 million. However, on November 12, 1999, we announced a tender offer to
purchase all of Jacor's publicly traded notes, excluding the LYONs, for prices
ranging between 107.847% and 110.803%, plus accrued interest to the date of
payment. Prior to the initiation of the tender offer, the holders of a majority
of the principal amount of each series of notes consented to certain amendments
which will eliminate or modify most of the restrictive covenants under each
series of notes upon completion of the tender offer. Additionally, Jacor options
and stock appreciation rights outstanding at the time of the merger became
exercisable for approximately 3.4 million shares of our common stock, and Jacor
common stock purchase warrants and LYONs became exercisable or convertible into
approximately 12.6 million shares of our common stock.
At the time of the Jacor merger, Jacor owned, programmed or sold airtime
for 157 FM and 81 AM radio stations and one television station. Jacor also
produced more than 50 syndicated programs and services for more than 4,000 radio
stations.
S-5
<PAGE> 6
THE OFFERING
Securities................. $900,000,000 aggregate principal amount of 1.5%
Senior Convertible Notes due 2002.
Maturity Date.............. December 1, 2002
Interest Payment Dates..... Interest on the convertible notes will be payable
in cash semi-annually on each December 1 and June
1, commencing on June 1, 2000.
Conversion Rights.......... The convertible notes are convertible into shares
of our common stock at any time prior to maturity,
unless previously redeemed or repurchased, at a
conversion price of $105.78 per share, subject to
adjustment in certain circumstances. See
"Description of Convertible Notes -- Conversion of
Convertible Notes."
Sinking Fund............... None
Repurchase at the Option
of Holders upon Change
of Control............... In the event a Change in Control occurs, as defined
later in this prospectus supplement, each holder of
convertible notes may require us to repurchase all
or a portion of the holder's convertible notes at
100% of their principal amount, together with
accrued interest to the repurchase date. If a
Change in Control were to occur, there could be no
assurance that we would have sufficient funds to
pay the repurchase price for all convertible notes
tendered by their holders or that we would be
permitted to repurchase the convertible notes under
our then-existing credit arrangements. See
"Description of Convertible Notes -- Repurchase at
Option of Holders upon Change in Control" and "Risk
Factors -- We May Face Limitations on the
Repurchase of Convertible Notes upon a Change in
Control."
Ranking.................... The convertible notes are our senior unsecured
obligations, rank equally with all of our other
unsecured and unsubordinated indebtedness and are
effectively subordinated in right of payment to the
prior payment in full of all indebtedness of our
subsidiaries. The indenture does not restrict our
ability to incur indebtedness or additional
indebtedness of our subsidiaries.
Denominations and
Registration of Notes.... The convertible notes are represented by a 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 convertible notes
will not be issued in exchange for beneficial
interests in the global security. See "Description
of Convertible Notes -- Global Securities" and
"-- Book Entry System."
S-6
<PAGE> 7
Use of Proceeds............ The net proceeds to be received by us from the sale
of the convertible notes offered by this prospectus
supplement, after deducting the discount to the
underwriters and other estimated expenses payable
by us, are approximately $886 million. We intend to
use such net proceeds to repay a portion of the
outstanding indebtedness under our credit
facilities.
Common Stock Trading....... The common stock is traded on the NYSE under the
symbol "CCU."
S-7
<PAGE> 8
SUMMARY FINANCIAL DATA
The following sets forth summary historical financial data for the three
years ended December 31, 1998 and the nine month periods ended September 30,
1998 and 1999 and as at September 30, 1998 and 1999. The following also sets
forth summary pro forma financial data to give effect to the AMFM merger and
certain completed acquisitions of Clear Channel and AMFM as if those
transactions had occurred on January 1, 1998 for the statement of operations
data and September 30, 1999 for the balance sheet data, as more fully set forth
in the "Unaudited Pro Forma Combined Condensed Financial Statements" presented
in this prospectus supplement. The pro forma as adjusted balance sheet data as
of September 30, 1999 sets forth pro forma financial data as adjusted for the
above described transactions and this offering.
After-tax cash flow is net income before unusual and non-recurring items
plus depreciation, amortization of intangibles and deferred taxes (including
that of non-consolidated affiliates). EBITDA is net income before interest
expense, income taxes, depreciation and amortization. You should not consider
after-tax cash flow and EBITDA in isolation from, as a substitute for, or more
meaningful than, operating income, net income or cash flow and other
consolidated income or cash flow statement data computed in accordance with
generally accepted accounting principles or as a measure of operating
performance, or as an alternative to operating cash flows as a measure of
liquidity. Although after-tax cash flow and EBITDA are not calculated in
accordance with generally accepted accounting principles, they are widely used
in the media industry as a measure of a company's operating performance because
they assist in comparing performance on a consistent basis across companies
without regard to depreciation and amortization, which can vary significantly
depending on accounting methods, particularly where acquisitions are involved,
or non-operating factors such as historical cost bases. In addition, our
calculation of after-tax cash flows is not necessarily comparable to similarly
titled measures reported by other companies.
Acquisitions and dispositions significantly impact the comparability of the
historical consolidated financial data reflected in this financial data. The
results of interim periods are not necessarily indicative of results for the
entire fiscal year. This information is only a summary and you should read the
information presented below in conjunction with our Consolidated Financial
Statements and the notes thereto incorporated by reference into this prospectus
supplement, which qualify the information presented below in its entirety.
S-8
<PAGE> 9
<TABLE>
<CAPTION>
NINE MONTHS ENDED
YEAR ENDED DECEMBER 31, SEPTEMBER 30,
---------------------------------------------- -----------------------------------
PRO FORMA PRO FORMA
1996 1997 1998 1998 1998 1999 1999
-------- -------- ---------- ----------- -------- ---------- -----------
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<S> <C> <C> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS
DATA:
Net revenue............. $351,739 $697,068 $1,350,940 $3,802,312 $909,555 $1,790,635 $3,284,350
Operating expenses...... 198,332 394,404 767,265 2,241,860 517,562 1,097,171 1,950,761
Depreciation and
amortization.......... 45,790 114,207 304,972 1,593,067 201,422 473,654 1,286,055
Noncash compensation
expense............... -- -- -- 21,260 -- -- 26,432
Merger and nonrecurring
costs................. -- -- -- 76,094 -- -- 61,580
Corporate expenses...... 8,527 20,883 37,825 127,699 25,739 44,585 103,252
-------- -------- ---------- ---------- -------- ---------- ----------
Operating income
(loss)................ 99,090 167,574 240,878 (257,668) 164,832 175,225 (143,730)
Gain on sale of
assets................ -- -- -- 123,845 -- 136,925 12,333
Interest expense........ 30,080 75,076 135,766 525,703 94,555 132,932 379,696
Gain on disposition of
representation
contracts............. -- -- -- 32,198 -- -- 18,284
Loss on investment in
liability companies... -- -- -- 28,565 -- -- --
Other income
(expense)............. 2,230 11,579 12,810 34,575 13,416 15,874 16,807
-------- -------- ---------- ---------- -------- ---------- ----------
Income (loss) before
income taxes.......... 71,240 104,077 117,922 (621,318) 83,693 195,092 (476,002)
Income tax (expense)
benefit............... (28,386) (47,116) (72,353) 59,048 (48,766) (106,546) 54,310
Dividends and accretion
on preferred stock.... -- -- -- 29,809 -- -- 12,709
Income (loss) before
equity earnings (loss)
of nonconsolidated
affiliates............ 42,854 56,961 45,569 (592,079) 34,927 88,546 (434,401)
Equity in earnings
(loss) of
nonconsolidated
affiliates............ (5,158) 6,615 8,462 (55,355) 10,063 6,742 (43,101)
-------- -------- ---------- ---------- -------- ---------- ----------
Net income (loss)....... $ 37,696 $ 63,576 $ 54,031 $ (647,434) $ 44,990 $ 95,288 $ (477,502)
======== ======== ========== ========== ======== ========== ==========
Net income (loss) per
common share:(1)
Basic................. $ 0.26 $ 0.36 $ 0.23 $ (1.27) $ 0.19 $ 0.31 $ (0.89)
======== ======== ========== ========== ======== ========== ==========
Diluted............... $ 0.25 $ 0.33 $ 0.22 $ (1.27) $ 0.19 $ 0.31 $ (0.89)
======== ======== ========== ========== ======== ========== ==========
OTHER DATA:
After tax cash flow..... $107,318 $213,445 $ 419,745 $1,020,277 $283,933 $ 523,607 $ 789,650
======== ======== ========== ========== ======== ========== ==========
EBITDA.................. $141,952 $299,975 $ 567,122 $1,530,386 $389,733 $ 808,420 $1,133,939
======== ======== ========== ========== ======== ========== ==========
Ratio of earnings to
fixed charges and
preferred stock
dividends............. 3.63x 2.32x 1.83x -- 1.91x 2.32x --
</TABLE>
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<TABLE>
<CAPTION>
SEPTEMBER 30,
----------------------------------------
PRO FORMA
AS ADJUSTED
-----------
1998 1999 1999
---------- ------------- -----------
<S> <C> <C> <C>
BALANCE SHEET DATA:
Cash and cash equivalents................................. $ 48,192 $ 82,678 $ 169,190
Total assets.............................................. 7,261,285 16,441,890 41,991,544
Long-term debt, net of current(2)......................... 2,980,849 3,917,442 6,819,974
Shareholders' equity...................................... 3,763,702 9,932,099 27,261,067
</TABLE>
- ---------------
(1) Adjusted to reflect the effect of our two-for-one stock splits distributed
in December 1996 and July 1998.
(2) Includes $575 million aggregate principal amount of 2 5/8% senior
convertible notes due April 1, 2003 issued by us on March 30, 1998.
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<PAGE> 11
RISK FACTORS
Investing in our securities involves a high degree of risk. You should
carefully consider the risks and uncertainties described below and the other
information in this prospectus supplement and the prospectus and in the
documents incorporated by reference before deciding whether to purchase our
securities.
WE HAVE LOSSES AND PRO FORMA LOSSES
On a pro forma basis, after giving effect to the acquisitions we completed
in 1998 and 1999, we had a loss for the nine months ended September 30, 1999,
and the year ended December 31, 1998. In addition, if the merger with AMFM had
been completed at the beginning of these periods, the pro forma losses during
the periods would have been substantially greater. Because of the substantial
amortization of goodwill related to the merger and prior acquisitions, we expect
these losses to continue. See "Unaudited Pro Forma Combined Condensed Financial
Statements."
WE MAY OR MAY NOT COMPLETE THE AMFM MERGER IN A TIMELY MANNER, IF AT ALL
We cannot assure you that we can complete the merger with AMFM in a timely
manner or on the terms described in this prospectus supplement, if at all.
Numerous conditions must be satisfied before the completion of the AMFM merger
can occur. Among others, the conditions include the receipt of approval from the
shareholders of both companies, the receipt of regulatory approvals under the
federal communications laws and the completion of a review of the merger by the
federal and state antitrust authorities. Governmental authorities will require
the combined enterprise to divest assets or submit to various operating
restrictions before granting the authorizations and approvals necessary to
complete the merger or as a condition to refraining from blocking the 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. We may need to divest between 100 and 125 radio stations in the
aggregate in approximately 22 markets or geographical areas to comply with the
FCC's limits. We may need to make additional divestitures of radio stations or
other assets or interests in order to gain the approval of the federal and state
antitrust authorities for the merger. We cannot assure you that the completion
of any such divestitures will 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 assets or a commensurate rate of return on the amount of its
investment. We cannot assure you that any operating restrictions imposed would
not adversely affect the value of the combined enterprise. See "The AMFM
Merger."
WE MAY EXPERIENCE DIFFICULTIES IN COMBINING CLEAR CHANNEL AND AMFM
The AMFM merger, if completed, will combine two companies that previously
operated independently. Following the merger, we intend to integrate some AMFM
operations into our own operations. However, we may not successfully combine the
operations of AMFM with our own operations. Any unexpected delays or costs of
combining the two companies could adversely affect us. Moreover, the outstanding
debt of AMFM, to the extent it remains outstanding following the merger,
contains restrictive covenants which may limit our ability to integrate the
separate operations of AMFM. Additionally, the operations, management and
personnel of the two companies may not be compatible. Following the merger with
AMFM, we may experience the loss of key personnel.
WE WILL HAVE MORE DEBT UPON COMPLETION OF THE AMFM MERGER
Following the AMFM merger, our debt obligations will significantly
increase. At September 30, 1999, we had borrowings under our credit facilities
and other long term debt outstanding of
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<PAGE> 12
approximately $4.4 billion and shareholders' equity of $9.9 billion. At
September 30, 1999, AMFM had total outstanding indebtedness of approximately
$5.7 billion and stockholders' equity of approximately $4.8 billion. We expect
to continue to borrow funds to finance acquisitions of broadcasting and outdoor
advertising properties, as well as for other purposes. We are permitted to
borrow up to $2 billion under our domestic credit facility at floating rates
equal to the London InterBank Offered Rate plus 0.40% and up to $1.0 billion
under our 364 day credit facility at floating rates equal to LIBOR plus 0.625%.
As of November 17, 1999, we had borrowed approximately $1.9 billion under our
long-term domestic credit facility and $246.9 million under our domestic 364 day
credit facility.
Such a large amount of indebtedness could have negative consequences for us
following the AMFM merger, including without limitation the following:
- limitations on our ability to obtain financing in the future;
- much of our cash flow will be dedicated to interest obligations and
unavailable for other purposes;
- the high level of indebtedness limits our flexibility to deal with
changing economic, business and competitive conditions; and
- the high level of indebtedness could make us more vulnerable to an
increase in interest rates, a downturn in our operating performance or a
decline in general economic conditions.
The failure to comply with the covenants in the agreements governing the
terms of our or our subsidiaries' indebtedness following the AMFM merger could
be an event of default and could accelerate the payment obligations and, in some
cases, could affect other obligations with cross-default and cross-acceleration
provisions.
WE MAY NEED TO REPAY OR REDEEM AMFM INDEBTEDNESS AFTER THE MERGER
A substantial portion of AMFM's indebtedness may become due upon the
closing of the AMFM merger or shortly thereafter. At September 30, 1999, AMFM
had total outstanding indebtedness of approximately $5.7 billion, including
senior and subordinated notes in the aggregate principal amount of $3.2 billion.
AMFM's credit facility will become payable as a result of the merger. We will
have to refinance AMFM's indebtedness under its credit facility after the
merger. The merger will also trigger the change in control provisions of AMFM's
senior and subordinated notes, and we must offer to purchase the outstanding
AMFM notes for consideration equal to 101% of the principal amount, plus any
accrued and unpaid interest. If the holders require that we purchase all or a
substantial portion of the AMFM notes, we may not have the funds available to
satisfy such obligations.
OUR OPERATIONS MAY BE RESTRICTED BY AMFM INDEBTEDNESS
If all or part of AMFM's indebtedness remains outstanding after the merger
because either the AMFM debtholders do not accept our mandatory offers to
purchase such indebtedness or we do not otherwise purchase or refinance such
indebtedness, the terms of such indebtedness may restrict the ability of AMFM
and its subsidiaries to make funds available to us in the form of dividends,
loans, advances or otherwise. Much of AMFM's indebtedness is high yield
indebtedness and restricts AMFM and its subsidiaries from incurring additional
indebtedness, selling assets or stock, engaging in asset swaps, mergers or
consolidations and entering into transactions with affiliates. The covenants for
this type of indebtedness are more restrictive than those contained in our
public indebtedness,
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including the convertible notes offered in this prospectus supplement.
Accordingly, the AMFM indebtedness which remains outstanding following the
merger may continue to:
- cause us to incur substantial consolidated interest expense and principal
repayment obligations;
- limit our ability to obtain additional debt financing;
- make it more difficult for us to combine our operations with AMFM; and
- place more restrictions on our ability to manage AMFM than we currently
face in the management of the rest of our business.
OUR OPERATIONS MAY BE RESTRICTED BY OTHER MEDIA INTERESTS OF DIRECTORS AND
STOCKHOLDERS OF AMFM THAT WILL ALSO BE OUR DIRECTORS AND STOCKHOLDERS AFTER THE
AMFM MERGER
Various directors and stockholders of AMFM that will be our directors and
stockholders after the AMFM merger hold interests in other companies that own
television stations and cable systems in various markets. Under the FCC's rules,
some or all of these holdings may become attributable to us following the
merger. Attribution of any of these holdings to us could require us to divest
existing assets or terminate existing contractual arrangements in those markets
and/or forego the acquisition of additional media holdings in those markets.
DEPENDENCE ON KEY PERSONNEL
Our business is dependent upon the performance of key employees, including
L. Lowry Mays, our chief executive officer, and other executive officers. We
employ or independently contract with several on-air personalities and hosts of
syndicated radio programs with significant loyal audiences in their respective
markets. Although we have entered into long-term agreements with some of our
executive officers, key on-air talent and program hosts to protect their
interests in those relationships, we can give no assurance that all of these key
employees will remain with us or will retain their audiences.
EXTENSIVE GOVERNMENT REGULATION MAY LIMIT OUR OPERATIONS
Broadcasting. The federal government extensively regulates the domestic
broadcasting industry, and any changes in the current regulatory scheme could
significantly affect us. Our broadcasting business depends upon maintaining
broadcasting licenses issued by the FCC for maximum terms of eight years.
Renewals of broadcasting licenses can be attained only through the FCC's grant
of appropriate applications. Although the FCC rarely denies a renewal
application, the FCC could deny future renewal applications. Such a denial could
adversely affect our operations.
The federal communications laws limit the number of broadcasting properties
we may own in a particular area. While the Telecommunications Act of 1996
relaxed the FCC's multiple ownership limits, any subsequent modifications that
tighten those limits could adversely affect us by making it impossible for us to
complete potential acquisitions, including our merger with AMFM, or requiring us
to divest stations we have already acquired. For instance, the FCC has recently
adopted modified rules that in some cases permit a company to own fewer radio
stations than allowed by the Telecommunications Act of 1996 in markets or
geographical areas where the company also owns television stations. These
modified rules could require additional divestitures in order to complete the
AMFM merger, and eventually could require us to divest radio stations we
currently own in markets or areas where we also own television stations.
Moreover, changes in governmental regulations and policies may have a
material impact upon us. For example, we currently provide programming to
several television stations we do not own and receive programming from other
parties for certain television stations we do own. These programming
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arrangements are made through contracts known as local marketing agreements. The
FCC has recently revised its rules and policies regarding television local
marketing agreements. These revisions will restrict our ability to enter into
television local marketing agreements in the future, and may eventually require
us to terminate our programming arrangements under existing local marketing
agreements. Additionally, the FCC has recently adopted rules which under certain
circumstances will subject previously nonattributable debt and equity interests
in communications media to the FCC's multiple ownership restrictions. These new
rules may limit our ability to expand our media holdings.
Antitrust. Our additional acquisitions of radio and television stations and
outdoor advertising properties will require antitrust review by the federal
antitrust authorities, and we can give no assurances that the Department of
Justice or the Federal Trade Commission will not seek to bar us from acquiring
additional radio or television stations or outdoor advertising properties in any
market where we already have a significant position. Following the passage of
the Telecommunications Act of 1996, the DOJ has become more aggressive in
reviewing proposed acquisitions of radio stations, particularly in instances
where the proposed acquiror already owns one or more radio station properties in
a particular market and seeks to acquire another radio station in the same
market. The DOJ has, in some cases, obtained consent decrees requiring radio
station divestitures in a particular market based on allegations that
acquisitions would lead to unacceptable concentration levels. The DOJ also
actively reviews proposed acquisitions of outdoor advertising properties. In
addition, the antitrust laws of foreign jurisdictions will apply if we acquire
international broadcasting properties.
Environmental. As the owner or operator of various real properties and
facilities, especially in our outdoor advertising operations, we must comply
with various federal, state and local environmental laws and regulations.
Historically, we have not incurred significant expenditures to comply with these
laws. However, additional environmental laws passed in the future or a finding
of a violation of existing laws could require us to make significant
expenditures.
GOVERNMENT REGULATION OF OUTDOOR ADVERTISING MAY ADVERSELY AFFECT OUR OUTDOOR
ADVERTISING OPERATIONS
The outdoor advertising industry is subject to extensive governmental
regulation at the federal, state and local level and compliance with existing
and future regulations could have a significant financial impact on us. Federal
law, principally the Highway Beautification Act of 1965, encourages states to
implement legislation to restrict billboards located within 660 feet of, or
visible from, highways except in commercial or industrial areas. Every state has
implemented regulations at least as restrictive as the Highway Beautification
Act, including a ban on the construction of new billboards along federally-aided
highways and the removal of any illegal signs on these highways at the owner's
expense and without any compensation.
States and local jurisdictions have, in some cases, passed additional
regulations on the construction, size, location and, in some instances,
advertising content of outdoor advertising structures adjacent to
federally-aided highways and other thoroughfares. From time to time governmental
authorities order the removal of billboards by the exercise of eminent domain
and certain jurisdictions have also adopted amortization of billboards in
varying forms. Amortization permits the billboard owner to operate its billboard
only 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. We have agreed to remove certain billboards
in Jacksonville, Florida. Furthermore, Tampa, Houston and San Francisco, which
are municipalities within our existing markets, have adopted amortization
ordinances. We can give no assurance that we will be successful in negotiating
acceptable arrangements in circumstances in which our displays are subject to
removal or amortization, and what effect, if any, such regulations may have on
our operations.
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In addition, we are 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, including
laws of the foreign jurisdictions in which we operate, could have a material
adverse effect on us.
CHANGES IN RESTRICTIONS ON OUTDOOR TOBACCO ADVERTISING AND ALCOHOL ADVERTISING
MAY POSE RISKS
Regulations, legislation and recent settlement agreements related to
outdoor tobacco advertising could have a material adverse effect on us. The
major U.S. tobacco companies that are defendants in numerous class action suits
throughout the country recently reached an out-of-court settlement with 46
states that includes a ban on outdoor advertising of tobacco products. The
settlement agreement was finalized on November 23, 1998, but must be ratified by
the courts in each of the 46 states participating in the settlement. In addition
to the mass settlement, the tobacco industry previously had come to terms with
the remaining four states individually. The terms of such individual settlements
also included bans on outdoor advertising of tobacco products.
In addition to the settlement agreements, state and local governments are
also regulating the outdoor advertising of alcohol and tobacco products. For
example, several states and cities have laws restricting tobacco billboard
advertising near schools and other locations frequented by children. Some cities
have proposed even broader restrictions, including complete bans on outdoor
tobacco advertising on billboards, kiosks, and private business window displays.
In a few jurisdictions, restrictions on tobacco billboard advertising have
prompted Constitutional challenges with mixed results in court. It is possible
that state and local governments may propose or pass similar ordinances to limit
outdoor advertising of alcohol, tobacco and other products or services in the
future, and that there may be court challenges to such restrictions. Legislation
regulating tobacco and alcohol advertising has also been introduced in a number
of European countries in which we conduct business, and could have a similar
impact.
The elimination of billboard advertising by the tobacco industry will cause
a reduction in our direct revenues from such advertisers and may simultaneously
increase the available space on the existing inventory of billboards in the
outdoor advertising industry. This industry-wide increase in space may in turn
result in a lowering of outdoor advertising rates or limit the ability of
industry participants to increase rates for some period of time. For the year
ended December 31, 1998, approximately 3% of our revenues came from the outdoor
advertising of tobacco products.
OUR INTERNATIONAL OPERATIONS HAVE ADDED RISKS
Doing business in foreign countries carries with it risks that are not
found in doing business in the United States. We currently derive a portion of
our revenues from international radio and outdoor operations in Europe, Asia,
Mexico, Australia and New Zealand. The risks of doing business in foreign
countries which could result in losses against which we are not insured include:
- potential adverse changes in the diplomatic relations of foreign
countries with the United States;
- hostility from local populations;
- the adverse effect of currency exchange controls;
- restrictions on the withdrawal of foreign investment and earnings;
- government policies against businesses owned by foreigners;
- expropriations of property;
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- the potential instability of foreign governments;
- the risk of insurrections;
- risks of renegotiation or modification of existing agreements with
governmental authorities;
- foreign exchange restrictions; and
- changes in taxation structure.
EXCHANGE RATES MAY CAUSE FUTURE LOSSES IN OUR INTERNATIONAL OPERATIONS
Because we own assets overseas and derive revenues from our international
operations, we may incur currency translation losses due to changes in the
values of foreign currencies and in the value of the U.S. dollar. We cannot
predict the effect of exchange rate fluctuations upon future operating results.
To reduce our exposure to the risk of international currency fluctuations, we
maintain a natural hedge by incurring amounts of debt in each currency
approximately equivalent to our net assets in each such currency. We review this
hedge position monthly. We currently maintain no other derivative instruments to
reduce the exposure to translation and/or transaction risk but may adopt other
hedging strategies in the future.
OUR ACQUISITION STRATEGY COULD POSE RISKS
Operational Risks. We intend to grow through the acquisition of
broadcasting companies and assets, outdoor advertising companies, individual
outdoor advertising display faces and other assets that we believe will assist
our customers in marketing their products and services. Our acquisition strategy
involves numerous risks, including:
- certain of such acquisitions may prove unprofitable and fail to generate
anticipated cash flows;
- to successfully manage a rapidly expanding and significantly larger
portfolio of broadcasting and outdoor advertising properties, we may need
to recruit additional senior management and expand corporate
infrastructure;
- we may encounter difficulties in the integration of operations and
systems;
- management's attention may be diverted from other business concerns; and
- we may lose key employees of acquired companies or stations.
We frequently evaluate strategic opportunities both within and outside our
existing lines of business. We expect from time to time to pursue additional
acquisitions and may decide to dispose of certain businesses. These acquisitions
or dispositions could be material.
Capital Requirements Necessary for Additional Acquisitions. We will face
stiff competition from other broadcasting and outdoor advertising companies for
acquisition opportunities. If the prices sought by sellers of these companies
continue to rise, we may find fewer acceptable acquisition opportunities. In
addition, the purchase price of possible acquisitions could require additional
debt or equity financing on our part. We can give no assurance that we will
obtain the needed financing or that we will obtain such financing on attractive
terms. Additional indebtedness could increase our leverage and make us more
vulnerable to economic downturns and may limit our ability to withstand
competitive pressures. Additional equity financing could result in dilution to
our stockholders.
WE FACE INTENSE COMPETITION IN THE BROADCASTING AND ADVERTISING INDUSTRIES
Our two business segments are in highly competitive industries, and we may
not be able to maintain or increase our current audience ratings and advertising
revenues. Our radio and television stations and outdoor advertising properties
compete for audiences and advertising revenues with other
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radio and television stations and outdoor advertising companies, as well as with
other media, such as newspapers, magazines, cable television, direct mail and
the Internet, within their respective markets. Audience ratings and market
shares are subject to change, which could have an adverse effect on our revenues
in that market. Other variables that could affect our financial performance
include:
- 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.
NEW TECHNOLOGIES MAY AFFECT OUR BROADCASTING OPERATIONS
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 radio broadcasts. We are unable to
predict the effect that these technologies will have on our broadcasting
operations, but the capital expenditures necessary to implement these
technologies could be substantial. Additionally, the FCC has proposed the
introduction of low power FM broadcast stations. If authorized, low power FM
stations may serve as additional competition to our radio operations in some or
all of our markets, and could cause interference to the signals of one or more
of our stations.
We also face risks in implementing the conversion of our television
stations to digital television, which the FCC has ordered and for which it has
established a timetable. We will incur considerable expense in the conversion to
digital television and are unable to predict the extent or timing of consumer
demand for any such digital television services. Moreover, the FCC may impose
additional public service obligations on television broadcasters in return for
their use of digital television spectrum. This could add to our operational
costs. The most contentious issue yet to be resolved is the extent to which
cable systems will be required to carry broadcasters' new digital channels. Our
television stations are highly dependent on their carriage by cable systems in
the areas they serve. Thus, FCC rules that impose no or limited obligations on
cable systems to carry the digital television signals of television broadcast
stations in their local markets could adversely affect our television
operations.
WE MAY FACE LIMITATIONS ON THE REPURCHASE OF CONVERTIBLE NOTES UPON A CHANGE IN
CONTROL
Upon the occurrence of a change in control, as described in this prospectus
supplement under the heading "Description of Convertible Notes -- Repurchase at
Option of Holders upon Change in Control," each holder of the convertible notes
may require us, or our successor, to repurchase all or a portion of the holder's
convertible notes. If a change in control were to occur, there could be no
assurance that there would be sufficient financial resources, or that financing
could be arranged to pay the repurchase price for all of the convertible notes
tendered by the holders. Our, or our successor's, ability to repurchase the
convertible notes in the event of a change in control may be limited by law, the
indenture or the terms of other agreements relating to borrowings. If we, or our
successor, are prohibited from repurchasing the convertible notes, the failure
would constitute an event of default under the indenture which could, in turn,
constitute a further default under our, or our successor's, existing or future
agreements relating to other indebtedness.
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THE YEAR 2000 ISSUE MAY ADVERSELY AFFECT OUR OPERATIONS
We are exposed to the risk that the year 2000 issue could cause system
failures or miscalculations in our broadcast, outdoor and corporate locations
which could cause disruptions of operations, including, among other things, a
temporary inability to produce broadcast signals, process financial
transactions, or engage in similar normal business activities. As a result, we
have determined that we will be required to modify or replace portions of their
software and certain hardware so that those systems will properly utilize dates
beyond December 31, 1999. We presently believe that with modifications or
replacements of existing software and certain hardware, the year 2000 issue can
be mitigated. To date, the amounts incurred and expensed for developing and
carrying out the plans to complete the year 2000 modifications have not had a
material effect on our operations. The total remaining cost for addressing year
2000 is not expected to be material to our operations. See "Item 2. Management's
Discussion and Analysis of Financial Condition and Results of Operations -- Year
2000" included in our quarterly report on Form 10-Q for the quarter ended
September 30, 1999, incorporated by reference into this document. If such
modifications and replacements are not made, are not completed on time or are
insufficient to prevent systems failures or other disruptions, the year 2000
issue could have a material impact on our operations.
In addition, the possibility of interruption exists in the event that the
information systems of our significant vendors and suppliers and other third
parties with whom we transact business are not year 2000 compliant. The
inability of these third parties to complete their year 2000 resolution process
in a timely fashion could materially impact us. The effect of non-compliance by
these third parties is not determinable. In addition, disruptions in the economy
generally resulting from the year 2000 issues could also materially adversely
affect us. We could be subject to litigation for computer systems failure, for
example, equipment shutdown or failure to properly date business records. The
amount of potential liability and lost revenue cannot be reasonably estimated at
this time.
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USE OF PROCEEDS
Our net proceeds from this offering are estimated to be approximately $886
million ($984.5 million if the underwriters' over-allotment option is exercised
in full) after deducting the underwriting discount and estimated offering
expenses that we will have paid. We will use the net proceeds to repay
borrowings outstanding under our credit facilities. As of November 17, 1999, a
total of approximately $2.1 billion in borrowings was outstanding under our
credit facilities and the effective interest rate thereon was approximately
5.82%. Borrowings under the $2 billion revolving credit facility, which must be
paid in full by June 2005, currently bear interest as of the date of this
prospectus supplement at a floating rate based on the LIBOR plus 0.40%.
Borrowings under the $1 billion 364-day credit facility, which must be paid in
full by August 11, 2000, but which may be extended until August 11, 2004,
currently bear interest as of the date of this prospectus supplement at a
floating rate base on the LIBOR plus 0.625%. Upon repayment of such borrowings,
the amounts repaid will become immediately available to us for re-borrowing
under the credit facilities. We expect that amounts available for re-borrowing
under the credit facilities as a result of the application of the net proceeds
of this offering, together with additional amounts that become available for
borrowing under the credit facilities, will be used to finance acquisitions or
refinance debt assumed by us in connection with acquisitions, as well as the
tender offer for Jacor's publicly traded debt. Future acquisitions of radio and
television stations and other media-related properties effected in connection
with the implementation of our acquisition strategy are expected to be financed
from increased borrowings under the credit facilities, other debt or equity
financings and cash flow from operations.
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COMMON STOCK PRICE RANGE AND DIVIDENDS
The common stock trades on the NYSE under the symbol "CCU." The table below
sets forth, for the calendar quarters indicated, the reported high and low sale
prices at the close of business of the common stock as reported on the NYSE. The
prices set forth in the table have been adjusted to reflect a two-for-one stock
split in July 1998.
<TABLE>
<CAPTION>
CLEAR CHANNEL
COMMON STOCK
CLOSING PRICES
---------------
HIGH LOW
------ ------
<S> <C> <C>
1997
First Quarter............................................. $24.81 $17.13
Second Quarter............................................ 31.69 21.38
Third Quarter............................................. 34.38 29.31
Fourth Quarter............................................ 39.72 30.00
1998
First Quarter............................................. $50.03 $36.72
Second Quarter............................................ 54.56 44.06
Third Quarter............................................. 61.75 40.38
Fourth Quarter............................................ 54.50 36.13
1999
First Quarter............................................. $67.44 $53.13
Second Quarter............................................ 74.00 65.06
Third Quarter............................................. 79.88 64.38
Fourth Quarter (through November 18, 1999)................ 87.50 71.25
</TABLE>
On November 18, 1999, the closing price per share of our common stock was
$84.625. We urge shareholders to obtain current market quotations before making
any decision with respect to an investment in the convertible notes.
We intend to retain future earnings for use in our business and we do not
anticipate paying any dividends on our common stock in the foreseeable future.
Our credit facility limits our ability to pay dividends, other than dividends
payable wholly in our capital stock.
On November 18, 1999, there were approximately 2,641 holders of record of
our common stock.
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CAPITALIZATION
The following table sets forth the current portion of our long-term debt
and our capitalization as of September 30, 1999, and as adjusted to give effect
to the sale of the $900 million aggregate principal amount of the convertible
notes offered in this prospectus supplement.
<TABLE>
<CAPTION>
SEPTEMBER 30, 1999
--------------------------------------------
PRO FORMA AS
ACTUAL AS ADJUSTED(1) ADJUSTED(2)
----------- --------------- ------------
(IN THOUSANDS)
<S> <C> <C> <C>
Current portion of long-term debt.............. $ 40,351 $ 40,351 $ 94,976
=========== =========== ===========
Credit Facility -- domestic(3)(4).............. $ 1,818,750 $ 932,750 $ 231,011
Credit Facility -- multi-currency.............. 245,029 245,029 245,029
Credit Facility -- international............... 110,768 110,768 110,768
7.25% Debentures due October 15, 2027.......... 300,000 300,000 300,000
6.25% Senior notes due June 15, 2008........... 125,000 125,000 125,000
6.875% Senior debentures due June 15, 2018..... 175,000 175,000 175,000
1.50% Convertible notes due 2002............... -- 900,000 900,000
2.625% Convertible debentures.................. 575,000 575,000 575,000
Other long-term debt........................... 62,768 62,768 62,768
Jacor subordinated notes(4)(5)................. 545,478 545,478 545,478
Jacor LYONs(5)................................. 487,093 487,093 487,093
AMFM Long Term Debt(3)......................... -- -- 3,644,896
AMFM Redeemable Preferred Stock................ -- -- 148,542
Shareholders' equity:
Class A Preferred Stock, $1.00 par value,
2,000,000 shares authorized, no shares issued
or outstanding............................... -- -- --
Class B Preferred Stock, $1.00 par value,
8,000,000 shares authorized, no shares issued
or outstanding............................... -- -- --
Common Stock, $.10 par value, 900,000,000
shares authorized, 338,442,790 shares issued
and outstanding.............................. 33,848 33,848 54,124
Additional paid-in capital..................... 9,239,112 9,239,112 26,219,431
Common stock warrants.......................... 253,428 253,428 253,428
Retained earnings.............................. 318,950 318,950 647,323
Other equity................................... (4,008) (4,008) (4,008)
Unrealized gain on investments................. 91,481 91,481 91,481
Cost of shares (10,240) held in treasury....... (712) (712) (712)
----------- ----------- -----------
Total shareholders' equity.............. 9,932,099 9,932,099 27,261,067
----------- ----------- -----------
Total capitalization................. $14,376,985 $14,390,985 $34,811,652
=========== =========== ===========
</TABLE>
(footnotes on following page)
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- ---------------
(1) As adjusted to give effect to this offering and the application of the net
proceeds of approximately $886 million.
(2) As adjusted to reflect the offering, and to give effect to the AMFM merger
and certain completed acquisitions of Clear Channel and AMFM as if those
transactions had occurred on September 30, 1999, as more fully set forth in
the "Unaudited Pro Forma Combined Condensed Financial Statements" presented
in this prospectus supplement.
(3) We may incur or assume additional indebtedness of up to approximately $5.7
billion in connection with the merger with AMFM. See "Risk Factors -- We
Will Have More Debt" and "AMFM Merger."
(4) Does not reflect the consummation of a tender offer launched on November 12,
1999, by a subsidiary of Jacor to purchase all of the Jacor subordinated
notes at prices ranging from between 107.847% and 110.803%, plus accrued
interest to the date of payment. We currently contemplate funding the tender
offer through borrowings under our domestic credit facility.
(5) We assumed Jacor's outstanding indebtedness upon the completion of the Jacor
merger. As of March 31, 1999, Jacor had indebtedness of approximately $1.6
billion, including its LYONs. The amounts in the table above includes
adjustments of approximately $229.9 million to reflect the fair value of
Jacor's indebtedness and merger related expenses.
THE AMFM MERGER
The description of the proposed merger with AMFM contained in this
prospectus supplement is not complete. To understand the terms of the merger
fully and for a more complete description, you should read the merger agreement
and the detailed disclosure in our Current Report on Form 8-K filed with the SEC
on October 5, 1999.
GENERAL
AMFM is a large national radio broadcasting and related media company with
operations in radio broadcasting, media representation and the Internet, which
as of November 1, 1999 consisted of:
- a radio station portfolio that, assuming completion of announced
transactions, consists of 456 radio stations (328 FM and 128 AM) in 102
markets throughout the continental United States and Puerto Rico,
including 12 stations operated under time brokerage or joint sales
agreements which allow AMFM to program another person's station and sell
the advertising;
- Katz Media, a full-service media representation firm that sells national
spot advertising time for its clients in the radio and television
industries primarily throughout the United States and for AMFM's
portfolio of radio stations; and
- AMFM's Internet initiative which focuses on developing AMFM's Internet
web sites, streaming online broadcasts of AMFM's on-air programming and
other media, and promoting emerging Internet and new media concerns.
In addition, AMFM owns an approximate 30% equity interest in Lamar
Advertising Company, one of the largest owners and operators of outdoor
advertising structures in the United States.
THE AMFM MERGER AGREEMENT
On October 2, 1999, we entered into a merger agreement with AMFM. Pursuant
to the merger agreement, we will merge our wholly-owned subsidiary with and into
AMFM which will survive as our wholly-owned subsidiary. Each share of AMFM
common stock will convert into 0.94 shares of
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our common stock. Based on the number of shares outstanding as of September 30,
1999 and assuming that no additional shares of AMFM common stock are issued
before the completion of the merger other than shares currently contemplated to
be issued in connection with the conversion of AMFM's convertible preferred
stock, we will issue approximately 202,757,103 shares of our common stock in the
merger to the shareholders of AMFM. Pursuant to the merger agreement, at the
completion of the merger, our board of directors will be expanded to include
four or five members who currently serve on the AMFM board of directors.
REGISTRATION RIGHTS AGREEMENT
In connection with the merger agreement, we entered into a registration
rights agreement with certain shareholders of AMFM. As a result of the
registration rights agreement, we may be required to file registration
statements with the SEC to register for resale our common stock received by such
AMFM stockholders in the merger.
SHAREHOLDERS AGREEMENT
In connection with the merger, several significant stockholders of us and
AMFM entered into a shareholders agreement with us which imposes standstill and
transfer restrictions on the stockholders and obligates those AMFM stockholders
to take various actions regarding regulatory approvals. Mr. Thomas O. Hicks and
seven entities affiliated with Hicks, Muse, Tate & Furst Incorporated comprise
the AMFM stockholders who have entered into the shareholders agreement and will
sometimes be referred to as the Hicks Muse stockholders in this discussion of
the shareholders agreement. Mr. Hicks and these affiliates of Hicks Muse will be
entitled to receive our common stock in exchange for their AMFM common stock at
the effective time of the merger. Our stockholders who have entered into the
shareholders agreement include L. Lowry Mays and 4-M Partners, Ltd., a limited
partnership of which Mr. L. Mays is the general partner. Mr. L. Mays and the
affiliated partnership will sometimes be referred to as the L. Mays stockholders
in this discussion of the shareholders agreement.
The shareholder agreement imposes standstill and voting restrictions on the
Hicks Muse stockholders and the L. Mays stockholders regarding their acquisition
of our voting securities and their rights to initiate and participate in
business combination transactions, tender and exchange offers, and proxy or
consent solicitations following the merger.
The Hicks Muse stockholders also agreed to facilitate the receipt of all
regulatory approvals required to complete the merger by providing assistance to
us, refraining from action that would hinder or delay the receipt of regulatory
approvals and using their best efforts to prevent the equity interest in RCN
Corporation, an affiliate of Hicks Muse, held by any of them or their affiliates
from hindering or delaying the receipt of regulatory approvals. They also agreed
that they and their affiliates will divest assets, terminate existing
relationships and contractual arrangements and take other actions, as necessary
to prevent interests in other media-related ventures held by the Hicks Muse
stockholders and their affiliates from hindering our future acquisitions of
additional media holdings and pursuit of media-related relationships and
activities. However, we have agreed that these obligations do not require
divestiture of various designated assets currently held by the Hicks Muse
stockholders and their affiliates, nor do the obligations require divestiture of
assets other than radio and television assets located in the U.S. and outdoor
advertising located anywhere in the world but South America. These obligations
continue until interests in other media-related ventures held by the Hicks Muse
stockholders and their affiliates are not attributable to us under the rules and
regulations of the FCC, any antitrust agency or any other governmental
authority.
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CONDITIONS TO THE AMFM MERGER
The completion of the AMFM merger cannot occur until the satisfaction of
numerous conditions, including the following:
- the receipt of approvals from our shareholders and the shareholders of
AMFM;
- the absence of any law or court order prohibiting the merger;
- receipt of regulatory approvals under the federal communications laws and
the completion of the review of the merger by the federal and state
antitrust authorities; and
- receipt of a legal opinion for us and AMFM and its common shareholders
that the merger will be tax-free.
Some conditions may be waived by the company entitled to assert the
condition.
REQUIRED REGULATORY APPROVALS
The Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended,
prohibits us from completing the AMFM merger until after we have furnished
information and materials to the DOJ and the FTC and we have waited the required
period of time. Both the DOJ and the FTC have the authority to challenge the
merger on antitrust grounds before or after we complete the merger. In addition,
the FCC must approve the transfer of control of AMFM's FCC licenses from AMFM's
existing stockholders to us. As part of the FCC's determination whether to
approve the merger, the FCC will examine whether the combined company will
comply with the FCC's limits on the number of radio and television stations that
a company is permitted to own in a single market. The FCC also will conduct
additional ownership concentration analysis and assess the merger's effect on
competition, diversity or other criteria designated by the FCC. We may need to
divest between 100 and 125 radio stations in the aggregate in approximately 22
markets or geographical areas to comply with the FCC's limits. We may need to
make additional divestitures of radio stations or other assets or interests in
order to gain the approval of the federal and state antitrust authorities for
the merger.
Some governmental authorities may seek conditions on the merger before
granting approval. We cannot predict whether we will obtain the required
regulatory approvals within the time frame in the merger agreement or on
conditions that would not be detrimental to us.
TERMINATION OF THE MERGER AGREEMENT AND TERMINATION FEES
AMFM and Clear Channel can jointly agree to terminate the merger agreement
at any time without completing the merger, even after obtaining stockholder
approval. In addition, either company can terminate the merger agreement if:
- the merger is not completed by March 31, 2001;
- the stockholders of either company fail to approve such company's merger
proposal;
- the board of directors of the other company withdraws or changes its
recommendation; or
- it receives and intends to accept a superior acquisition proposal.
AMFM must pay us a termination fee of $700 million plus reasonably
documented expenses up to $25 million if the merger agreement terminates under
specified conditions. Similarly, we must pay AMFM a termination fee of $1
billion plus reasonably documented expenses up to $25 million if the merger
agreement terminates under specified conditions.
S-24
<PAGE> 25
AMFM OPTIONS AND WARRANTS AFTER THE MERGER
We will assume all options and warrants to purchase AMFM common stock
outstanding at the effective time of the merger, whether or not exercisable at
the effective time of the merger, and each of these AMFM options and warrants
will become an option or warrant to acquire our common stock on the same terms
and conditions as were applicable prior to the effective time of the merger. We
will register with the SEC and reserve for issuance a sufficient number of
shares of our common stock for delivery upon the exercise of the AMFM options
assumed by us in the merger.
OWNERSHIP OF CLEAR CHANNEL AFTER THE AMFM MERGER
Based on the number of shares outstanding as of September 30, 1999 and
assuming that no additional shares of AMFM or our common stock are issued before
the completion of the merger other than shares currently contemplated to be
issued in connection with the conversion of AMFM's convertible preferred stock,
we will issue approximately 202,757,103 shares of our common stock to the
shareholders of AMFM in the merger. Assuming the issuance of such number of
shares of our common stock in the merger, the shares of our common stock held by
our existing shareholders at the time of the merger will represent approximately
62.5% of our outstanding common stock after the merger. Based upon the same
assumptions, the shares of our common stock to be received by the AMFM
shareholders in the merger will represent approximately 37.5% of our common
stock outstanding after the merger.
ACCOUNTING TREATMENT
We expect to account for the merger as a purchase. Under this accounting
method, we will record AMFM's assets and liabilities at their fair market
values, and, if the purchase price exceeds the total of these fair market
values, we will record this excess as goodwill. We will include the revenues and
expenses of AMFM in our financial statements following the merger.
BUSINESS OF AMFM
General
AMFM is a large national pure-play radio broadcasting and related media
company with operations in radio broadcasting and media representation and
growing Internet operations, which focus on developing AMFM's Internet web
sites, streaming online broadcasts of AMFM's on-air programming and other media,
and promoting emerging Internet and new media concerns. In addition, AMFM owns
an approximate 30% equity interest in Lamar Advertising Company, one of the
largest owners and operators of outdoor advertising structures in the United
States.
AMFM Radio Group
As of November 1, 1999, AMFM owned and operated, programmed or sold air
time for 456 radio stations (328 FM and 128 AM) in 102 markets in the
continental United States and in Puerto Rico, including 12 radio stations
programmed under time brokerage or joint sales agreements. AMFM also operates a
national radio network, The AMFM Radio Networks, which broadcasts advertising
and syndicated programming shows to a national audience of approximately 68
million listeners in the United States (including approximately 59 million
listeners from AMFM's portfolio of stations). The AMFM Radio Networks'
syndicated programming shows include, among others, American Top 40 with Casey
Kasem, Rockline, The Dave Koz Show, The Bob and Tom Morning Show and special
events such as the Kentucky Derby. Additionally, AMFM operates the Chancellor
Marketing Group, a full service sales promotion firm developing integrated
marketing programs for Fortune 1000 companies.
S-25
<PAGE> 26
The following table sets forth selected information with regard to each of
AMFM's 128 AM and 328 FM radio stations that it owned and operated or
programmed, or for which it sold airtime, as of November 1, 1999.
<TABLE>
<CAPTION>
MARKET AM STATIONS* FM STATIONS* TOTAL*
- ------ ------------ ------------ ------
<S> <C> <C> <C>
ALABAMA
Birmingham.......................................... 1 4 5(a)
Gadsden............................................. 1 1 2
Huntsville.......................................... 2 4 6
Montgomery.......................................... 0 3 3
Tuscaloosa.......................................... 1 3 4
ALASKA
Anchorage........................................... 2 4 6
Fairbanks........................................... 1 3 4
ARIZONA
Phoenix............................................. 3 5 8
Tucson.............................................. 2 2 4
Yuma................................................ 1 2 3
ARKANSAS
Fayetteville........................................ 0 4 4
Ft. Smith........................................... 1 3 4
CALIFORNIA
Fresno.............................................. 3 6 9
Los Angeles......................................... 2 5 7(b)
Modesto/Stockton.................................... 3 3 6(c)
Riverside/San Bernardino............................ 1 1 2
Sacramento.......................................... 2 2 4
San Diego........................................... 0 2 2
San Francisco....................................... 2 5 7
COLORADO
Colorado Springs.................................... 0 2 2
Denver.............................................. 1 5 6
CONNECTICUT
Hartford............................................ 1 4 5
New Haven........................................... 0 1 1(f)
DELAWARE
Wilmington.......................................... 2 2 4
FLORIDA
Ft. Pierce/Stuart/Vero Beach........................ 1 4 5
Melbourne/Titusville/Cocoa Beach.................... 2 3 5
Miami/Ft. Lauderdale................................ 1 0 1(d)
Orlando............................................. 0 4 4
Pensacola........................................... 0 3 3
GEORGIA
Savannah............................................ 2 4 6
HAWAII
Honolulu............................................ 3 4 7
</TABLE>
S-26
<PAGE> 27
<TABLE>
<CAPTION>
MARKET AM STATIONS* FM STATIONS* TOTAL*
- ------ ------------ ------------ ------
<S> <C> <C> <C>
ILLINOIS
Chicago............................................. 1 5 6
Springfield......................................... 1 2 3
INDIANA
Indianapolis........................................ 1 2 3
IOWA
Cedar Rapids........................................ 0 3 3
Des Moines.......................................... 1 2 3
KANSAS
Wichita............................................. 0 4 4
LOUISIANA
Alexandria.......................................... 1 3 4
Baton Rouge......................................... 3 3 6
Shreveport.......................................... 1 2 3
MARYLAND
Frederick........................................... 1 1 2
MASSACHUSETTS
Boston.............................................. 1 2 3
Springfield......................................... 1 2 3
Worcester........................................... 1 1 2
MICHIGAN
Battle Creek/Kalamazoo.............................. 2 2 4
Detroit............................................. 2 5 7
Grand Rapids........................................ 1 3 4
MINNESOTA
Minneapolis/St. Paul................................ 2 5 7
MISSISSIPPI
Biloxi.............................................. 0 2 2
Jackson............................................. 1 4 5
NEBRASKA
Lincoln............................................. 0 4 4
Ogallala............................................ 1 2 3
Omaha/Council Bluffs................................ 1 3 4
NEW HAMPSHIRE
Manchester.......................................... 1 1 2
Portsmouth/Dover/Rochester.......................... 3 4 7
NEW MEXICO
Farmington.......................................... 1 3 4
NEW YORK
Albany/Schenectady/Troy............................. 2 4 6
Nassau/Suffolk (Long Island)........................ 1 1 2
New York City....................................... 0 5 5
NORTH CAROLINA
Asheville........................................... 1 1 2
Charlotte........................................... 0 3 3
Greensboro.......................................... 1 2 3
</TABLE>
S-27
<PAGE> 28
<TABLE>
<CAPTION>
MARKET AM STATIONS* FM STATIONS* TOTAL*
- ------ ------------ ------------ ------
<S> <C> <C> <C>
Raleigh............................................... 0 4 4
Statesville......................................... 1 1 2
OHIO
Cincinnati.......................................... 2 2 4
Cleveland........................................... 3 4 7
OKLAHOMA
Lawton.............................................. 0 2 2
PENNSYLVANIA
Allentown........................................... 2 2 4
Harrisburg/Lebanon/Carlisle......................... 1 3 4
Philadelphia........................................ 1 5 6
Pittsburgh.......................................... 1 5 6
PUERTO RICO........................................... 0 8 8(e)
RHODE ISLAND
Providence.......................................... 1 2 3
SOUTH CAROLINA
Columbia............................................ 2 4 6
Greenville.......................................... 1 3 4
TENNESSEE
Jackson............................................. 1 2 3
Nashville........................................... 1 4 5
TEXAS
Amarillo............................................ 1 3 4
Austin.............................................. 1 3 4
Beaumont............................................ 1 3 4
Corpus Christi...................................... 2 4 6
Dallas.............................................. 1 5 6
Houston............................................. 3 5 8
Killeen............................................. 0 3 3(f)
Lubbock............................................. 2 4 6
Lufkin.............................................. 1 3 4
Odessa/Midland...................................... 0 3 3
Texarkana........................................... 1 3 4
Tyler............................................... 1 4 5
Victoria............................................ 0 2 2
Waco................................................ 1 4 5
VERMONT
Burlington.......................................... 1 3 4(c)
VIRGINIA
Richmond............................................ 1 4 5
Roanoke/Lynchburg................................... 2 7 9
Winchester.......................................... 1 2 3
WASHINGTON
Richland/Kennewick/Pasco............................ 2 4 6(g)
Spokane............................................. 2 4 6(f)
WASHINGTON DC......................................... 3 5 8
</TABLE>
S-28
<PAGE> 29
<TABLE>
<CAPTION>
MARKET AM STATIONS* FM STATIONS* TOTAL*
- ------ ------------ ------------ ------
<S> <C> <C> <C>
WEST VIRGINIA/KENTUCKY
Huntington/Asland................................... 5 5 10(c)
Wheeling............................................ 2 5 7(f)
WISCONSIN
Madison............................................. 2 4 6
Milwaukee........................................... 1 1 2
--- --- ---
128 328 456
=== === ===
</TABLE>
- ---------------
* We currently contemplate that Clear Channel and AMFM will be required to
divest between 100 and 125 stations in the aggregate to obtain antitrust and
FCC approval of the merger.
(a) Includes one FM station programmed pursuant to a local marketing agreement.
AMFM does not own the FCC license.
(b) Includes one FM and one AM station programmed pursuant to a local marketing
agreement. AMFM does not own the FCC licenses.
(c) Includes one AM station programmed pursuant to a local marketing agreement.
AMFM does not own the FCC license.
(d) AMFM has entered into an agreement with Cox to dispose of one FM station in
this market. In conjunction with the pending disposition, the station is
currently being programmed by Cox under a local marketing agreement.
(e) AMFM has entered into an agreement with Spanish Broadcasting Systems, Inc.
to sell the eight FM stations in this market.
(f) Includes one FM station on which AMFM sells the commercial time pursuant to
a joint sales agreement. AMFM does not own the FCC license.
(g) Includes two FM stations programmed pursuant to a local marketing
agreement. AMFM does not own the FCC licenses. AMFM has entered into an
agreement with New Northwest Broadcasters, Inc. to dispose of two AM and
two FM stations in this market.
AMFM New Media Group
Media Representation. AMFM entered into the media representation business
with the acquisition of Katz Media Group, Inc. Katz Media is a full-service
media representation firm that sells national spot advertising time for its
clients in the radio and television industries primarily throughout the United
States and for AMFM's portfolio of stations.
Internet Initiative. AMFM has initiated a broad-based Internet strategy
intended to leverage the value of its national radio station portfolio,
proprietary content, advertiser relationships and listener base. AMFM intends to
develop and position Internet web sites representing AMFM's portfolio of radio
stations as highly trafficked Internet destinations designed to further AMFM's
relationship with its listening audience. These web sites are expected to
encompass a variety of functions including online streaming of AMFM's on-air
programming and other media. In addition, AMFM intends to promote emerging
Internet and new media businesses.
Lamar Advertising Company Investment
AMFM completed the sale of its outdoor advertising business to Lamar
Advertising Company on September 15, 1999. Lamar is one of the largest and most
experienced owners and operators of outdoor advertising structures in the United
States. AMFM now owns an approximate 30% equity interest in Lamar. AMFM is
required to retain the shares of Lamar class A common stock representing its 30%
equity interest in Lamar until September 15, 2000.
S-29
<PAGE> 30
BUSINESS
We are a diversified media company with two business segments: broadcasting
and outdoor advertising. Clear Channel was incorporated in Texas in 1974. As of
October 15, 1999, we owned, programmed, or sold airtime for 487 domestic radio
stations, two international radio stations and 24 domestic television stations.
In addition, as of October 2, 1999, we were one of the world's largest outdoor
advertising companies based on its total advertising display inventory of
approximately 147,000 domestic display faces and approximately 415,000
international display faces.
During 1998, we derived approximately 48% of our net revenue from
broadcasting operations and approximately 52% from outdoor advertising
operations. The revenue composition would differ if we had completed the
acquisitions described in "Summary -- Recent Developments" as of January 1,
1998.
The broadcasting segment includes both radio and television stations for
which we are the licensee and radio and television stations for which we program
or sell air time under local marketing agreements or joint sales agreements. The
broadcasting segment also operates radio networks and produces syndicated
programming. The outdoor advertising segment includes advertising display faces
which we own or operate under lease management agreements.
BROADCASTING
The following table sets forth certain selected information with regard to
each of our 164 AM and 325 FM radio stations; 20 television stations and four
satellite television stations that we owned, programmed, or for which we sold
airtime as of October 15, 1999. Excluded from the following table are the one AM
and two FM Mexican radio stations for which we provide programming and sell
airtime under exclusive sales agency arrangements.
<TABLE>
<CAPTION>
RADIO* TELEVISION
------------------------------ ---------------------------------
AM FM
MARKET STATIONS STATIONS TOTAL STATION NETWORK AFFILIATION
- ------ -------- -------- ----- ------- -------------------
<S> <C> <C> <C> <C> <C>
DOMESTIC:
ALABAMA
Mobile................. 2 4 6 -- --
Mobile/Pensacola, FL... WPMI-TV NBC
-- -- WJTC-TV(a) UPN
ARIZONA
Phoenix................ -- 4 4
Tucson................. -- -- -- KTTU-TV(b) UPN
ARKANSAS
Little Rock............ -- 5 5 KLRT-TV FOX
KASN-TV(a) UPN
CALIFORNIA
Lancaster.............. 1 2 3 -- --
Los Angeles............ 2 4 6 -- --
Monterey............... 2 4 6 -- --
Riverside.............. 2 -- 2 -- --
San Diego.............. 3 5 8 -- --
San Francisco.......... -- 1 1 -- --
San Jose............... -- 3 3 -- --
Santa Barbara.......... 3(f) 4(f) 7 -- --
Santa Clarita.......... 1 -- 1 -- --
</TABLE>
S-30
<PAGE> 31
<TABLE>
<CAPTION>
RADIO* TELEVISION
------------------------------ ---------------------------------
AM FM
MARKET STATIONS STATIONS TOTAL STATION NETWORK AFFILIATION
- ------ -------- -------- ----- ------- -------------------
<S> <C> <C> <C> <C> <C>
Thousand Oaks............ 1 -- 1 -- --
Walnut Creek........... -- 1 1 -- --
COLORADO
Denver................. 3 5 8 -- --
Ft. Collins-Greeley.... 2 2 4 -- --
CONNECTICUT
New Haven.............. 2 1 3 -- --
FLORIDA
Daytona Beach.......... -- 1 1 -- --
Florida Keys........... 1(a) 7 8 -- --
Ft. Myers.............. 2 6 8 -- --
Ft. Pierce/Vero
Beach............... 1 1 2 -- --
Jacksonville........... 1 6 7 WAWS-TV FOX
WTEV-TV(a) UPN
Miami.................. 2 5 7 -- --
Orlando................ 2 4 6 -- --
Panama City............ 1 5(f) 6 -- --
Pensacola.............. -- 2(d) 2 -- --
Sarasota............... 2 4(c) 6 -- --
Tallahassee............ 1 4 5 -- --
Tampa/St. Petersburg... 3 5 8 -- --
West Palm Beach........ 3(d) 3 6 -- --
GEORGIA
Atlanta................ 2 4(f) 6 -- --
Helen.................. -- 1 1 -- --
Hogansville............ 1 1 2 -- --
IDAHO
Boise.................. 2 4 6 -- --
Idaho Falls............ 1 1 2 -- --
Pocatello.............. 1 2 3 -- --
Twin Falls............. 1 2 3 -- --
IOWA
Ames................... 1 1 2 -- --
Burlington............. 1 1 2 -- --
Cedar Rapids........... 2 2 4 -- --
Des Moines............. 1 3 4 -- --
Ft. Dodge.............. 1 1 2 -- --
Ft. Madison............ 1 1 2 -- --
KANSAS
Hoisington............. -- -- -- KBDK-TV(e)(1) n/a
Salina................. -- -- -- KAAS-TV(e) FOX
Wichita................ -- -- -- KSAS-TV FOX
KSCC-TV(a)(1) UPN
</TABLE>
S-31
<PAGE> 32
<TABLE>
<CAPTION>
RADIO* TELEVISION
------------------------------ ---------------------------------
AM FM
MARKET STATIONS STATIONS TOTAL STATION NETWORK AFFILIATION
- ------ -------- -------- ----- ------- -------------------
<S> <C> <C> <C> <C> <C>
KENTUCKY
Lexington.............. 2 5(f) 7 -- --
Louisville............. 3 5 8 -- --
LOUISIANA
New Orleans............ 2 5 7 -- --
Shreveport............. 2 4(f) 6 -- --
MARYLAND
Baltimore.............. 1 2 3 -- --
MASSACHUSETTS
Springfield............ 2 1 3 -- --
MICHIGAN
Grand Rapids........... 2 5 7 -- --
MINNESOTA
Bemidji................ -- -- -- KFTC-TV(m) FOX
Minneapolis............ -- -- -- WFTC-TV FOX
MISSISSIPPI
Jackson................ 2 3 5 -- --
MISSOURI
St. Louis.............. 1 5 6 -- --
NEVADA
Las Vegas.............. -- 4 4 -- --
NEW MEXICO
Albuquerque............ -- 5(i) 5 -- --
NEW YORK
Albany................. 2 5 7 -- --
Albany/Schenectady/
Troy................ -- -- -- WXXA-TV FOX
Rochester.............. 2 5 7 -- --
Syracuse............... 2 4(f) 6 -- --
Utica.................. 3 3 6 -- --
NORTH CAROLINA
Greensboro............. 2 2 4 -- --
Morehead City.......... 1 -- 1 -- --
Raleigh-Durham......... 1 4 5 -- --
NORTH DAKOTA
Bismarck............... 1 1 2 -- --
OHIO
Chillicothe............ 1 1(f) 2 -- --
Cincinnati............. 4 4 8 WKRC-TV CBS
Cleveland.............. 1 5 6 -- --
Columbus............... 2 3 5 -- --
Dayton................. 1 5 6 -- --
Defiance............... -- 1 1 -- --
Findlay................ -- 2 2 -- --
</TABLE>
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<PAGE> 33
<TABLE>
<CAPTION>
RADIO* TELEVISION
------------------------------ ---------------------------------
AM FM
MARKET STATIONS STATIONS TOTAL STATION NETWORK AFFILIATION
- ------ -------- -------- ----- ------- -------------------
<S> <C> <C> <C> <C> <C>
Greenville............. -- 1 1 -- --
Lima................... 1 3 4 -- --
Marion................. 1 2 3 -- --
Sandusky............... 1 2 3 -- --
Springfield............ 1 -- 1 -- --
Tiffin................. 1 1 2 -- --
Toledo................. 2 3 5 -- --
Washington Court
House............... 1 1 2 -- --
Youngstown............. 3(f) 5(k) 8 -- --
OKLAHOMA
Guymon................. 1(a) -- 1 -- --
Oklahoma City.......... 3(f) 4 7 -- --
Tulsa.................. 2 4 6 KOKI-TV FOX
KTFO-TV(a) UPN
OREGON
Corvallis.............. 3 3 6 -- --
Medford................ 1 4 5 -- --
Portland............... 2 3(c) 5 -- --
PENNSYLVANIA
Allentown.............. 1 1 2 -- --
Lancaster.............. 1 1 2 -- --
Johnstown.............. 1 1 2 -- --
Newcastle.............. 2 1 3 -- --
Reading................ 1 1 2 -- --
Harrisburg/Lebanon/
Lancaster/York...... 2 4 6 WHP-TV CBS
WLYH-TV(a) UPN
Williamsport........... 2 2 4 -- --
RHODE ISLAND
Providence............. -- 2 2 WPRI-TV CBS
WNAC-TV(a) FOX
SOUTH CAROLINA
Charleston............. 1 4 5 -- --
Columbia............... 1 3 4 -- --
Greenville............. 1 3 4 -- --
TENNESSEE
Cookeville............. 2 2 4 -- --
Crossville/Sparta...... 4(f) 2 6 -- --
Jackson................ -- -- -- WMTU-TV(a)(n) UPN
Memphis................ 3 4 7 WPTY-TV ABC
WLMT-TV(a) UPN
TEXAS
Austin................. 1 3 4 -- --
Dallas................. -- 2 2 -- --
</TABLE>
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<PAGE> 34
<TABLE>
<CAPTION>
RADIO* TELEVISION
------------------------------ ---------------------------------
AM FM
MARKET STATIONS STATIONS TOTAL STATION NETWORK AFFILIATION
- ------ -------- -------- ----- ------- -------------------
<S> <C> <C> <C> <C> <C>
El Paso................ 2 3 5 -- --
Houston................ 3(h) 7(d) 10 -- --
San Antonio............ 3(f) 4 7 -- --
UTAH
Salt Lake City......... 3 4 7 -- --
VIRGINIA
Charlottesville........ -- 3 3 -- --
Norfolk................ -- 4 4 -- --
Richmond............... 3 3 6 -- --
WASHINGTON
Centralia.............. 1 1 2 -- --
WISCONSIN
Milwaukee.............. 1 3 4 -- --
WYOMING
Casper................. 2(c) 3(k) 5 -- --
Cheyenne............... 1 4 5 -- --
INTERNATIONAL:
DENMARK
Copenhagen............. -- 2 2 -- --
--
--- --- ---
TOTAL.......... 164 325 489 24
=== === ===
</TABLE>
- ---------------
* We currently contemplate that Clear Channel and AMFM will be required to
divest between 100 and 125 stations in the aggregate to obtain antitrust and
FCC approval of the merger.
(a) Station programmed pursuant to a local marketing agreement (FCC licenses
not owned by Clear Channel). We have applied to acquire the FCC licenses of
WJTC-TV in Mobile, Alabama/ Pensacola, Florida; KASN-TV in Little Rock,
Arkansas; WTEV-TV in Jacksonville, Florida; KTFO-TV in Tulsa, Oklahoma;
WMTU-TV in Jackson, Tennessee; and WLMT-TV in Memphis, Tennessee.
(b) Station programmed by another party pursuant to a local marketing
agreement.
(c) Includes one station for which Clear Channel holds a construction permit
but which is not yet operating.
(d) Includes one station for which Clear Channel sells airtime pursuant to a
joint sales agreement (FCC license not owned by Clear Channel).
(e) Satellite station of KSAS-TV in Wichita, Kansas.
(f) Includes one station programmed pursuant to a local marketing agreement
(FCC license not owned by Clear Channel).
(g) Includes two stations programmed pursuant to local marketing agreements
(FCC licenses not owned by Clear Channel).
(h) Includes two stations that are owned by CCC-Houston AM, Ltd., in which
Clear Channel owns an 80% interest.
(i) Includes five stations programmed pursuant to a local marketing agreement
(FCC license not owned by Clear Channel).
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<PAGE> 35
(j) Includes four AM and two FM stations programmed pursuant to a local
marketing agreement (FCC license not owned by Clear Channel).
(k) Includes three stations programmed pursuant to a local marketing agreement
(FCC license not owned by Clear Channel).
(l) Station for which there is a construction permit but which is not yet
operating.
(m) Satellite station of WFTC-TV in Minneapolis, Minnesota.
(n) Satellite station of WLMT-TV in Memphis, Tennessee.
We also own 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 Florida Radio Network based in Orlando, Florida, the University of Florida
Sports Network based in Gainesville, Florida and Orlando, Florida, and the Penn
State Sports Network based in State College, Pennsylvania.
We produce more than 50 syndicated programs and services for more than
4,000 radio stations, which programs include Rush Limbaugh, The Dr. Laura
Schlessinger Show and Dr. Dean Edell.
OUTDOOR ADVERTISING
The following table sets forth certain selected information with regard to
our outdoor advertising display faces as of October 2, 1999.
<TABLE>
<CAPTION>
MARKET TOTAL DISPLAY FACES(a)
- ------ ----------------------
<S> <C>
DOMESTIC:
ARIZONA
Phoenix................................................... 369
Tucson.................................................... 1,466
CALIFORNIA
Los Angeles(b)............................................ 12,431
North California(c)....................................... 4,730
DELAWARE
Wilmington................................................ 1,087
FLORIDA
Atlantic Coast............................................ 746
Gulf Coast................................................ 650
Jacksonville.............................................. 1,078
Miami..................................................... 2,082
Ocala-Gainesville......................................... 1,025
Orlando................................................... 1,908
Tampa-St. Petersburg...................................... 2,605
GEORGIA
Atlanta................................................... 2,079
ILLINOIS
Chicago................................................... 7,332
INDIANA
Indianapolis.............................................. 1,902
</TABLE>
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<PAGE> 36
<TABLE>
<CAPTION>
MARKET TOTAL DISPLAY FACES(a)
- ------ ----------------------
<S> <C>
IOWA
Des Moines................................................ 649
MARYLAND
Baltimore................................................. 3,718
Salisbury-Ocean City...................................... 1,075
Washington, DC............................................ 1,464
MICHIGAN
Detroit................................................... 168
MINNESOTA
Minneapolis............................................... 1,740
NEW YORK
New York.................................................. 2,153
OHIO
Cleveland(d).............................................. 2,293
PENNSYLVANIA
Philadelphia.............................................. 43,770
SOUTH CAROLINA
Myrtle Beach.............................................. 1,253
TENNESSEE
Chattanooga............................................... 1,690
Memphis................................................... 2,490
TEXAS
Dallas.................................................... 4,756
El Paso................................................... 1,310
Houston................................................... 5,002
San Antonio............................................... 3,389
WISCONSIN
Milwaukee................................................. 1,616
OTHER OUT-OF-HOME
Various................................................... 15,479
UNION PACIFIC SOUTHERN PACIFIC(e)
Various................................................... 11,165
INTERNATIONAL
Belgium................................................... 2,533
Canada.................................................... 929
Denmark................................................... 11,223
Estonia................................................... 240
Finland................................................... 1,574
France.................................................... 124,003
Great Britain............................................. 47,254
Ireland................................................... 5,507
Italy..................................................... 29,060
Latvia.................................................... 200
Lithuania................................................. 225
Norway.................................................... 23,798
Poland.................................................... 15,160
</TABLE>
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<PAGE> 37
<TABLE>
<CAPTION>
MARKET TOTAL DISPLAY FACES(a)
- ------ ----------------------
<S> <C>
Russia...................................................... 650
Taiwan.................................................... 1,624
Sweden.................................................... 20,406
Switzerland............................................... 13,227
Small Transit displays(f)................................. 117,618
-------
TOTAL............................................. 561,901
=======
</TABLE>
- ---------------
(a) Domestic 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. International display faces include street furniture, various
transit displays and billboards of various sizes.
(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) Represents licenses managed under the Union Pacific Southern Pacific
license management agreement.
(f) Represents small display faces on the interior and exterior of various
public transportation vehicles.
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<PAGE> 38
DESCRIPTION OF CONVERTIBLE NOTES
The convertible notes offered by this prospectus supplement are a series of
"senior debt securities" which are described in the accompanying prospectus.
This description supplements the description of the general terms and provisions
of the debt securities found in the accompanying prospectus.
The convertible 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 us and The Bank of New York, as debt
trustee. The Indenture contains:
- provisions limiting our ability to consolidate with or merge into any
other corporation or convey or transfer substantially all of our
properties and assets,
- limitations on Mortgages, and
- limitations on sale and leaseback transactions.
See "Description of Senior and Subordinated Debt Securities -- Consolidation,
Merger, Conveyance or Transfer" and "Description of Senior and Subordinated Debt
Securities -- Senior Debt Securities -- Covenants" in the accompanying
prospectus.
Capitalized terms used and not otherwise defined below or elsewhere in this
prospectus supplement or the accompanying prospectus are used with the
respective meanings given thereto in the Indenture.
GENERAL
The convertible notes will be our senior unsecured general obligation, and
rank equally with all of our other unsecured and unsubordinated indebtedness.
The convertible notes will be limited to an aggregate principal amount of
$900,000,000 ($1,000,000,000 including the underwriters' over-allotment option)
and will mature on December 1, 2002. The convertible notes will bear interest at
a rate of 1.5% per annum from November 24, 1999, or from the most recent
interest payment date on which interest has been paid or provided for, payable
semi-annually on June 1 and December 1 of each year, commencing June 1, 2000, to
each holder in whose name a convertible note (or any predecessor convertible
note) is registered at the close of business on the preceding record date of May
15 or November 15 (whether or not a business day), as the case may be. Interest
on the convertible notes will be computed on the basis of a 360-day year
containing twelve, 30-day months.
Principal of, and premium, if any, and interest on the convertible notes
will be payable; convertible notes may be presented for conversion; and
transfers of the convertible notes will be registrable at our office or agency
in the Borough of Manhattan, The City of New York, and transfers of the
convertible notes will also be registrable at any of our other offices or
agencies as we may maintain for that purpose. In addition, payment of interest
may be made, at our option, by check mailed to the address of the person
entitled thereto as shown on the Security Register. The convertible 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 convertible notes, except for any tax or other governmental charge that may
be imposed in connection with the transfer or exchange.
GLOBAL SECURITIES
The convertible notes will be issued in the form of one or more global
securities that will be deposited with, or on behalf of the depositary, the
Depositary Trust Company. 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 convertible notes in definitive form, a global
security may
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not be transferred except as a whole to a nominee of the depositary for the
global security, or by a nominee of the depositary to the depositary or another
nominee of the depositary, or by the depositary or any nominee to a successor
depositary or a nominee of the successor depositary.
BOOK-ENTRY SYSTEM
Initially, the convertible notes will be registered in the name of Cede &
Co., the nominee of the depositary. Accordingly, beneficial interests in the
convertible 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 us 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 eliminates the need for physical movement of
securities certificates by facilitating the settlement among Direct Participants
of securities transactions, such as transfers and pledges, in deposited
securities through electronic computerized book-entry changes in the Direct
Participants' accounts. 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:
- upon our issuance of the convertible notes, the depositary will credit
the accounts of Direct and Indirect Participants designated by the
underwriters with the principal amounts of the convertible notes
purchased by the underwriters, and
- 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, the nominee for all purposes will be considered the sole
owner or holder of the global securities under the Indenture. Except as provided
below, owners of beneficial interests in the global securities will not be
entitled to have convertible notes registered in their names, will not receive
or be entitled to receive physical delivery of convertible notes in definitive
form and will not be considered the owners or holders thereof under the
Indenture.
Neither we, the debt 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
those beneficial ownership interests.
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Principal and interest payments on the convertible 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 convertible notes, we and the debt trustee will treat the
persons in whose names the convertible notes are registered as the owners of
those convertible notes for the purpose of receiving payment of principal and
interest on those convertible notes and for all other purposes whatsoever.
Therefore, neither we, the debt trustee nor any paying agent has any direct
responsibility or liability for the payment of principal or interest on the
convertible notes to owners of beneficial interests in the global securities.
The depositary has advised us and the debt 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 the Direct and Indirect
Participants and not of the depositary, the debt trustee or us, subject to any
statutory requirements that may be in effect from time to time. Payment of
principal and interest to the depositary is our responsibility or the
responsibility of the debt trustee, disbursement of those payments to the owners
of beneficial interests in the global securities shall be the responsibility of
the depositary and Direct and Indirect Participants.
Convertible notes represented by a global security will be exchangeable for
convertible notes in definitive form of like tenor as the global security in
denominations of $1,000 and in any greater amount that is an integral multiple
if the depositary notifies us that it is unwilling or unable to continue as
depositary for the global security or if at any time the depositary ceases to be
a clearing agency registered under applicable law and a successor depositary is
not appointed by us within 90 days or we, in our discretion, at any time
determine not to require all of the convertible notes to be represented by a
global security and notify the debt trustee of that determination. Any
convertible notes that are exchangeable pursuant to the preceding sentence are
exchangeable for convertible 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 convertible notes will be made by the underwriters in
immediately available funds. So long as the depositary continues to make same
day settlement available to us, all payments of principal and interest on the
convertible notes will be made by us 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
depositary will facilitate same day settlement for trading in the convertible
notes until maturity, and secondary market trading activity in the convertible
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 convertible
notes.
CONVERSION OF CONVERTIBLE NOTES
The holders of convertible notes will be entitled at any time through the
close of business on the final maturity date of the convertible notes, subject
to prior redemption or repurchase, to convert any convertible notes or portions
thereof (in denominations of $1,000 or multiples thereof) into our
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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 below, no adjustment will be made on conversion of any convertible
notes for interest accrued thereon or for dividends on any of our common stock
issued upon conversion of the convertible notes.
If any convertible notes are converted after a record date for the payment
of interest and prior to the next succeeding interest payment date, the
convertible notes must be accompanied by funds equal to the interest payable on
the succeeding interest payment date on the principal amount so converted. We
are not required to issue fractional shares of our common stock upon conversion
of convertible notes and, in lieu thereof, will pay a cash adjustment based upon
the market price of our common stock on the last trading day (as hereinafter
defined) prior to the date of conversion. A convertible note in respect of which
a holder is exercising its option to require repurchase upon a change in control
may be converted only if the holder withdraws its election to exercise its
option in accordance with the terms of the convertible note. See below
"-- Repurchase at Option of Holders Upon Change in Control."
"Trading day" shall mean
- if the applicable security is listed or admitted for trading on the New
York Stock Exchange or another national security exchange, a day on which
the New York Stock Exchange or other national security exchange is open
for business, or
- if the applicable security is quoted on the Nasdaq National Market, a day
on which trades may be made thereon, or
- if the applicable security is not so listed, admitted for trading or
quoted, any day other than a Saturday or Sunday or a day on which banking
institutions in the State of New York are authorized or obligated by law
or executive order to close.
The initial conversion price of $105.78 per share of our common stock is
subject to adjustment (under formulae set forth in the convertible notes) in
certain events, including:
- the issuance of common stock as a dividend or distribution on our common
stock;
- certain subdivisions and combinations of our common stock;
- the issuance to all holders of our common stock of certain rights or
warrants to purchase common stock;
- the distribution to all holders of our common stock of shares of our
capital stock (other than common stock) or evidences of our indebtedness
or assets (including securities, but excluding those rights, warrants,
dividends and distributions referred to above and dividends and
distributions in connection with our liquidation, dissolution or winding
up or paid in cash);
- dividends or other distributions consisting exclusively of cash
(excluding any cash portion of distributions referred to in the previous
bullet point) to all holders of our common stock to the extent that those
distributions, combined together with:
-- all other all-cash distributions made within the preceding 12 months
in respect of which no adjustment has been made, plus
-- any cash and the fair market value of other consideration payable in
respect of any tender offers by us for our common stock concluded
within the preceding 12 months in respect of which no adjustment has
been made, exceeds 10% of our market capitalization (being the
product of the then current market price of our common stock times
the number of shares of common stock then outstanding on the record
date for the distribution);
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- the purchase of our common stock pursuant to a tender offer made by us or
any of our subsidiaries to the extent that the same involves an aggregate
consideration that, together with:
-- any cash and the fair market value of any other consideration payable
in any other tender offer by us or any of our subsidiaries for our
common stock expiring within the 12 months preceding the tender offer
in respect of which no adjustment has been made, plus
-- the aggregate amount of any all-cash distributions referred to in the
previous bullet point to all holders of our common stock within the
12 months preceding the expiration of the tender offer in respect of
which no adjustments have been made, exceeds 10% of our market
capitalization on the expiration of the tender offer; and
- payment in respect of a tender offer or exchange offer by a person other
than us or any of our subsidiaries in which, as of the closing date of
the offer, our board of directors is not recommending rejection of the
offer.
If an adjustment is required to be made as set forth in the fifth bullet point
of the preceding paragraph as a result of a distribution that is not a quarterly
dividend, the adjustment would be based upon the full amount of the
distribution. The adjustment referred to in the last bullet point above will
only be made if the tender offer or exchange offer is for an amount which
increases that person's ownership of our 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 the payment per share of common stock, exceeds the
average closing price per share of the common stock for the first business day
after the last date on which tenders or exchanges may be made pursuant to the
tender or exchange offer and the next two trading days. The adjustment referred
to in the last bullet point above will not be made, however, if, as of the
closing of the offer, the offering documents with respect to the offer disclose
a plan or an intention to cause us to engage in a consolidation or merger or a
sale of our assets, as an entirety or substantially as an entirety.
No adjustment in the conversion price will be required unless the
adjustment would require a change of at least 1% in the conversion price then in
effect; provided that any adjustment that would otherwise be 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 our common stock or any securities convertible into or exchangeable
for our common stock or carrying the right to purchase any of the foregoing.
In the case of:
- any reclassification or change of our common stock, or
- a consolidation, merger or combination involving us or a sale or
conveyance to another person of our property and assets as an entirety or
substantially as an entirety,
in each case as a result of which holders of our common stock shall be entitled
to receive stock, other securities, other property or assets (including cash)
with respect to or in exchange for the common stock, the holders of the
convertible notes then outstanding will be entitled thereafter to convert the
convertible 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 the reclassification, change, consolidation, merger, combination,
sale or conveyance had the convertible notes been converted into our common
stock immediately prior to the reclassification, change, consolidation, merger,
combination, sale or conveyance assuming that a holder of convertible 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 our common stock (or
other transaction) which results in any adjustment of the conversion price, the
holders of convertible notes may, in
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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 an adjustment may result in a taxable dividend to the holders of our
common stock. See "Certain Federal Income Tax Considerations."
From time to time we may, to the extent permitted by law, reduce the
conversion price of the convertible notes by any amount for any period of at
least 20 days, in which case we shall give at least 15 days' notice of the
decrease, if our board of directors has made a determination that the decrease
would be in our best interests, which determination shall be conclusive. See
"Certain Federal Income Tax Considerations." We may, at our option, make
reductions in the conversion price, in addition to those set forth above, as our
board of directors deems advisable to avoid or diminish any income tax to
holders of our 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."
REPURCHASE AT OPTION OF HOLDERS UPON CHANGE IN CONTROL
The convertible notes provide that if a change in control occurs, each
holder of convertible notes shall have the right to require us to repurchase all
of the holder's convertible 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 convertible notes being repurchased.
Within 15 trading days after the occurrence of a change in control, we or,
at our request, the debt trustee is obligated to mail to all holders of record
of convertible notes a notice (the "Company Notice") of the occurrence of the
change in control and of the repurchase right arising as a result thereof. We
must also deliver a copy of the Company Notice to the debt trustee. To exercise
the repurchase right, a holder of the convertible notes must deliver to the debt
trustee on or before the Repurchase Date, written notice of the holder's
exercise of that right, together with the convertible notes with respect to
which the right is being exercised, duly endorsed for transfer to us.
A "change in control" will be deemed to have occurred at the time after the
original issuance of the convertible notes as:
- any person (including any syndicate or group deemed to be a "person"
under Section 13(d)(3) of the Exchange Act), other than us, any of our
subsidiaries, or any of our or our subsidiaries' employee benefit plans,
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 us), of shares of our capital stock entitling the
person to exercise in excess of 50% of the total voting power of all
shares of our capital stock entitled to vote generally in the election of
directors;
- we consolidate with or merge into, any other person, another person
merges into us, or we sell or transfer any of our assets, as an entirety
or substantially as an entirety, to another person other than in
-- any transaction pursuant to which the holders of our common stock
immediately prior to the transaction have, directly or indirectly,
shares of capital stock of the continuing or surviving corporation
immediately after the transaction which entitle the 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
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-- any merger which does not result in any reclassification, conversion,
exchange or cancellation of outstanding shares of our common stock or
which is effected solely to change our jurisdiction of incorporation
and results in a reclassification, conversion or exchange of
outstanding shares of our common stock solely into shares of common
stock and separate series of common stock carrying substantially the
same relative rights as our common stock; or
- a change in our board of directors in which the individuals who
constituted our board of directors at the beginning of the one-year
period immediately preceding the change, together with any other director
whose election by our board of directors or whose nomination for election
by our stockholders was approved by a vote of at least a majority of the
directors then in office either who were directors at the beginning of
the 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
- the closing price per share of our 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 trading day,
- at least 90% of the consideration, excluding cash payments for fractional
shares, in the transaction or transactions constituting a change in
control consists of shares of common stock with full voting rights traded
on a national securities exchange or quoted on the Nasdaq National Market
or which will be so traded or quoted when issued or exchanged in
connection with the change in control (such securities being referred to
as "Publicly Traded Securities") and as a result of the transaction or
transactions the convertible notes become convertible solely into
Publicly Traded Securities and 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 the 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 the change in control. The term
"beneficial owner" shall be determined in accordance with Rule 13d-3
promulgated by the SEC under the Exchange Act.
To the extent applicable, we 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 the rules, in connection with any offer by us to
repurchase convertible notes upon a change in control.
The change in control feature of the convertible notes may in certain
circumstances make it more difficult for or otherwise discourage a person from
attempting to take us over and, thus, remove incumbent management. The
repurchase right is not the result of management's knowledge of any effort to
accumulate any of our common stock or to obtain control of us 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 us and the underwriters.
The foregoing provisions would not necessarily afford holders of the
convertible notes protection in the event of a highly leveraged transaction,
certain changes in control or other transactions that may adversely affect
holders.
Our ability to repurchase convertible 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 we would have
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sufficient financial resources, or would be able to arrange financing, to pay
the repurchase price for all convertible notes tendered by holders thereof. See
"Risk Factors -- We May Face Limitations on the Repurchase of Convertible Notes
Upon a Change in Control."
GOVERNING LAW
The Indenture and the convertible notes will be governed by and construed
in accordance with the laws of the State of New York.
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CERTAIN FEDERAL INCOME TAX CONSIDERATIONS
The following is a general summary of certain United States federal income
tax consequences arising from the purchase, ownership and disposition of the
notes and of common stock into which the convertible notes may be converted.
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 convertible notes as part of a hedge, straddle or conversion
transaction. In addition, this summary applies only to holders that purchase
convertible notes in the initial offering and that hold the convertible notes or
the common stock into which convertible notes may be converted as "capital
assets" within the meaning of Section 1221 of the Code. We 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 convertible
notes (or the common stock into which the convertible notes are convertible)
and, therefore, there can be no assurance that the IRS will agree with the
conclusions set forth below.
For purposes of this summary, the term "U.S. Holder" means a beneficial
owner of a convertible note or our common stock that is
- a citizen or resident of the United States,
- a corporation or other entity taxable as a corporation created or
organized in or under the laws of the United States or any political
subdivision thereof,
- an estate the income of which is subject to United States federal income
taxation regardless of its source, and
- a trust if
-- a U.S. court is able to exercise primary supervision over the trust's
administration, and
-- 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 convertible note
or our 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 provides that certain actual or constructive distributions of stock
with respect to stock and convertible securities may be
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treated as a dividend (to the extent of our current or accumulated earnings and
profits) under certain circumstances. Applicable Treasury regulations treat
holders of convertible debentures, such as the convertible notes, as having
received a constructive distribution where the conversion price is adjusted to
reflect certain distributions with respect to the stock into which the
debentures are convertible and where such adjustments have the effect of
increasing the proportionate interest of a holder of notes in the earnings and
profits or assets of the corporation. Thus, under certain circumstances, an
adjustment in the conversion price of our common stock may be taxable 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
convertible note will be increased by the amount of any constructive dividend.
U.S. Holders of the convertible notes are advised to consult their tax advisors
with respect to the potential of taxable constructive dividend distributions
upon the conversion price modifications.
Payments of Interest. The payment of stated interest on the convertible
notes will be taxable to a U.S. Holder as ordinary interest income at the time
it accrues or is received in accordance with the holder's usual method of
accounting for federal income tax purposes.
Conversion of a Convertible Note into Our Common Stock. In general, a U.S.
Holder will not recognize income, gain or loss on conversion of a convertible
note solely into our common stock pursuant to the terms of the conversion right
of the convertible 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 convertible note generally will include the period
during which the convertible note was held prior to the conversion. The U.S.
Holder's aggregate tax basis in our common stock received upon conversion of a
convertible note generally will equal the U.S. Holder's aggregate tax basis in
the convertible 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 convertible notes into our common stock, in particular in the
case of the conversion of a convertible note into our common stock after a
record date for the payment of interest but prior to the next succeeding
interest payment date.
Disposition of Convertible Notes or Common Stock. A U.S. Holder of a
convertible 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 convertible note (or the common stock into which it was
converted) measured by the difference between
- the amount realized (except to the extent the amount is attributable to
accrued interest income, which will generally be taxable as ordinary
income), and
- the U.S. Holder's tax basis in the convertible note (or the common stock
into which it was converted).
The gain or loss on the disposition will be long-term capital gain or loss if
the convertible note (or the common stock into which it was converted) has been
held for more than one year at the time of the disposition.
Distributions with Respect to Common Stock. In general, distributions made
by us with respect to our 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 our undistributed current or accumulated
earnings and profits (as determined for U.S. federal income tax purposes).
Distributions in excess of our 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
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amount of any gain (or reducing the amount of any loss) which might be realized
by the holder upon the sale, exchange or redemption of the common stock. Any
distributions in excess of the U.S. Holder's tax basis in our 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 us
are treated as dividends, a U.S. Holder of our 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 the earnings and
profits (the "Dividends Received Deduction"). With respect to our common stock
which is 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 our 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 convertible note by us 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 the 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
- does not actually or constructively own 10% or more of the combined
voting power of all classes of our stock entitled to vote,
- is not a controlled foreign corporation related to us actually or
constructively through stock ownership,
- is not a bank receiving interest on a loan entered into in the ordinary
course of business, and
- either provides a Form W-8 a Form W-8 BEN 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 deposits the convertible 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 convertible note and provides a statement to us or our agent
under penalties of perjury in which it certifies that a Form W-8 or Form
W-8 BEN has been received by it from the Non-U.S. Holder or another
financial institution and furnishes us or our agent with a copy thereof.
This procedure will change on January 1, 2001. We suggest you consult
your own tax advisor about the specific method for satisfying this
requirement after December 31, 2000.
Conversion of a Convertible Note into Common Stock. In general, no United
States federal income tax or withholding tax will be imposed upon the conversion
of a convertible note into our 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 convertible note, where any one of the four exceptions
described below under "-- Disposition of Convertible Notes or Common Stock" is
applicable. In addition, under certain circumstances, the extent to which the
fair market value of the common stock received upon conversion is attributable
to accrued interest will be treated as ordinary interest income taxable as
described above under "-- Payments of Interest."
S-48
<PAGE> 49
Disposition of Convertible Notes or Common Stock. A Non-U.S. Holder of the
convertible 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
convertible note (including the receipt of cash in lieu of fractional shares
upon conversion of the convertible note to common stock), unless
- the gain is effectively connected with a United States trade or business
of the Non-U.S. Holder,
- in the case of a Non-U.S. Holder who is an individual, the 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 the 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 the holder in
the United States,
- the Non-U.S. Holder is subject to tax pursuant to the provisions of the
Code applicable to certain United States expatriates, or
- we are or have 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 the Non-U.S. Holder's holding
period.
We do not believe that we are, or are likely to become, a United States real
property holding corporation.
Distributions with Respect to Common Stock. To the extent distributions
made by us 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 our
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 the Non-U.S. Holder is a foreign corporation,
it may also be subject to a United States branch profits tax on the effectively
connected income at a 30% rate or such lower rate as may be specified by an
applicable income tax treaty.
Under current Treasury regulations, dividends paid to an address in a
foreign country are presumed to be paid to a resident of that country, unless
the payer has knowledge to the contrary, for purposes of the withholding
discussed above, and under the current interpretation of Treasury regulations,
for purposes of determining the applicability of a tax treaty rate. Under
Treasury regulations which generally are effective for payments made after
December 31, 2000, subject to certain transition rules, a Non-U.S. Holder of
common stock who wishes to claim the benefit of an applicable treaty rate would
be required to satisfy applicable certification requirements.
BACKUP WITHHOLDING AND INFORMATION REPORTING
U.S. Holders. Under current United States federal income tax law, U.S.
Holders of convertible 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 convertible notes
S-49
<PAGE> 50
or common stock by, certain noncorporate, not otherwise exempt U.S. Holders.
Generally, the backup withholding rules will not apply to a U.S. Holder if:
- assuming a U.S. Holder holds its convertible notes or common stock
through a broker or other securities intermediary, the intermediary
provides information to the IRS concerning interest and disposition
proceeds on the U.S. Holder's convertible notes or common stock, and
- a U.S. Holder provides the intermediary with its Taxpayer Identification
Number for its use in reporting information to the IRS. If the U.S.
Holder is an individual, this is its social security number. U.S. Holders
are also required to comply with other IRS requirements concerning
information reporting.
Backup withholding will not apply with respect to payments made to certain U.S.
Holders of the convertible 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 the holder
to a refund provided the required information is furnished to the IRS.
Non-U.S. Holders. Payments made on the convertible notes or common stock
and proceeds from the sale of the convertible notes or common stock generally
may be subject to a backup withholding tax of 31% or to information reporting
requirements if the payee fails to certify that the holder is a Non-U.S. Holder
or if we or our paying agent have actual knowledge that the payee is a United
States person.
The payment of the proceeds on the disposition of convertible notes or
shares of common stock to or through the United States office of a United States
or foreign broker will be subject to information reporting and backup
withholding unless the owner provides the certification described above or
otherwise establishes an exemption. The proceeds of the disposition by a
Non-U.S. Holder of convertible notes or shares of common stock to or through a
foreign office of a broker will not be subject to backup withholding. However,
if such broker is a United States person, a controlled foreign corporation for
United States tax purposes, or a foreign person 50% or more of whose gross
income from all sources for certain periods is from activities that are
effectively connected with a United States trade or business, information
reporting will apply unless such broker has documentary evidence of the owner's
foreign status and has no actual knowledge to the contrary or unless the owner
otherwise establishes an exemption. Both backup withholding and information
reporting will apply to the proceeds from such disposition if the broker has
actual knowledge that the payee is a U.S. Holder.
Recently adopted Treasury regulations, which generally are effective for
payments made after December 31, 2000, subject to certain transition rules,
alter the foregoing rules in certain respects. We strongly urge you to consult
your own tax advisor concerning these changes.
S-50
<PAGE> 51
UNDERWRITING
We have entered into an underwriting agreement with the underwriters named
below in which they have severally agreed to purchase from us the principal
amount of convertible notes set forth opposite their names.
<TABLE>
<CAPTION>
PRINCIPAL AMOUNT
UNDERWRITER OF CONVERTIBLE NOTES
- ----------- --------------------
<S> <C>
Deutsche Bank Securities Inc.......................... $270,150,000
Salomon Smith Barney Inc.............................. 270,150,000
Banc of America Securities LLC........................ 41,100,000
Credit Suisse First Boston Corporation................ 41,100,000
Goldman, Sachs & Co. ................................. 41,100,000
Merrill Lynch, Pierce, Fenner & Smith
Incorporated............................ 41,100,000
Morgan Stanley Co. Incorporated....................... 41,100,000
PaineWebber Incorporated.............................. 41,100,000
Schroder & Co. Inc. .................................. 41,100,000
BancBoston Robertson Stephens......................... 18,000,000
First Union Securities, Inc. ......................... 18,000,000
ING Barings LLC....................................... 18,000,000
Thomas Weisel Partners LLC............................ 18,000,000
------------
Total....................................... $900,000,000
============
</TABLE>
The obligation of the underwriters to purchase the convertible notes is
subject to the terms and conditions set forth in the underwriting agreement. The
underwriting agreement requires the underwriters to purchase all the convertible
notes offered by this prospectus supplement, if any of such convertible notes
are purchased.
We have agreed to indemnify the underwriters against certain liabilities,
including certain liabilities under the Securities Act, or to contribute to
payments the underwriters may be required to make in respect of these
liabilities.
COMMISSIONS AND DISCOUNTS
The underwriters have advised us that they propose to offer some of the
convertible notes directly to the public at the public offering price of $1,000
per convertible note and some of the convertible notes to certain dealers at the
public offering price less a concession not in excess of $9.00 per convertible
note. The underwriters may allow, and such dealers may reallow, a concession not
in excess of $1.00 per convertible note to certain other dealers. The
underwriters may change the public offering price after the common stock is
released for sale to the public.
The following table sets forth the public offering price and all discounts
and commissions to be allowed to the underwriters. This information is presented
assuming either no exercise or full exercise by the underwriters of the
over-allotment option.
<TABLE>
<CAPTION>
PER CONVERTIBLE NOTE WITHOUT OPTION WITH OPTION
-------------------- -------------- --------------
<S> <C> <C> <C>
Public offering price................... $1,000 $900,000,000 $1,000,000,000
Underwriting discount................... $ 15 $ 13,500,000 $ 15,000,000
Proceeds, before expenses, to Clear
Channel............................... $ 985 $886,500,000 $ 985,000,000
</TABLE>
S-51
<PAGE> 52
OVER-ALLOTMENT OPTION
We have 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 $100,000,000 principal amount of convertible notes at the public
offering price less the underwriting discounts and commissions set forth in the
table above. 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 the overallotment that the aggregate principal amount of
convertible notes to be purchased by it shown in the above table bears to
$900,000,000, and we will be obligated, pursuant to the option, to sell such
convertible notes to the underwriters. The underwriters may exercise such option
only to cover overallotments made in connection with the sale of convertible
notes offered pursuant to this prospectus supplement. If purchased, the
underwriters will offer such additional convertible notes on the same terms as
those in which the $900,000,000 convertible notes are being offered. To the
extent that the underwriters exercise this option, each underwriter will be
obligated, subject to certain conditions, to purchase an amount of additional
convertible notes proportionate to such underwriter's initial amount reflected
in the foregoing table.
PRICE STABILIZATION, SHORT POSITIONS AND PENALTY BIDS
In connection with this offering, the underwriters may purchase and sell
convertible notes and common stock in the open market. These transactions may
include short sales, stabilizing transactions and purchases to cover positions
created by short sales. Short sales involve the sale by the underwriters of a
greater principal amount of convertible notes than they are required to purchase
in this offering. Stabilizing transactions consist of certain bids or purchases
made for the purpose of preventing or retarding a decline in the market price of
the convertible notes or the common stock while the offering is in progress.
The underwriters also may impose a penalty bid. This occurs when a
particular underwriter repays to the underwriters a portion of the underwriting
discount received by it because the underwriters have repurchased convertible
notes sold by or for the account of such underwriter in stabilizing or short
covering transactions.
These activities by the underwriters may stabilize, maintain or otherwise
affect the market price of the convertible notes and the common stock. As a
result, the price of the convertible notes or the common stock may be higher
than the price that otherwise might exist in the open market. In addition,
neither any of the underwriters nor we make any representation that the
underwriters will engage in the transactions discussed above. In addition, such
transactions, once commenced, may be discontinued by the underwriters at any
time. These transactions may be effected in the over-the-counter market or
otherwise.
LOCK-UP
Clear Channel 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 Clear Channel or any securities convertible into or
exchangeable for, or any rights to purchase or acquire, equity securities of
Clear Channel (other than employee stock options granted by Clear Channel 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 the joint
book-running managers, Deutsche Bank Securities Inc. and Salomon Smith Barney
Inc.
CERTAIN RELATIONSHIPS AND ARRANGEMENTS
The underwriters and their respective affiliates may be customers of,
lenders to, engage in transactions with, and perform services for us and our
subsidiaries in the ordinary course of business.
S-52
<PAGE> 53
Certain of the underwriters are advisors to us or to AMFM in connection with
AMFM Merger. In addition, Salomon Smith Barney is acting on behalf of our
subsidiary, Jacor, as exclusive dealer manager for the debt tender offer.
Thomas Weisel Partners LLC, one of the underwriters, was organized and
registered as a broker-dealer in December 1998. Since December 1998, Thomas
Weisel Partners has been named as a lead or co-manager on 87 filed public
offerings of equity securities, of which 64 have been completed, and has acted
as a syndicate member in an additional 45 public offerings of equity securities.
Thomas Weisel Partners does not have any material relationship with us or any of
our officers, directors or other controlling persons, except with respect to its
contractual relationship with us pursuant to the underwriting agreement entered
into in connection with this offering.
AVAILABLE INFORMATION
We file annual, quarterly and special reports, proxy statements and other
information with the SEC. You may read and copy any reports, statements or other
information we file at the SEC's public reference rooms in Washington, D.C., New
York, New York and Chicago, Illinois. Please call the SEC at 1-800-SEC-8330 for
further information on the public reference rooms. Our SEC filings are also
available to the public from commercial document retrieval services and at the
web site maintained by the SEC at http://www.sec.gov.
EXPERTS
The consolidated financial statements of Clear Channel at December 31, 1998
and 1997, and for each of the three years in the period ended December 31, 1998,
and the financial statement schedule included in Clear Channel's Annual Report
on Form 10-K for the year ended December 31, 1998, have been audited by Ernst &
Young LLP, independent auditors, as set forth in their reports thereon
incorporated by reference elsewhere herein which are based in part on the
reports of KPMG, independent auditors, as to the year ended December 31, 1996,
and KPMG LLP, independent auditors, as to each of the two years in the period
ended December 31, 1998. The financial statements referred to above are
incorporated into this document by reference in reliance upon such reports given
upon the authority of such firms as experts in accounting and auditing.
The consolidated financial statements incorporated into this document 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, included in Clear Channel's Current Report on
Form 8-K dated March 12, 1998, as amended by Form 8-K/A filed on March 23, 1998
and Form 8-K/A filed on February 23, 1999, have been so incorporated in reliance
on the report of PricewaterhouseCoopers LLP, independent accountants, given on
the authority of said firm as experts in auditing and accounting.
The consolidated financial statements of Eller Media Corporation 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 into this document by
reference are included in Clear Channel'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 in reliance upon the authority of said firm as
experts in giving said reports.
The combined financial statements of Eller Investment Company, Inc. as of
and for the year ended December 31, 1994, incorporated by reference in this
document are included in Clear
S-53
<PAGE> 54
Channel'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 into this document by reference
in reliance upon the authority of said firm as experts in giving said reports.
The financial statement incorporated into this document 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
Clear Channel's Current Report on Form 8-K dated December 22, 1997, as amended
by Form 8-K/A filed on February 23, 1999, have been so incorporated in reliance
on the report of PricewaterhouseCoopers LLP, independent accountants, given on
the authority of said firm as experts in auditing and accounting.
The consolidated financial statements of More Group Plc. as of December 31,
1997 and for the year ended December 31, 1997, included in Clear Channel's
Current Report on Form 8-K/A dated September 4, 1998, as amended by Form 8-K/A
filed on January 14, 1999, and Form 8-K/A filed on February 23, 1999, have been
audited by Price Waterhouse Chartered Accountants and Registered Auditors,
London, England and are incorporated by reference into this document in reliance
upon the report of said firm as experts in auditing and accounting.
The consolidated financial statements of Jacor Communications, Inc. and its
subsidiaries as of December 31, 1998 and 1997 and for each of the three years in
the period ended December 31, 1998 incorporated into this document by reference
to Clear Channel Communications, Inc.'s Current Report on Form 8-K, date of
report December 9, 1998, amended by Form 8-K/A, date of report February 23, 1999
and amended by Form 8-K/A, date of report April 12, 1999, have been so
incorporated in reliance on the report of PricewaterhouseCoopers LLP,
independent accountants, given on the authority of said firm as experts in
accounting and auditing.
The consolidated financial statements of Jacor Communications, Inc. and its
subsidiaries as of December 31, 1997 and 1996 and for each of the three years in
the period ended December 31, 1997 incorporated into this document by reference
to Clear Channel Communications, Inc.'s Current Report on Form 8-K, date of
report December 9, 1998, amended by Form 8-K/A, date of report February 23, 1999
and amended by Form 8-K/A, date of report April 12, 1999, have been so
incorporated in reliance on the report of PricewaterhouseCoopers LLP,
independent accountants, given on the authority of said firm as experts in
accounting and auditing.
The consolidated financial statements incorporated into this document by
reference to the audited consolidated financial statements of AMFM Inc.
(formerly Chancellor Media Corporation) and Subsidiaries as of December 31, 1997
and 1998 and for the years then ended included in Clear Channel's Current Report
on Form 8-K dated November 18, 1999 have been so incorporated in reliance on the
report of PricewaterhouseCoopers LLP, independent accountants, given on the
authority of said firm as experts in accounting and auditing.
The consolidated financial statements of AMFM Inc. (formerly Chancellor
Media Corporation) and Subsidiaries for the year ended December 31, 1996 have
been incorporated by reference herein and in the registration statement in
reliance upon the report of KPMG LLP, independent certified public accountants,
incorporated by reference herein, and upon the authority of said firm as experts
in accounting and auditing.
The consolidated financial statements incorporated into this document by
reference to the audited consolidated financial statements of Capstar
Broadcasting Corporation and Subsidiaries as of December 31, 1997 and 1998 and
for each of the three years in the period ended December 31, 1998 included in
Clear Channel's Current Report on Form 8-K dated November 18, 1999 have been so
incorporated in reliance on the report of PricewaterhouseCoopers LLP,
independent accountants, given on the authority of said firm as experts in
accounting and auditing.
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<PAGE> 55
LEGAL OPINIONS
The validity of the convertible notes offered hereby will be passed upon
for Clear Channel by our 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 Clear Channel and
owns approximately 146,000 shares of common stock (including presently
exercisable nonqualified options to acquire approximately 118,500 shares).
S-55
<PAGE> 56
UNAUDITED PRO FORMA COMBINED CONDENSED FINANCIAL STATEMENTS
The following unaudited pro forma combined condensed financial statements
give effect to the merger. For accounting purposes Clear Channel has accounted
for the merger as a purchase of AMFM; accordingly the net assets of AMFM have
been adjusted to their estimated fair values based upon a preliminary purchase
price allocation.
The unaudited pro forma combined condensed balance sheet at September 30,
1999 gives effect to the merger as if it occurred on September 30, 1999. The
unaudited pro forma combined condensed statements of operations for the year
ended December 31, 1998 and for the nine months ended September 30, 1999 give
effect to the merger as if it had occurred on January 1, 1998.
The unaudited pro forma combined condensed balance sheet was prepared based
upon the historical balance sheet of Clear Channel and the historical balance
sheet of AMFM, adjusted for certain financing transactions, as if such
transactions had occurred on September 30, 1999. The unaudited pro forma
combined condensed statement of operations for the year ended December 31, 1998
was prepared based upon the historical statement of operations of Clear Channel,
adjusted to reflect the merger with Universal Outdoor Holding, Inc., the
acquisition of More Group, Plc, and the merger with Jacor Communications, Inc.
as if such mergers and acquisitions had occurred on January 1, 1998 ("1998 Clear
Channel Pro Forma"), and based upon the historical statement of operations of
AMFM, adjusted to reflect the merger with Capstar Broadcasting Corporation, the
acquisition of KKFR-FM and KFYI-AM from The Broadcast Group, Inc., the
disposition of WMVP-AM to ABC, Inc., the disposition of AMFM's outdoor
advertising business to Lamar Advertising Company and certain financing
transactions, as if such transactions had occurred on January 1, 1998 ("1998
AMFM Pro Forma"). The unaudited pro forma combined condensed statement of
operations for the nine months ended September 30, 1999 was prepared based upon
the historical statement of operations of Clear Channel, adjusted to reflect the
merger with Jacor Communications, Inc. as if such merger had occurred on January
1, 1998 ("1999 Clear Channel Pro Forma"), and the historical statement of
operations of AMFM, adjusted to reflect the merger with Capstar Broadcasting
Corporation, the acquisition of KKFR-FM and KFYI-AM from The Broadcast Group,
Inc., the disposition of WMVP-AM to ABC, Inc., the disposition of AMFM's outdoor
advertising business to Lamar Advertising Company and certain financing
transactions as if such transactions had occurred on January 1, 1998 ("1999 AMFM
Pro Forma"). Additionally, both the Clear Channel pro forma financial statements
and the AMFM pro forma financial statements have been adjusted for the expected
divestitures in markets where the combined AMFM and Clear Channel radio stations
exceed the number allowed by the FCC. These divestitures have been recorded
based upon managements' best estimates as to the expected cash sales proceeds
for the stations involved. Certain amounts in the AMFM pro forma financial
statements have been reclassified to conform to Clear Channel's presentation.
The unaudited pro forma combined condensed financial statements should be
read in conjunction with the historical financial statements of AMFM and Clear
Channel.
The unaudited pro forma combined condensed financial statements are not
necessarily indicative of the actual results of operations or financial position
that would have occurred had the merger and the above described acquisitions,
dispositions, financing and merger transactions of Clear Channel and AMFM
occurred on the dates indicated nor are they necessarily indicative of future
operating results or financial position.
P-1
<PAGE> 57
CLEAR CHANNEL AND AMFM
UNAUDITED PRO FORMA COMBINED CONDENSED BALANCE SHEET
(IN THOUSANDS OF DOLLARS)
SEPTEMBER 30, 1999
ASSETS
<TABLE>
<CAPTION>
CLEAR CHANNEL
PRO FORMA AND AMFM
CLEAR CHANNEL CLEAR CHANNEL AMFM AMFM MERGER PRO FORMA
HISTORICAL DIVESTITURES(1) PRO FORMA DIVESTITURES(2) ADJUSTMENTS(3) MERGER
------------- --------------- ----------- --------------- -------------- -------------
<S> <C> <C> <C> <C> <C> <C>
Current Assets:
Cash and cash equivalents..... $ 82,678 $ -- $ 86,512 $ -- $ -- $ 169,190
Accounts receivable, net...... 686,684 -- 486,651 -- -- 1,173,335
Other current assets.......... 160,345 -- 106,742 -- -- 267,087
----------- --------- ----------- ----------- ----------- -----------
Total Current Assets.... 929,707 -- 679,905 -- -- 1,609,612
Property, plant & equipment,
net........................... 2,414,930 (30,581) 467,736 (59,406) -- 2,792,679
Intangible assets:
Contract valuations........... 746,567 -- -- -- -- 746,567
Licenses and goodwill......... 11,810,385 (448,367) 11,023,112 (1,735,177) 13,719,330 34,369,283
Other intangible assets....... 78,919 (9,425) 542,028 (40,456) -- 571,066
----------- --------- ----------- ----------- ----------- -----------
12,635,871 (457,792) 11,565,140 (1,775,633) 13,719,330 35,686,916
Less accumulated amortization... (603,457) 24,968 (1,037,700) 106,713 930,987 (578,489)
----------- --------- ----------- ----------- ----------- -----------
12,032,414 (432,824) 10,527,440 (1,668,920) 14,650,317 35,108,427
Other assets:
Restricted cash............... 113,470 -- -- -- -- 113,470
Notes receivable.............. 53,675 -- -- -- -- 53,675
Investments in and advances to
nonconsolidated
affiliates.................. 353,374 -- 1,129,389 -- 44,258 1,527,021
Other assets.................. 230,906 -- 242,340 -- -- 473,246
Other investments............. 313,414 -- -- -- -- 313,414
----------- --------- ----------- ----------- ----------- -----------
TOTAL ASSETS............ $16,441,890 $(463,405) $13,046,810 $(1,728,326) $14,694,575 $41,991,544
=========== ========= =========== =========== =========== ===========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
Accounts payable, accrued
expenses and other current
liabilities................. $ 634,739 $ -- $ 389,252 $ -- $ -- $ 1,023,991
Current portion of long-term
debt........................ 40,351 -- 54,625 -- -- 94,976
----------- --------- ----------- ----------- ----------- -----------
Total Current
Liabilities........... 675,090 -- 443,877 -- -- 1,118,967
Long-term debt.................. 3,917,442 (786,739) 5,825,502 (2,235,231) 85,000 6,805,974
Liquid yield options notes...... 487,093 -- -- -- -- 487,093
Deferred income taxes........... 1,238,768 (5,039) 1,734,967 (294,365) 3,249,292 5,923,623
Other long-term liabilities..... 171,844 -- 51,176 -- -- 223,020
Minority interest............... 19,554 -- 3,704 -- -- 23,258
Redeemable preferred stock...... -- -- 148,542 -- -- 148,542
Shareholders' Equity:
Common stock.................. 33,848 -- 2,157 -- 18,119 54,124
Additional paid-in capital.... 9,239,112 -- 5,209,559 -- 11,770,760 26,219,431
Common stock warrants......... 253,428 -- -- -- -- 253,428
Retained earnings............. 318,950 328,373 (372,674) 801,270 (428,596) 647,323
Other......................... (4,008) -- -- -- -- (4,008)
Unrealized gain on
investments................. 91,481 -- -- -- -- 91,481
Cost of shares held in
treasury.................... (712) -- -- -- -- (712)
----------- --------- ----------- ----------- ----------- -----------
Total Shareholders'
Equity................ 9,932,099 328,373 4,839,042 801,270 11,360,283 27,261,067
----------- --------- ----------- ----------- ----------- -----------
TOTAL LIABILITIES AND
SHAREHOLDERS'
EQUITY................ $16,441,890 $(463,405) $13,046,810 $(1,728,326) $14,694,575 $41,991,544
=========== ========= =========== =========== =========== ===========
</TABLE>
P-2
<PAGE> 58
CLEAR CHANNEL AND AMFM
UNAUDITED PRO FORMA COMBINED CONDENSED STATEMENT OF OPERATIONS
(IN THOUSANDS OF DOLLARS, EXCEPT PER SHARE DATA)
YEAR ENDED DECEMBER 31, 1998
<TABLE>
<CAPTION>
CLEAR CHANNEL
1998 1998 PRO FORMA AND AMFM
CLEAR CHANNEL CLEAR CHANNEL AMFM AMFM MERGER PRO FORMA
PRO FORMA DIVESTITURES(4) PRO FORMA DIVESTITURES(5) ADJUSTMENT(6) MERGER
------------- --------------- ---------- --------------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C>
Net revenue.................. $2,364,186 $(81,034) $1,797,024 $(261,426) $ (16,438) $3,802,312
Operating expenses........... 1,448,212 (45,924) 1,006,048 (150,038) (16,438) 2,241,860
Depreciation and
Amortization............... 643,412 (13,666) 790,946 (76,474) 248,849 1,593,067
Noncash compensation
expense.................... -- -- 21,260 -- -- 21,260
Merger and nonrecurring
costs...................... -- -- 76,094 -- -- 76,094
Corporate expenses........... 66,040 -- 61,659 -- -- 127,699
---------- -------- ---------- --------- --------- ----------
Operating income (loss)...... 206,522 (21,444) (158,983) (34,914) (248,849) (257,668)
Interest expense............. 299,719 (39,337) 411,218 (150,878) 4,981 525,703
Gain on disposition of
assets..................... -- -- 123,845 -- -- 123,845
Gain on disposition of
representation contracts... -- -- 32,198 -- -- 32,198
Loss on investment in limited
liability companies........ -- -- 28,565 -- -- 28,565
Other income
(expense) -- net........... 23,013 -- 11,562 -- -- 34,575
---------- -------- ---------- --------- --------- ----------
Income (loss) before income
taxes...................... (70,184) 17,893 (431,161) 115,964 (253,830) (621,318)
Income tax (expense)
benefit.................... (56,029) (7,635) 112,027 (65,962) 76,647 59,048
Dividends and accretion on
preferred stock of
subsidiaries............... -- -- 29,809 -- -- 29,809
---------- -------- ---------- --------- --------- ----------
Income (loss) before equity
in earnings (loss) of
nonconsolidated
affiliates................. (126,213) 10,258 (348,943) 50,002 (177,183) (592,079)
Equity in earnings (loss) of
nonconsolidated
affiliates................. 8,091 -- (82,674) -- 19,228 (55,355)
---------- -------- ---------- --------- --------- ----------
Net income (loss)............ $ (118,122) $ 10,258 $(431,617) $ 50,002 $(157,955) $ (647,434)
========== ======== ========== ========= ========= ==========
Net income (loss) before
extraordinary items per
common share:
Basic...................... $ (0.39) $ (1.27)
========== ==========
Diluted.................... $ (0.39) $ (1.27)
========== ==========
</TABLE>
P-3
<PAGE> 59
CLEAR CHANNEL AND AMFM
UNAUDITED PRO FORMA COMBINED CONDENSED STATEMENT OF OPERATIONS
(IN THOUSANDS OF DOLLARS, EXCEPT PER SHARE DATA)
NINE MONTHS ENDED SEPTEMBER 30, 1999
<TABLE>
<CAPTION>
CLEAR CHANNEL
1999 1999 PRO FORMA AND AMFM
CLEAR CHANNEL CLEAR CHANNEL AMFM AMFM MERGER PRO FORMA
PRO FORMA DIVESTITURES(4) PRO FORMA DIVESTITURES(5) ADJUSTMENT(6) MERGER
------------- --------------- ---------- --------------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C>
Net revenue........... $2,062,282 $(81,030) $1,535,409 $(218,033) $ (14,278) $3,284,350
Operating expenses.... 1,289,248 (45,482) 849,341 (128,068) (14,278) 1,950,761
Depreciation and
amortization........ 570,234 (13,232) 637,008 (75,508) 167,553 1,286,055
Noncash compensation
expense............. -- -- 26,432 -- -- 26,432
Merger and
nonrecurring
costs............... -- 61,580 -- -- 61,580
Corporate expenses.... 51,958 -- 51,294 -- -- 103,252
---------- -------- ---------- --------- --------- ----------
Operating income
(loss).............. 150,842 (22,316) (90,246) (14,457) (167,553) (143,730)
Interest expense...... 173,590 (29,503) 345,281 (113,159) 3,487 379,696
Gain on disposition of
assets.............. -- -- 12,333 -- -- 12,333
Gain on disposition of
representation
contracts........... -- -- 18,284 -- -- 18,284
Other income
(expense) -- net.... 15,711 -- 1,096 -- -- 16,807
---------- -------- ---------- --------- --------- ----------
Income (loss) before
income taxes........ (7,037) 7,187 (403,814) 98,702 (171,040) (476,002)
Income tax (expense)
benefit............. (39,551) (3,470) 104,122 (58,452) 51,661 54,310
Dividends and
accretion on
preferred stock of
subsidiaries........ -- -- 12,709 -- -- 12,709
---------- -------- ---------- --------- --------- ----------
Income (loss) before
equity in earnings
(loss) of
nonconsolidated
affiliates.......... (46,588) 3,717 (312,401) 40,250 (119,379) (434,401)
Equity in earnings
(loss) of
nonconsolidated
affiliates.......... 6,742 -- (64,265) -- 14,422 (43,101)
---------- -------- ---------- --------- --------- ----------
Net income (loss)..... $ (39,846) $ 3,717 $( 376,666) $ 40,250 $(104,957) $ (477,502)
========== ======== ========== ========= ========= ==========
Net income (loss)
before extraordinary
items per common
share:
Basic............... $ (0.12) $ (0.89)
========== ==========
Diluted............. $ (0.12) $ (0.89)
========== ==========
</TABLE>
P-4
<PAGE> 60
CLEAR CHANNEL AND AMFM
NOTES TO UNAUDITED PRO FORMA COMBINED
CONDENSED FINANCIAL STATEMENTS
(IN THOUSANDS OF DOLLARS, EXCEPT PER SHARE DATA)
Clear Channel and AMFM unaudited pro forma combined condensed financial
statements reflect the merger, accounted for as a purchase, as follows:
<TABLE>
<S> <C>
AMFM common stock outstanding (in whole shares)............. 215,699,046
Share conversion number..................................... 0.94
------------
Clear Channel's common stock to be issued in the merger (in
whole shares)............................................. 202,757,103
Estimated value per share (based on the average price
between September 29, 1999 and October 6, 1999)........... $ 77.3229
------------
$ 15,677,767
Estimated value of common stock options and other equity.... 1,322,827
Estimated transaction costs................................. 85,000
------------
Total estimated purchase price.................... $ 17,085,594
============
</TABLE>
For purpose of these statements the total estimated purchase price was
allocated as follows:
<TABLE>
<S> <C>
Total estimated purchase price.............................. $17,085,594
Plus -- deferred tax liability.............................. 3,249,292
Less -- estimated fair value adjustment to investment in and
advances to nonconsolidated affiliates.................... 44,258
Less -- AMFM net assets exchanged in the merger at September
30, 1999 adjusted for the elimination of existing net
licenses and goodwill of $8,356,948....................... (2,716,637)
-----------
Estimated excess purchase price (allocated to licenses and
goodwill)................................................. $23,007,265
===========
</TABLE>
The estimated excess purchase price allocated to licenses and goodwill of
$23,007,265 will be amortized over a 25 year period using the straight-line
method, which will result in annual licenses and goodwill amortization of
$920,291.
Clear Channel and AMFM expect to be required to divest from approximately
100 to 125 radio stations in order to obtain approval to complete this merger
from the DOJ and FCC.
The unaudited pro forma combined condensed balance sheet adjustments do not
include an adjustment of AMFM long-term debt outstanding to fair value as the
carrying value of the long-term debt approximates fair value.
Clear Channel may be required to refinance certain outstanding AMFM
long-term debt.
P-5
<PAGE> 61
CLEAR CHANNEL AND AMFM
NOTES TO UNAUDITED PRO FORMA COMBINED
CONDENSED FINANCIAL STATEMENTS -- (CONTINUED)
(1) The pro forma adjustments at September 30, 1999 relating to the sale of
radio stations Clear Channel anticipates divesting, assuming a total of 125
radio stations in the aggregate will be divested, are as follows:
<TABLE>
<CAPTION>
INCREASE
(DECREASE)
----------
<S> <C> <C>
(a) Decrease in property, plant and equipment, net of
accumulated depreciation.................................... $ (30,581)
(b) Decrease in licenses and goodwill........................... (448,367)
(c) Decrease in other intangible assets......................... (9,425)
(d) Decrease in accumulated amortization........................ (24,968)
(e) Decrease in long-term debt resulting from the use of net
proceeds.................................................... (786,739)
(f) Decrease in deferred income taxes........................... (5,039)
(g) Increase in retained earnings resulting from the gain on the
sale of stations, net of tax at an assumed rate of 40%...... 328,373
</TABLE>
(2) The pro forma adjustments at September 30, 1999 relating to the sale of
radio stations AMFM anticipates divesting, assuming a total of 125 radio
stations in the aggregate will be divested, are as follows:
<TABLE>
<CAPTION>
INCREASE
(DECREASE)
-----------
<S> <C> <C>
(h) Decrease in property, plant and equipment, net of
accumulated depreciation.................................... $ (59,406)
(i) Decrease in licenses and goodwill........................... (1,735,177)
(j) Decrease in other intangible assets......................... (40,456)
(k) Decrease in accumulated amortization........................ (106,713)
(l) Decrease in long-term debt resulting from the use of net
proceeds.................................................... (2,235,231)
(m) Decrease in deferred income taxes........................... (294,365)
(n) Increase in retained earnings resulting from the gain on the
sale of stations, net of tax at AMFM's assumed tax rate of
39%......................................................... 801,270
</TABLE>
P-6
<PAGE> 62
CLEAR CHANNEL AND AMFM
NOTES TO UNAUDITED PRO FORMA COMBINED
CONDENSED FINANCIAL STATEMENTS -- (CONTINUED)
(3) The pro forma merger adjustments at September 30, 1999 are as follows:
<TABLE>
<CAPTION>
INCREASE
(DECREASE)
-----------
<S> <C> <C>
(o) Increase in goodwill and licenses equal to the excess
purchase price of the merger................................ $13,719,330
(p) Decrease in accumulated amortization resulting from the
elimination of AMFM's existing accumulated amortization on
goodwill.................................................... (930,987)
(q) Increase in investment in and advances to, nonconsolidated
affiliates due to the mark-up to fair value of AMFM's
investments................................................. 44,258
(r) Increase in long-term debt resulting from estimated merger
expenses.................................................... 85,000
(s) Increase in deferred income tax due to fair value write-up
of FCC licenses............................................. 3,249,292
(t) Increase in common stock to account for Clear Channel common
stock given in the merger at $0.10 par value................ 18,119
(u) Increase in additional paid-in capital to account for Clear
Channel common stock given in the merger at $77.3229 per
share less $0.10 par value ($15,657,492) plus the value of
AMFM stock options included in the merger ($1,316,229) less
AMFM's pro forma additional paid-in capital balance
($5,202,961)................................................ 11,770,760
(v) Decrease in retained earnings to eliminate AMFM's existing
retained earnings balance................................... (428,596)
</TABLE>
(4) The pro forma adjustments for the nine months ended September 30, 1999
and the year ended December 31, 1998 relating to the sale of radio stations
Clear Channel anticipates divesting, assuming a total of 125 radio stations will
be divested, are as follows:
<TABLE>
<CAPTION>
INCREASE (DECREASE)
TO INCOME
----------------------------
DECEMBER 31, SEPTEMBER 30,
1998 1999
------------ -------------
<S> <C> <C> <C>
(w) Decrease in revenue................................... $(81,034) $(81,030)
(x) Decrease in operating expenses........................ 45,924 45,482
(y) Decrease in depreciation and amortization............. 13,666 13,232
(z) Decrease in interest expense associated with the
reduction of long-term debt resulting from the use of
net proceeds.......................................... 39,337 29,503
(aa) Increase in income tax expense associated with the tax
effect of adjustments (w) through (z) at Clear
Channel's assumed tax rate of 40%..................... (7,635) (3,470)
</TABLE>
P-7
<PAGE> 63
CLEAR CHANNEL AND AMFM
NOTES TO UNAUDITED PRO FORMA COMBINED
CONDENSED FINANCIAL STATEMENTS -- (CONTINUED)
(5) The pro forma adjustments for the nine months ended September 30, 1999
and the year ended December 31, 1998 relating to the sale of radio stations AMFM
anticipates divesting, assuming a total of 125 radio stations will be divested,
are as follows:
<TABLE>
<CAPTION>
INCREASE (DECREASE)
TO INCOME
----------------------------
DECEMBER 31, SEPTEMBER 30,
1998 1999
------------ -------------
<S> <C> <C> <C>
(ab) Decrease in revenue................................ $(261,426) $(218,033)
(ac) Decrease in operating expenses..................... 150,038 128,068
(ad) Decrease in depreciation and amortization.......... 76,474 75,508
(ae) Decrease in interest expense associated with the
reduction of long-term debt resulting from the use
of net proceeds.................................... 150,878 113,159
(af) Increase in income tax expense associated with the
tax effect of adjustments (ab) through (ae) at
AMFM's assumed tax rate of 39%..................... (65,962) (58,452)
</TABLE>
(6) The pro forma merger adjustment for the nine months ended September 30,
1999 and the year ended December 31, 1998 are as follows:
<TABLE>
<CAPTION>
INCREASE (DECREASE)
TO INCOME
----------------------------
DECEMBER 31, SEPTEMBER 30,
1998 1999
------------ -------------
<S> <C> <C> <C>
(ag) Decrease in revenue due to the elimination of
services AMFM provided to Clear Channel and services
Clear Channel provided to AMFM....................... $ (16,438) $ (14,278)
(ah) Decrease in operating expense due to the elimination
of services AMFM provided to Clear Channel and
services Clear Channel provided to AMFM.............. 16,438 14,278
(ai) Increase in amortization expense resulting from the
additional goodwill created by the merger and a
change in the life of goodwill amortization from 15
years (AMFM's policy) to 25 years (Clear Channel's
policy). This amortization expense results in a
permanent difference and will not be deductible for
federal income tax purposes.......................... (248,849) (167,553)
(aj) Increase in interest expense associated with the
increased long-term debt resulting from the estimated
merger expenses of $85,000........................... (4,981) (3,487)
(ak) Decrease in income tax expense associated with the
tax effect of the adjustments in note (ai) and (aj)
at Clear Channel's assumed tax rate of 40%........... 76,647 51,661
(al) Increase in equity in net income of nonconsolidated
affiliates caused by changing the life of excess cost
amortization from 15 years (AMFM's policy) to 25
years (Clear Channel's policy). This increase is
partially offset by the markup of excess cost to fair
value................................................ 19,228 14,422
</TABLE>
P-8
<PAGE> 64
CLEAR CHANNEL AND AMFM
NOTES TO UNAUDITED PRO FORMA COMBINED
CONDENSED FINANCIAL STATEMENTS -- (CONTINUED)
Pro forma basic and diluted share information is as follows:
<TABLE>
<CAPTION>
(IN THOUSANDS)
----------------------------
DECEMBER 31, SEPTEMBER 30,
1998 1999
------------ -------------
<S> <C> <C>
Basic
Clear Channel pro forma weighted average shares
outstanding............................................ 306,423 331,609
AMFM pro forma weighted average shares outstanding........ 209,592 215,003
Decrease weighted average common stock outstanding to
account for Clear Channel's common stock given in the
merger at the share conversion number of 0.94.......... (6,835) (12,246)
------- -------
Clear Channel and AMFM Pro Forma Merger................... 509,180 534,366
======= =======
Diluted
Clear Channel pro forma weighted average shares
outstanding............................................ 324,319 359,572
AMFM pro forma weighted average shares outstanding........ 216,662 221,704
Decrease weighted average common stock outstanding to
account for Clear Channel common stock given in the
merger and to account for the dilution effect of AMFM's
common stock warrants, employee stock options and other
dilutive shares have on the Company at the share
conversion number of 0.94.............................. (7,864) (12,651)
------- -------
Clear Channel and AMFM Pro Forma Merger................... 533,117 568,625
======= =======
</TABLE>
P-9
<PAGE> 65
CLEAR CHANNEL
UNAUDITED PRO FORMA COMBINED CONDENSED CONSOLIDATED
STATEMENT OF OPERATIONS
(IN THOUSANDS OF DOLLARS, EXCEPT PER SHARE DATA)
YEAR ENDED DECEMBER 31, 1998
<TABLE>
<CAPTION>
HISTORICAL
NATIONWIDE
SIX MONTHS
CLEAR ENDED
CHANNEL UNIVERSAL PRO FORMA MORE PRO FORMA JACOR JUNE 30,
HISTORICAL HISTORICAL ADJUSTMENT(1) HISTORICAL ADJUSTMENT(2) HISTORICAL 1998
---------- ---------- ------------- ---------- ------------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
Net revenue............. $1,350,940 $55,292 $ -- $144,674 $ -- $754,468 $50,171
Operating expenses...... 767,265 30,826 -- 110,827 -- 497,861 39,623
Depreciation and
amortization.......... 304,972 15,517 7,720 15,699 11,565 120,392 5,044
Noncash compensation
expense............... -- 106 (106) 3,476 (3,476) -- --
Corporate expenses...... 37,825 1,414 -- 5,711 -- 19,684 1,406
---------- ------- ------- -------- -------- -------- -------
Operating income
(loss)................ 240,878 7,429 (7,614) 8,961 (8,089) 116,531 4,098
Interest expense........ 135,766 13,159 -- 3,715 22,352 107,295 (452)
Other income
(expense) --
net................... 12,810 (23) -- (9,576) -- 19,806 (4)
---------- ------- ------- -------- -------- -------- -------
Income (loss) before
income taxes.......... 117,922 (5,753) (7,614) (4,330) (30,441) 29,042 4,546
Income tax (expense)
benefit............... (72,353) -- -- (3,301) 6,728 (28,100) (1,546)
---------- ------- ------- -------- -------- -------- -------
Income (loss) before
equity in earnings
(loss)
of nonconsolidated
affiliates............ 45,569 (5,753) (7,614) (7,631) (23,713) 942 3,000
Equity in earnings
(loss) of
non-consolidated
affiliates............ 8,462 -- -- (371) -- -- --
---------- ------- ------- -------- -------- -------- -------
Net income (loss)....... $ 54,031 $(5,753) $(7,614) $ (8,002) $(23,713) $ 942 $ 3,000
========== ======= ======= ======== ======== ======== =======
Net income (loss) per
common share:
Basic................. $ 0.23
==========
Diluted............... $ 0.22
==========
<CAPTION>
1998
NATIONWIDE ACQUISITION PRO FORMA CLEAR
PRO FORMA PRO FORMA MERCER CHANNEL
ADJUSTMENTS(3) ADJUSTMENTS(3) ADJUSTMENT(4) PRO FORMA
-------------- -------------- ------------- ----------
<S> <C> <C> <C> <C>
Net revenue............. $ -- $ 8,641(k) $ -- $2,364,186
Operating expenses...... (738)(g) 2,548 (k)(l -- 1,448,212
Depreciation and
amortization.......... 299(g) 4,565(h) 157,639 643,412
Noncash compensation
expense............... -- -- -- --
Corporate expenses...... -- -- -- 66,040
----- -------- --------- ----------
Operating income
(loss)................ 439 1,528 (157,639) 206,522
Interest expense........ -- 14,954(i) 2,930 299,719
Other income
(expense) --
net................... -- -- -- 23,013
----- -------- --------- ----------
Income (loss) before
income taxes.......... 439 (13,426) (160,569) (70,184)
Income tax (expense)
benefit............... -- 5,371(i) 37,172 (56,029)
----- -------- --------- ----------
Income (loss) before
equity in earnings
(loss)
of nonconsolidated
affiliates............ 439 (8,055) (123,397) (126,213)
Equity in earnings
(loss) of
non-consolidated
affiliates............ -- -- -- 8,091
----- -------- --------- ----------
Net income (loss)....... $ 439 $ (8,055) $(123,397) $ (118,122)
===== ======== ========= ==========
Net income (loss) per
common share:
Basic................. $ (0.39)
==========
Diluted............... $ (0.39)
==========
</TABLE>
P-10
<PAGE> 66
CLEAR CHANNEL
UNAUDITED PRO FORMA COMBINED CONDENSED CONSOLIDATED
STATEMENT OF OPERATIONS
(IN THOUSANDS OF DOLLARS, EXCEPT PER SHARE DATA)
NINE MONTHS ENDED SEPTEMBER 30, 1999
<TABLE>
<CAPTION>
JACOR 1999
CLEAR HISTORICAL CLEAR
CHANNEL 1/1 TO 5/4 PRO FORMA CHANNEL
HISTORICAL 1999 ADJUSTMENT(4) PRO FORMA
---------- ---------- ------------- ----------
<S> <C> <C> <C> <C>
Net revenue.................................. $1,790,635 $271,647 $ -- $2,062,282
Operating expenses........................... 1,097,171 192,077 -- 1,289,248
Depreciation and amortization................ 473,654 46,951 49,629 570,234
Corporate expenses........................... 44,585 7,373 -- 51,958
---------- -------- --------- ----------
Operating income (loss)...................... 175,225 25,246 (49,629) 150,842
Interest expense............................. 132,932 39,731 927 173,590
Gain on disposition of assets................ 136,925 130,385 (267,310) --
Other income (expense) -- net................ 15,874 (163) -- 15,711
---------- -------- --------- ----------
Income (loss) before income taxes............ 195,092 115,737 (317,866) (7,037)
Income tax (expense) benefit................. (106,546) (52,300) 119,295 (39,551)
---------- -------- --------- ----------
Income (loss) before equity in earnings of
non-consolidated affiliates................ 88,546 63,437 (198,571) (46,588)
Equity in earnings of non-consolidated
affiliates................................. 6,742 -- -- 6,742
---------- -------- --------- ----------
Net income (loss)............................ $ 95,288 $ 63,437 $(198,571) $ (39,846)
========== ======== ========= ==========
Net income (loss) per common share:
Basic...................................... $ 0.31 $ (0.12)
========== ==========
Diluted.................................... $ 0.31 $ (0.12)
========== ==========
</TABLE>
P-11
<PAGE> 67
CLEAR CHANNEL
NOTES TO UNAUDITED PRO FORMA COMBINED
CONDENSED FINANCIAL STATEMENTS
(IN THOUSANDS OF DOLLARS)
UNIVERSAL MERGER
(1) The pro forma merger adjustments for the year ended December 31, 1998
are as follows:
<TABLE>
<CAPTION>
INCREASE
(DECREASE)
IN INCOME
----------
<S> <C> <C>
(a) Increase in amortization expense resulting from the
additional goodwill created by the merger................... $(7,720)
(b) Decrease in noncash compensation to reverse the effect of
Financial Accounting Standards Board Statement No. 123 ("FAS
123") from the statement of operations as the Company
elected to follow Accounting Principles Board Opinion Number
25 ("APB 25") for earnings presentation and implemented FAS
123 for footnote disclosure only............................ 106
</TABLE>
MORE ACQUISITION
(2) More is headquartered in London. Accordingly, More's financial
statements are reported in British Pounds. The statement of operations was
translated into US Dollars using the average exchange rate for the period and
the balance sheet was translated into US Dollars using the exchange rate at the
end of the period. The pro forma adjustments for the year ended December 31,
1998 are as follows:
<TABLE>
<CAPTION>
INCREASE
(DECREASE)
IN INCOME
----------
<S> <C> <C>
(c) Increase in amortization expense resulting from the
additional goodwill created by the acquisition.............. $(11,565)
(d) Decrease in noncash compensation to reverse the effect of
FAS 123 from the statement of operations as Clear Channel
elected to follow APB 25 for earnings presentation and
implemented FAS 123 for footnote disclosure only............ 3,476
(e) Increase in interest expense due to financing the
acquisition price of More at Clear Channel's average
interest rate of 5.78% for 1998............................. (22,352)
(f) The tax effect of adjustment (d) at the 1998 UK statutory
rate of 31.5% offset by the tax benefit of adjustment (e) at
Clear Channel's federal U.S. tax rate in 1998 of 35%........ 6,728
</TABLE>
JACOR MERGER
The Jacor acquisition pro forma adjustments exclude the effect of any
divestiture of stations, which were required for regulatory approval, as Clear
Channel intends the funds received from any divestiture to be reinvested in
acquisitions of similar stations in other markets.
(3) The pro forma acquisition adjustments for the year ended December 31,
1998 are as follows:
(g) The adjustments for the six months ended June 30, 1998 represent
the elimination of time brokerage agreement fees and additional
depreciation and amortization expenses resulting from the
allocation of Nationwide's purchase price of KXGL in San Diego.
P-12
<PAGE> 68
CLEAR CHANNEL
NOTES TO UNAUDITED PRO FORMA COMBINED
CONDENSED FINANCIAL STATEMENTS -- (CONTINUED)
(h) The adjustment reflects the additional depreciation and
amortization expense resulting from the allocation of Jacor's
purchase price to the assets acquired including an increase in
property and equipment and identifiable intangible assets to their
estimated fair market values.
(i) The adjustment reflects additional interest expense related to
additional borrowings under Jacor's credit facility, its 8% Notes
and its 4 3/4% Liquid Yield Option Notes offering completed during
February of 1998 to finance, in part, the acquisition of
Nationwide.
(j) To provide for the tax effect of pro forma adjustments using an
assumed rate of 40%.
(k) Additional revenues and expenses related to Nationwide Stations
from July 1, 1998 to the date of acquisition consummation, net of
elimination of the results for the divestiture of two San Diego
stations.
(l) Jacor experienced and Clear Channel anticipates continuing to
experience significant expense savings, which are not reflected in
the pro forma statements of operations, resulting from the
elimination of redundant broadcast operating expenses arising from
the operation of multiple stations in broadcast areas, changes in
benefit plan and compensation structures to conform with Jacor's
and the elimination of Nationwide's corporate office function.
<TABLE>
<CAPTION>
YEAR ENDED
DECEMBER 31,
1998
------------
<S> <C>
ESTIMATED EXPENSE SAVINGS
Corporate general and administrative...................... $1,406
Benefit plan expenses..................................... 1,741
Commissions............................................... 413
Promotion and programming................................. 1,527
Personnel reductions...................................... 1,955
Other..................................................... 732
------
Total............................................. 7,774
Income taxes.............................................. 3,110
------
Total, net of taxes............................... $4,664
======
</TABLE>
P-13
<PAGE> 69
CLEAR CHANNEL
NOTES TO UNAUDITED PRO FORMA COMBINED
CONDENSED FINANCIAL STATEMENTS -- (CONTINUED)
(4) The pro forma merger adjustment for the nine months ended September 30,
1999 and the year ended December 31, 1998 are as follows:
<TABLE>
<CAPTION>
INCREASE (DECREASE)
TO INCOME
----------------------------
DECEMBER 31, SEPTEMBER 30,
1998 1999
------------ -------------
<S> <C> <C> <C>
(m) Increase in amortization expense resulting
from the additional goodwill created by the
merger and a change in the life of goodwill
amortization from 40 years (Jacor's policy) to
25 years (Clear Channel's policy). This
amortization expense results in a permanent
difference and will not be deductible for
federal income tax purposes................... $(157,639) $(49,629)
(n) Increase in interest expense associated with
the increased long-term debt resulting from
the estimated merger expenses of $50,000...... (2,930) (927)
(o) Decrease in gain on disposition of assets as
this gain is associated directly with the
merger of Jacor and is a non-recurring item... -- (267,310)
(p) Decrease in income tax expense associated with
the tax effect of adjustments (n), (o), and
(p) at Clear Channel's assumed tax rate of
40%........................................... 37,172 119,295
</TABLE>
P-14
<PAGE> 70
AMFM INC.
UNAUDITED PRO FORMA COMBINED CONDENSED BALANCE SHEET
AT SEPTEMBER 30, 1999
(IN THOUSANDS OF DOLLARS)
<TABLE>
<CAPTION>
AMFM
HISTORICAL PRO FORMA AMFM
AT 9/30/99 ADJUSTMENTS PRO FORMA
----------- ----------- -----------
<S> <C> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents.......................... $ 86,512 $ -- $ 86,512
Accounts receivable, net........................... 486,651 -- 486,651
Other current assets............................... 106,742 -- 106,742
----------- --------- -----------
Total current assets....................... 679,905 -- 679,905
Property and equipment, net.......................... 467,736 -- 467,736
Intangible assets:
Licenses and goodwill.............................. 11,023,112 -- 11,023,112
Other intangible assets............................ 542,028 -- 542,028
----------- --------- -----------
11,565,140 -- 11,565,140
Less accumulated amortization...................... (1,037,700) -- (1,037,700)
----------- --------- -----------
10,527,440 -- 10,527,440
Other assets:
Investment in nonconsolidated affiliates........... 1,129,389 -- 1,129,389
Other assets....................................... 242,340 -- 242,340
----------- --------- -----------
TOTAL ASSETS............................... $13,046,810 $ -- $13,046,810
=========== ========= ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Accounts payable and accrued expenses.............. $ 389,252 $ -- $ 389,252
Current portion of long-term debt.................. 54,625 -- 54,625
----------- --------- -----------
Total current liabilities.................. 443,877 -- 443,877
Long-term debt, excluding current portion............ 5,645,670 169,281(1) 5,825,502
10,551(2)
Deferred tax liabilities............................. 1,740,476 (3,693)(2) 1,734,967
(1,816)(3)
Other liabilities.................................... 51,176 -- 51,176
Minority interest.................................... 3,704 -- 3,704
Redeemable preferred stock........................... 317,823 (169,281)(1) 148,542
Stockholders' equity:
Preferred stock.................................... 110,000 (110,000)(4) --
Common stock....................................... 2,096 61(4) 2,157
Additional paid-in capital......................... 5,094,432 5,188(3) 5,209,559
109,939(4)
Accumulated deficit................................ (362,444) (6,858)(2) (372,674)
(3,372)(3)
----------- --------- -----------
Total stockholders' equity................. 4,844,084 (5,042) 4,839,042
----------- --------- -----------
TOTAL LIABILITIES AND STOCKHOLDERS'
EQUITY................................... $13,046,810 $ -- $13,046,810
=========== ========= ===========
</TABLE>
See accompanying notes to Unaudited Pro Forma Financial Information
P-15
<PAGE> 71
AMFM INC.
UNAUDITED PRO FORMA COMBINED CONDENSED STATEMENT OF OPERATIONS
THE YEAR ENDED DECEMBER 31, 1998
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
CAPSTAR AS PRO FORMA
PRO FORMA ADJUSTED FOR THE ADJUSTMENTS
LAMAR ADJUSTMENTS FOR COMPLETED FOR THE
AMFM TRANSACTION THE LAMAR CAPSTAR CAPSTAR
HISTORICAL(5) HISTORICAL(6) TRANSACTION TRANSACTIONS(11) MERGER
------------- ------------- --------------- ---------------- -----------
<S> <C> <C> <C> <C> <C>
Net revenues............. $1,273,856 $(47,605) $ -- $ 626,620 $ (56,261)(12)
Operating expenses
excluding depreciation
and amortization....... 682,061 (23,505) -- 359,014 (4,400)(12)
Depreciation and
amortization........... 446,338 (25,990) -- 133,223 (49,425)(12)
281,630(13)
Corporate general and
administrative......... 36,722 (1,981) -- 26,918 --
Noncash compensation
expense................ -- -- -- 21,260 --
Merger and non-recurring
costs.................. 63,661 -- -- 20,433 (8,000)(14)
---------- -------- --------- --------- ---------
Operating income
(loss)................. 45,074 3,871 -- 65,772 (276,066)
Interest expense......... 217,136 (105) 45,819(7) 180,342 (10,600)(12)
4,018(15)
Interest income.......... (15,650) -- -- (3,775) 10,600(12)
Gain on disposition of
assets................. (123,845) -- -- -- --
Gain on disposition of
representation
contracts.............. (32,198) -- -- -- --
Loss on investment in
limited liability
companies.............. -- -- -- 28,565 --
Other (income) expense... (3,221) 156 -- 328 --
---------- -------- --------- --------- ---------
Income (loss) before
income taxes........... 2,852 3,820 (45,819) (139,688) (280,084)
Income tax expense
(benefit).............. 33,751 (345) (16,037)(9) (41,083) (98,029)(16)
Dividends and accretion
on preferred stock of
subsidiaries........... 17,601 -- -- 25,586 --
---------- -------- --------- --------- ---------
Income (loss) before
equity in net loss of
nonconsolidated
affiliates............. (48,500) 4,165 (29,782) (124,191) (182,055)
Equity in net loss of
nonconsolidated
affiliates............. -- -- (82,674)(10) -- --
---------- -------- --------- --------- ---------
Net income (loss)........ (48,500) 4,165 (112,456) (124,191) (182,055)
Preferred stock
dividends.............. 25,670 -- -- -- --
---------- -------- --------- --------- ---------
Income (loss)
attributable to common
stockholders........... $ (74,170) $ 4,165 $(112,456) $(124,191) $(182,055)
========== ======== ========= ========= =========
Basic and diluted loss
per common share....... $ (0.54)
==========
Weighted average common
shares
outstanding(22)........ 137,979 53,554
========== =========
<CAPTION>
PRO FORMA
ADJUSTMENTS
FOR THE OTHER 1998
OTHER COMPLETED PRO FORMA AMFM
TRANSACTIONS(17) ADJUSTMENTS PRO FORMA
---------------- ----------- ----------
<S> <C> <C> <C>
Net revenues............. $ 414 $ -- $1,797,024
Operating expenses
excluding depreciation
and amortization....... (7,122) -- 1,006,048
Depreciation and
amortization........... 5,170 -- 790,946
Corporate general and
administrative......... -- -- 61,659
Noncash compensation
expense................ -- -- 21,260
Merger and non-recurring
costs.................. -- -- 76,094
------- -------- ----------
Operating income
(loss)................. 2,366 -- (158,983)
Interest expense......... 4,830 (30,222)(18) 411,218
Interest income.......... -- -- (8,825)
Gain on disposition of
assets................. -- -- (123,845)
Gain on disposition of
representation
contracts.............. -- -- (32,198)
Loss on investment in
limited liability
companies.............. -- -- 28,565
Other (income) expense... -- -- (2,737)
------- -------- ----------
Income (loss) before
income taxes........... (2,464) 30,222 (431,161)
Income tax expense
(benefit).............. (862) 10,578(19) (112,027)
Dividends and accretion
on preferred stock of
subsidiaries........... -- (13,378)(20) 29,809
------- -------- ----------
Income (loss) before
equity in net loss of
nonconsolidated
affiliates............. (1,602) 33,022 (348,943)
Equity in net loss of
nonconsolidated
affiliates............. -- -- (82,674)
------- -------- ----------
Net income (loss)........ (1,602) 33,022 (431,617)
Preferred stock
dividends.............. -- (25,670)(21) --
------- -------- ----------
Income (loss)
attributable to common
stockholders........... $(1,602) $ 58,692 $ (431,617)
======= ======== ==========
Basic and diluted loss
per common share....... $ (2.06)
==========
Weighted average common
shares
outstanding(22)........ 18,059 209,592
======== ==========
</TABLE>
See accompanying notes to Unaudited Pro Forma Financial Information
P-16
<PAGE> 72
AMFM INC.
UNAUDITED PRO FORMA COMBINED CONDENSED STATEMENT OF OPERATIONS
THE NINE MONTHS ENDED SEPTEMBER 30, 1999
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
PRO FORMA CAPSTAR AS PRO FORMA PRO FORMA
ADJUSTMENTS ADJUSTED FOR ADJUSTMENTS ADJUSTMENTS
LAMAR FOR THE THE COMPLETED FOR THE FOR THE
AMFM TRANSACTION LAMAR CAPSTAR CAPSTAR OTHER COMPLETED
HISTORICAL(5) HISTORICAL(6) TRANSACTION TRANSACTIONS(11) MERGER TRANSACTIONS(17)
------------- ------------- ----------- ---------------- ----------- ----------------
<S> <C> <C> <C> <C> <C> <C>
Net revenues................ $1,376,848 $(156,627) $ -- $ 347,290 $(31,397)(12) $ (705)
Operating expenses excluding
depreciation and
amortization.............. 731,260 (84,583) -- 207,001 (4,221)(12) (116)
Depreciation and
amortization.............. 529,725 (94,062) -- 78,338 (26,832)(12) 2,839
147,000(13)
Corporate general and
administrative............ 44,103 (6,835) -- 14,026 -- --
Noncash compensation
expense................... 6,148 -- -- 20,284 -- --
Merger and non-recurring
costs..................... 59,956 (2,154) -- 51,288 (47,510)(14) --
---------- --------- --------- --------- -------- -------
Operating income (loss)..... 5,656 31,007 -- (23,647) (99,834) (3,428)
Interest expense............ 306,695 (171) (35,874)(7) 90,075 (9,650)(12) 2,717
1,464(15)
Interest income............. (10,490) -- -- (302) 9,650(12) --
Gain on disposition of
assets.................... (221,356) (947) 209,970(8) -- -- --
Gain on disposition of
representation
contracts................. (18,284) -- -- -- -- --
Other (income) expense...... -- -- -- 46 -- --
---------- --------- --------- --------- -------- -------
Income (loss) before income
taxes..................... (50,909) 32,125 (174,096) (113,466) (101,298) (6,145)
Income tax expense
(benefit)................. 8,818 8,867 (60,934)(9) (26,759) (35,454)(16) (2,151)
Dividends and accretion on
preferred stock of
subsidiaries.............. 7,940 -- -- 17,390 -- --
---------- --------- --------- --------- -------- -------
Income (loss) before equity
in net loss of
nonconsolidated
affiliates................ (67,667) 23,258 (113,162) (104,097) (65,844) (3,994)
Equity in net loss of
nonconsolidated
affiliates................ (2,085) -- (59,736)(10) (2,444) -- --
---------- --------- --------- --------- -------- -------
Net income (loss)........... (69,752) 23,258 (172,898) (106,541) (65,844) (3,994)
Preferred stock dividends... 14,011 -- -- -- -- --
---------- --------- --------- --------- -------- -------
Income (loss) attributable
to common stockholders.... $ (83,763) $ 23,258 $(172,898) $(106,541) $(65,844) $(3,994)
========== ========= ========= ========= ======== =======
Basic and diluted loss per
common share.............. $ (0.52)
==========
Weighted average common
shares outstanding(22).... 160,511 38,057
========== ========
<CAPTION>
OTHER 1999
PRO FORMA AMFM
ADJUSTMENTS PRO FORMA
----------- ----------
<S> <C> <C>
Net revenues................ $ -- $1,535,409
Operating expenses excluding
depreciation and
amortization.............. -- 849,341
Depreciation and
amortization.............. -- 637,008
Corporate general and
administrative............ -- 51,294
Noncash compensation
expense................... -- 26,432
Merger and non-recurring
costs..................... -- 61,580
-------- ----------
Operating income (loss)..... -- (90,246)
Interest expense............ (9,975)(18) 345,281
Interest income............. -- (1,142)
Gain on disposition of
assets.................... -- (12,333)
Gain on disposition of
representation
contracts................. -- (18,284)
Other (income) expense...... -- 46
-------- ----------
Income (loss) before income
taxes..................... 9,975 (403,814)
Income tax expense
(benefit)................. 3,491(19) (104,122)
Dividends and accretion on
preferred stock of
subsidiaries.............. (12,621)(20) 12,709
-------- ----------
Income (loss) before equity
in net loss of
nonconsolidated
affiliates................ 19,105 (312,401)
Equity in net loss of
nonconsolidated
affiliates................ -- (64,265)
-------- ----------
Net income (loss)........... 19,105 (376,666)
Preferred stock dividends... (14,011)(21) --
-------- ----------
Income (loss) attributable
to common stockholders.... $ 33,116 $ (376,666)
======== ==========
Basic and diluted loss per
common share.............. $ (1.75)
==========
Weighted average common
shares outstanding(22).... 16,435 215,003
======== ==========
</TABLE>
See accompanying notes to Unaudited Pro Forma Financial Information
P-17
<PAGE> 73
NOTES TO UNAUDITED PRO FORMA COMBINED
CONDENSED FINANCIAL INFORMATION
(IN THOUSANDS OF DOLLARS)
ADJUSTMENTS TO THE UNAUDITED PRO FORMA COMBINED CONDENSED BALANCE SHEET
(1) Reflects the exchange of Capstar Communications' 12 5/8% Series E
Cumulative Exchangeable Preferred Stock for 12 5/8% Senior Subordinated
Exchange Debentures due 2006 expected to be completed on November 23,
1999.
(2) Reflects the purchase of $293,641 of aggregate principal amount of
Capstar Communications' 10 3/4% Senior Subordinated Notes due 2006 and
estimated fees and expenses pursuant to a tender offer which was
completed on November 12, 1999, funded with borrowings under the credit
agreement. The adjustment to accumulated deficit represents the related
extraordinary loss on the early extinguishment of debt of $10,551, net
of a tax benefit of $3,693.
(3) Reflects the adjustment to record estimated stock option compensation
expense relating to certain executive stock options of $5,188, net of a
tax benefit of $1,816, recognized ratably using the five-year vesting
period from the date of grant through September 30, 1999. These options
will become exercisable upon the Clear Channel merger, subject to the
vesting terms.
(4) Reflects the conversion of AMFM's 7% Convertible Preferred Stock to
AMFM common stock expected to be completed during the first quarter of
2000.
ADJUSTMENTS TO THE UNAUDITED PRO FORMA COMBINED CONDENSED STATEMENTS OF
OPERATIONS
(5) AMFM began operating KKFR-FM and KFYI-AM in Phoenix under a time
brokerage agreement effective November 5, 1998. Therefore, the results
of operations of KKFR-FM and KFYI-AM are included in AMFM's historical
operations subsequent to this date during 1998 and for the nine months
ended September 30, 1999.
AMFM entered into a time brokerage agreement to sell substantially all
of the broadcast time of WMVP-AM in Chicago effective September 10,
1998. Therefore, substantially all of the results of operations of
WMVP-AM are excluded from AMFM's historical operations subsequent to
this date during 1998 and for the nine months ended September 30, 1999.
(6) On September 15, 1999, AMFM consummated the sale of its outdoor
advertising business to Lamar in exchange for net proceeds of $680,000
in cash, subject to a working capital adjustment, and 26,227,273 shares
of Lamar's class A common stock. This adjustment removes the historical
results of operations of AMFM's outdoor advertising business.
(7) Reflects the increase in interest expense of $45,819 for the year ended
December 31, 1998 and the net decrease in interest expense of $35,874
for the nine months ended September 30, 1999 in connection with the
additional bank borrowings related to the
P-18
<PAGE> 74
NOTES TO UNAUDITED PRO FORMA COMBINED
CONDENSED FINANCIAL INFORMATION -- (CONTINUED)
outdoor advertising acquisitions completed during 1998 and 1999 and the
paydown of debt resulting from the net proceeds of $680,000 received
from Lamar.
(8) Reflects the elimination of the nonrecurring gain of $209,970 incurred
in connection with AMFM's sale of its outdoor advertising business.
(9) Reflects the tax effect of the pro forma adjustments.
(10) The adjustment to reflect AMFM's 30% equity interest in Lamar and
amortization of the investment basis in excess of underlying equity in
the net assets of Lamar over an estimated life of 15 years is as
follows:
<TABLE>
<CAPTION>
NINE MONTHS
YEAR ENDED ENDED
DECEMBER 31, 1998 SEPTEMBER 30, 1999
----------------- ------------------
<S> <C> <C>
Lamar historical net loss applicable to common
stock............................................... $ (12,255) $(19,533)
Pro forma adjustments for significant acquisitions
completed by Lamar during 1998.................... (19,640) --
Pro forma adjustments to reflect the acquisition by
Lamar of AMFM's outdoor business.................. (69,104) (49,383)
--------- --------
Lamar pro forma net loss applicable to common
stockholders...................................... (100,999) (68,916)
AMFM equity interest................................ 30% 30%
--------- --------
Equity in pro forma net loss of Lamar............... (30,300) (20,675)
Less historical equity in net loss of Lamar......... -- (219)
--------- --------
Pro forma adjustment for equity in net loss of
Lamar............................................. (30,300) (20,456)
Amortization of investment basis in excess of
underlying equity in the net assets of Lamar...... (52,374) (39,280)
--------- --------
Total equity in net loss of affiliate..... $ (82,674) $(59,736)
========= ========
</TABLE>
The Lamar pro forma net loss applicable to common stockholders was
estimated by AMFM based on information obtained from publicly filed
financial statements. These estimates, including the allocation of
purchase price, are preliminary and subject to change.
P-19
<PAGE> 75
NOTES TO UNAUDITED PRO FORMA COMBINED
CONDENSED FINANCIAL INFORMATION -- (CONTINUED)
ADJUSTMENTS TO CAPSTAR'S HISTORICAL CONDENSED STATEMENT OF OPERATIONS RELATED TO
THE COMPLETED CAPSTAR TRANSACTIONS
(11) Capstar's historical condensed statement of operations for the year
ended December 31, 1998 and the period from January 1 to July 13, 1999
and pro forma adjustments related to the completed Capstar
transactions is summarized below:
<TABLE>
<CAPTION>
PRO FORMA CAPSTAR
ADJUSTMENTS AS ADJUSTED
COMPLETED FOR THE FOR THE
CAPSTAR COMPLETED COMPLETED
YEAR ENDED CAPSTAR TRANSACTIONS CAPSTAR CAPSTAR
DECEMBER 31, 1998 HISTORICAL HISTORICAL(A) TRANSACTIONS TRANSACTIONS
- ----------------- ---------- ------------- ------------ ------------
<S> <C> <C> <C> <C>
Net revenues........................ $517,467 $ 109,153 $ -- $ 626,620
Operating expenses excluding
depreciation and amortization..... 304,565 54,449 -- 359,014
Depreciation and amortization....... 96,207 13,290 23,726(B) 133,223
Corporate general and
administrative.................... 23,678 3,240 -- 26,918
Noncash compensation expense........ 21,260 74,199 (74,199)(C) 21,260
LMA fees............................ 4,103 697 (4,800)(D) --
Merger and non-recurring costs...... 12,970 35,318 (11,255)(E) 20,433
(16,600)(F)
-------- --------- -------- ---------
Operating income (loss)............. 54,684 (72,040) 83,128 65,772
Interest expense.................... 121,145 31,508 27,689(G) 180,342
Interest income..................... (3,423) (352) -- (3,775)
Loss on investment in limited
liability companies............... 28,565 -- -- 28,565
Other (income) expense.............. 183 3,308 (3,163)(H) 328
-------- --------- -------- ---------
Income (loss) before income taxes... (91,786) (106,504) 58,602 (139,688)
Income tax expense (benefit)........ (24,317) 210 (16,976)(I) (41,083)
Dividends and accretion on preferred
stock of subsidiary............... 21,987 -- 17,264(J) 25,586
(13,665)(K)
-------- --------- -------- ---------
Net income (loss)................... (89,456) (106,714) 71,979 (124,191)
Preferred stock dividends........... -- 17,264 (17,264)(J) --
-------- --------- -------- ---------
Income (loss) attributable to common
stockholders...................... $(89,456) $(123,978) $ 89,243 $(124,191)
======== ========= ======== =========
</TABLE>
P-20
<PAGE> 76
NOTES TO UNAUDITED PRO FORMA COMBINED
CONDENSED FINANCIAL INFORMATION -- (CONTINUED)
<TABLE>
<CAPTION>
PRO FORMA CAPSTAR
ADJUSTMENTS AS ADJUSTED
FOR THE FOR THE
COMPLETED COMPLETED
PERIOD FROM JANUARY 1 CAPSTAR CAPSTAR CAPSTAR
TO JULY 13, 1999 HISTORICAL TRANSACTIONS TRANSACTIONS
- --------------------- ---------- ------------ ------------
<S> <C> <C> <C>
Net revenues.................................... $ 347,290 $ -- $ 347,290
Operating expenses excluding depreciation and
amortization.................................. 207,001 -- 207,001
Depreciation and amortization................... 78,338 -- 78,338
Corporate general and administrative............ 14,026 -- 14,026
Noncash compensation expense.................... 20,284 -- 20,284
LMA fees........................................ 387 (387)(D) --
Merger and non-recurring costs.................. 51,288 -- 51,288
--------- ----- ---------
Operating income................................ (24,034) 387 (23,647)
Interest expense................................ 90,075 -- 90,075
Interest income................................. (302) -- (302)
Other (income) expense.......................... 46 -- 46
--------- ----- ---------
Income (loss) before income taxes............... (113,853) 387 (113,466)
Income tax expense (benefit).................... (26,894) 135(I) (26,759)
Dividends and accretion on preferred stock of
subsidiary.................................... 17,390 -- 17,390
--------- ----- ---------
Income (loss) before equity in net loss of
nonconsolidated affiliates.................... (104,349) 252 (104,097)
Equity in net loss of nonconsolidated
affiliates.................................... (2,444) -- (2,444)
--------- ----- ---------
Income (loss) attributable to common
stockholders.................................. $(106,793) $ 252 $(106,541)
========= ===== =========
</TABLE>
- ---------------
(A) The detail of the historical financial data of significant stations
acquired or disposed of in the completed transactions by Capstar for the
year ended December 31, 1998 has been obtained from the historical
financial statements of the respective stations and is summarized below:
<TABLE>
<CAPTION>
PATTERSON SFX OTHER SFX COMPLETED
ACQUISITION ACQUISITION TRANSACTIONS CAPSTAR
YEAR ENDED HISTORICAL HISTORICAL HISTORICAL TRANSACTIONS
DECEMBER 31, 1998 1/1-1/29(i) 1/1-5/29(ii) 1/1-5/29(iii) HISTORICAL
- ----------------- ------------ -------------- ------------- ------------
<S> <C> <C> <C> <C>
Net revenues............................... $ 3,503 $ 124,677 $(19,027) $ 109,153
Operating expenses excluding depreciation
and amortization......................... 2,523 78,235 (26,309) 54,449
Depreciation and amortization.............. 497 17,668 (4,875) 13,290
Corporate general and administrative....... 171 3,069 -- 3,240
Noncash compensation expense............... -- 74,199 -- 74,199
LMA fees................................... -- 697 -- 697
Merger and non-recurring costs............. -- 35,318 -- 35,318
------- --------- -------- ---------
Operating income (loss).................... 312 (84,509) 12,157 (72,040)
Interest expense........................... 645 30,867 (4) 31,508
Interest income............................ -- (352) -- (352)
Other expense.............................. 3,163 -- 145 3,308
------- --------- -------- ---------
Income (loss) before income taxes.......... (3,496) (115,024) 12,016 (106,504)
Income tax expense......................... -- 210 -- 210
------- --------- -------- ---------
Net income (loss).......................... (3,496) (115,234) 12,016 (106,714)
Preferred stock dividends.................. -- 17,264 -- 17,264
------- --------- -------- ---------
Income (loss) attributable to common
stockholders............................. $(3,496) $(132,498) $ 12,016 $(123,978)
======= ========= ======== =========
</TABLE>
P-21
<PAGE> 77
NOTES TO UNAUDITED PRO FORMA COMBINED
CONDENSED FINANCIAL INFORMATION -- (CONTINUED)
- ---------------
(i) In January 1998, Capstar acquired 39 radio stations (25 FM and 14 AM) from
Patterson Broadcasting, Inc. for approximately $227,186 in cash.
(ii) On May 29, 1998, Capstar acquired SFX Broadcasting, Inc. a radio
broadcasting company which owned 81 radio stations (60 FM and 21 AM) and
operated two additional radio stations (1 FM and 1 AM) under time
brokerage or joint sales agreements. The acquisition was effected through
the merger of a wholly owned subsidiary of Capstar with and into SFX, with
SFX surviving the merger as a wholly owned subsidiary of Capstar, renamed
Capstar Communications, Inc. The total consideration paid for all of the
outstanding common equity interest of SFX was approximately $1,279,656,
including direct costs of the acquisition.
(iii) Other SFX transactions include the following transactions related to
stations acquired by Capstar from SFX on May 29, 1998:
(a) On February 20, 1998, AMFM entered into an agreement to acquire from
Capstar KTXQ-FM and KBFB-FM in Dallas/Ft. Worth, KODA-FM, KKRW-FM and
KQUE-AM in Houston, KPLN-FM and KYXY-FM in San Diego and WPHH-FM,
WJJJ-FM, WXDX-FM and WDVE-FM in Pittsburgh (collectively, the
"Capstar/SFX Stations") for an aggregate purchase price of
approximately $637,500 in a series of purchases and exchanges over a
period of three years. In connection with this transaction, which is
expected to be terminated on November 19, 1999, Capstar entered into a
time brokerage agreement with AMFM to sell substantially all of the
broadcasting time of ten of the Capstar/SFX Stations (9 FM and 1 AM)
effective May 29, 1998. Reflects the adjustment to eliminate the
results of operations of the Capstar/SFX Stations operated by AMFM
under time brokerage agreements and to record the related time
brokerage (LMA) fee revenue of $20,594 for the period January 1, 1998
to May 29, 1998.
(b) In connection with the acquisition of SFX, Capstar was required to
dispose of certain stations acquired from SFX due to governmental
restrictions on multiple station ownership. On May 29, 1998, Capstar
completed the following disposition and exchange transactions to
comply with multiple ownership rules:
- the sale of one FM station in Houston, Texas to HBC Houston, Inc.
for approximately $54,000;
- the sale of four radio stations (3 FM and 1 AM) in Long Island, New
York to Cox Radio, Inc. for approximately $46,000;
- the sale of four radio stations (3 FM and 1 AM) in Greenville,
South Carolina to Clear Channel Radio, Inc. for approximately
$35,000;
- the sale of one FM station in Daytona Beach, Florida to Clear
Channel Metroplex, Inc. for approximately $11,500;
- the assignment of four radio stations (2 FM and 2 AM) in Fairfield,
Connecticut with an aggregate fair market value of $15,000 to a
trust pending the sale to a third party; and
- the exchange of KODA-FM in Houston, Texas to AMFM for two FM
stations in Jacksonville, Florida (valued at $53,000) and $90,250
in cash, which was used by Capstar to acquire three stations (2 FM
and 1 AM) in Austin, Texas through a qualified intermediary.
P-22
<PAGE> 78
NOTES TO UNAUDITED PRO FORMA COMBINED
CONDENSED FINANCIAL INFORMATION -- (CONTINUED)
Reflects the adjustment to eliminate the results of operations of the SFX
stations disposed by Capstar and to record the results of operations for
the stations received in the exchange transaction for the period January
1, 1998 to May 29, 1998.
(B) Reflects incremental amortization related to the completed transactions and
is based on the following allocation to intangible assets:
<TABLE>
<CAPTION>
INCREMENTAL HISTORICAL ADJUSTMENT
COMPLETED TRANSACTIONS AMORTIZATION INTANGIBLE AMORTIZATION AMORTIZATION FOR NET
YEAR ENDED DECEMBER 31, 1998 PERIOD(1) ASSETS, NET EXPENSE EXPENSE INCREASE
- ---------------------------- ------------ ----------- ------------ ------------ ----------
<S> <C> <C> <C> <C> <C>
Patterson acquisition............. 1/1-1/29 $ 268,219 $ 540 $ 356 $ 184
SFX acquisition................... 1/1-5/29 3,194,742 33,057 9,515 23,542
---------- ------- ------ -------
$3,462,961 $33,597 $9,871 $23,726
========== ======= ====== =======
</TABLE>
- ---------------
(i) The incremental amortization period represents the period of the year
that the acquisition was not completed. Intangible assets consist of
broadcast licenses which are amortized on a straight-line basis over
estimated average lives of 40 years. Actual amortization may differ
based upon final purchase price allocations.
(C) Reflects the elimination of non-recurring transaction-related compensation
expense of $74,199 attributable to the voluntary settlement of the
outstanding options, SARs and unit purchase options by SFX in connection
with Capstar's acquisition of SFX.
(D) Reflects the elimination of $4,800 of time brokerage (LMA) fees for the
year ended December 31, 1998, of which $4,103 were paid by Capstar and $697
by SFX, and $387 of time brokerage (LMA) fees paid by Capstar for the
period from January 1 to July 13, 1999 related to acquired radio stations
that were previously operated under time brokerage agreements.
(E) Reflects the elimination of non-recurring transaction-related charges of
$11,255 recorded by SFX in connection with Capstar's acquisition of SFX and
the spin-off of SFX Entertainment, Inc. These charges consist primarily of
legal, accounting and regulatory fees.
(F) Reflects the elimination of the consent solicitation payments to the
holders of the 10 3/4% Senior Subordinated Notes due 2006 and 12 5/8%
Series E Cumulative Exchangeable Preferred Stock of SFX incurred in
connection with the spin-off of SFX Entertainment of $16,600. The spin-off
of SFX Entertainment was consummated in April 1998.
(G) Reflects the adjustment to interest expense in connection with the
consummation of the completed Capstar transactions:
<TABLE>
<CAPTION>
YEAR ENDED
DECEMBER 31, 1998
-----------------
<S> <C>
Additional bank borrowings related to completed
acquisitions............................................... $1,362,072
Interest expense at 8.00%.................................. 108,966
Less: historical interest expense recognized subsequent to
completed acquisition.................................... (69,925)
----------
Incremental interest expense............................... 39,041
Less: historical interest expense recognized by the
acquired company......................................... (11,352)
----------
Net increase in interest expense........................... $ 27,689
==========
</TABLE>
(H) Adjustment represents the elimination of $3,163 of transaction expenses
recorded by Patterson in connection with Capstar's acquisition of
Patterson.
(I) Reflects the tax effect of the pro forma adjustments.
P-23
<PAGE> 79
NOTES TO UNAUDITED PRO FORMA COMBINED
CONDENSED FINANCIAL INFORMATION -- (CONTINUED)
(J) Reclassification of SFX's historical preferred stock dividends of $17,264
to Capstar's dividends on preferred stock of subsidiaries.
(K) Reflects the elimination of a portion of the redeemable preferred stock
dividends related to the SFX acquisition and the subsequent redemption of
$119,600 and $500 liquidation preference on July 3, 1998 and July 10, 1998,
respectively, of the 12 5/8% Series E Cumulative Preferred Stock of SFX as
follows:
<TABLE>
<CAPTION>
YEAR ENDED
DECEMBER 31,
1998
------------
<S> <C>
Dividends on 6% Series C Redeemable Preferred Stock redeemed
as part of the acquisition of SFX on May 29, 1998........... $ (112)
Dividends on 6 1/2% Series D Cumulative Convertible
Exchangeable Preferred Stock redeemed as part of the
acquisition of SFX on May 29, 1998........................ (5,841)
Dividends on 12 5/8% Series E Cumulative Exchangeable
Preferred Stock of $119,500 and $500 for the period
January 1, 1998 to the redemption dates of July 3, 1998
and July 10, 1998, respectively........................... (7,712)
--------
Total adjustment for net decrease in dividends and
accretion................................................. $(13,665)
========
</TABLE>
ADJUSTMENTS TO UNAUDITED PRO FORMA COMBINED CONDENSED STATEMENT OF OPERATIONS
RELATED TO THE CAPSTAR MERGER
(12) Reflects the elimination of intercompany transactions between AMFM and
Capstar for AMFM's media representation services provided to Capstar,
Capstar's participation in The AMFM Radio Networks, fees paid by AMFM
to Capstar under time brokerage (LMA) agreements and interest on
Capstar's note payable to AMFM of $150,000 for the year ended December
31, 1998 and the period from January 1 to July 13, 1999.
(13) Reflects incremental amortization related to the Capstar merger and is
based on the allocation of the total consideration as follows:
<TABLE>
<CAPTION>
PERIOD FROM
YEAR ENDED JANUARY 1 TO
DECEMBER 31, 1998 JULY 13, 1999
----------------- -------------
<S> <C> <C>
Amortization expense on $5,893,129 of intangible
assets.......................................... $ 392,875 $210,625
Less: historical amortization expense........... (111,245) (63,625)
--------- --------
Adjustment for net increase in amortization
expense....................................... $ 281,630 $147,000
========= ========
</TABLE>
Historical depreciation expense of Capstar as adjusted for the completed
Capstar transactions is assumed to approximate depreciation expense on a
pro forma basis. Actual depreciation and amortization may differ based
upon final purchase price allocations.
(14) Reflects the elimination of financial advisory and other expenses of
Capstar in connection with the Capstar merger of $8,000 for the year
ended December 31, 1998 and $47,510 for the period from January 1 to
July 13, 1999.
(15) Reflects the adjustment to record interest expense of $4,018 for the
year ended December 31, 1998 and $1,464 for the nine months ended
September 30, 1999 on
P-24
<PAGE> 80
NOTES TO UNAUDITED PRO FORMA COMBINED
CONDENSED FINANCIAL INFORMATION -- (CONTINUED)
additional bank borrowings related to estimated financial advisors,
legal, accounting and other professional fees incurred by AMFM and
Capstar.
(16) Reflects the tax effect of the pro forma adjustments.
ADJUSTMENTS TO UNAUDITED PRO FORMA COMBINED CONDENSED STATEMENT OF OPERATIONS
RELATED TO THE OTHER COMPLETED TRANSACTIONS
(17) The combined condensed statement of operations for the other completed
transactions for the year ended December 31, 1998 and for the nine
months ended September 30, 1999 are summarized below:
<TABLE>
<CAPTION>
THE
CHICAGO BROADCAST PRO FORMA
DISPOSITION GROUP, INC. ADJUSTMENTS FOR OTHER
YEAR ENDED HISTORICAL HISTORICAL THE OTHER COMPLETED COMPLETED
DECEMBER 31, 1998 1/1-12/31(a) 1/1-12/31(b) TRANSACTIONS TRANSACTIONS
- ----------------- ------------ ------------ ------------------- ------------
<S> <C> <C> <C> <C>
Net revenues.................. $(10,309) $11,772 $ (1,049)(c) $ 414
Operating expenses excluding
depreciation and
amortization................ (13,271) 6,149 -- (7,122)
Depreciation and
amortization................ (592) 188 5,574(d) 5,170
-------- ------- ---------- -------
Operating income (loss)....... 3,554 5,435 (6,623) 2,366
Interest expense.............. -- 332 4,498(e) 4,830
-------- ------- ---------- -------
Income (loss) before income
taxes....................... 3,554 5,103 (11,121) (2,464)
Income tax expense
(benefit)................... -- 1,850 (2,712)(f) (862)
-------- ------- ---------- -------
Income (loss)................. $ 3,554 $ 3,253 $ (8,409) $(1,602)
======== ======= ========== =======
</TABLE>
<TABLE>
<CAPTION>
CHICAGO PRO FORMA
DISPOSITION ADJUSTMENTS FOR OTHER
NINE MONTHS ENDED HISTORICAL THE OTHER COMPLETED COMPLETED
SEPTEMBER 30, 1999 1/1-4/16(a) TRANSACTIONS TRANSACTIONS
- ------------------ ----------- ------------------- ------------
<S> <C> <C> <C>
Net revenues................................ $(705) $ -- $ (705)
Operating expenses excluding depreciation
and amortization.......................... (116) -- (116)
Depreciation and amortization............... -- 2,839(d) 2,839
----- ------- -------
Operating income (loss)..................... (589) (2,839) (3,428)
Interest expense............................ -- 2,717(e) 2,717
----- ------- -------
Income (loss) before income taxes........... (589) (5,556) (6,145)
Income tax expense (benefit)................ -- (2,151)(f) (2,151)
----- ------- -------
Income (loss)............................... $(589) $(3,405) $(3,994)
===== ======= =======
</TABLE>
- ---------------
(a) On April 16, 1999, AMFM sold WMVP-AM in Chicago to ABC, Inc. for $21,000
in cash. AMFM entered into a time brokerage agreement to sell
substantially all of the broadcast time of WMVP-AM effective September 10,
1998.
(b) On July 1, 1999, AMFM acquired KKFR-FM and KFYI-AM in Phoenix from The
Broadcast Group, Inc. for $90,000 in cash. AMFM began operating KKFR-FM
and KFYI-AM under a time brokerage agreement effective November 5, 1998.
P-25
<PAGE> 81
NOTES TO UNAUDITED PRO FORMA COMBINED
CONDENSED FINANCIAL INFORMATION -- (CONTINUED)
(c) Reflects the elimination of revenue related to the time brokerage
agreement between The Broadcast Group Inc. and AMFM. AMFM began operating
KKFR-FM and KFYI-AM in Phoenix under the time brokerage agreement
effective November 5, 1998.
(d) Reflects incremental amortization related to the assets acquired in the
Phoenix acquisition and is based on the allocation of the total
consideration as follows:
<TABLE>
<CAPTION>
INCREMENTAL INTANGIBLE HISTORICAL ADJUSTMENT
YEAR ENDED AMORTIZATION ASSETS, AMORTIZATION AMORTIZATION FOR NET
DECEMBER 31, 1998 PERIOD(i) NET EXPENSE(i) EXPENSE INCREASE
- ----------------- ------------ ---------- ------------ ------------ ----------
<S> <C> <C> <C> <C> <C>
Phoenix acquisition......... 1/1-12/31 $85,160 $5,677 $103 $5,574
------- ------ ---- ------
</TABLE>
<TABLE>
<CAPTION>
INCREMENTAL INTANGIBLE HISTORICAL ADJUSTMENT
NINE MONTHS ENDED AMORTIZATION ASSETS, AMORTIZATION AMORTIZATION FOR NET
SEPTEMBER 30, 1999 PERIOD(i) NET EXPENSE(i) EXPENSE INCREASE
- ------------------ ------------ ---------- ------------ ------------ ----------
<S> <C> <C> <C> <C> <C>
Phoenix acquisition......... 1/1-7/1 $85,160 $2,839 $ -- $2,839
------- ------ ---- ------
</TABLE>
(i) Intangible assets are amortized on a straight-line basis over an estimated
average 15 year life. The incremental amortization period represents the
period of the year that the acquisition was not completed.
Historical depreciation expense for the Phoenix acquisition is assumed to
approximate depreciation expense on a pro forma basis. Actual depreciation
and amortization may differ based upon final purchase price allocations.
(e) Reflects the adjustment to interest expense as follows:
<TABLE>
<CAPTION>
YEAR ENDED NINE MONTHS ENDED
DECEMBER 31, 1998 SEPTEMBER 30, 1999
----------------- ------------------
<S> <C> <C>
Additional bank borrowings related to other
completed transactions...................... $69,000 $69,000
------- -------
Interest expense at 7.0%.................... 4,830 2,415
Less: historical interest expense recognized
subsequent to the completed
transaction............................... -- 302
------- -------
Incremental interest expense................ 4,830 2,717
Less: historical interest expense recognized
by the acquired company................... (332) --
------- -------
Net increase in interest expense............ $ 4,498 $ 2,717
======= =======
</TABLE>
(f) Reflects the tax effect of the pro forma adjustments.
(18) Reflects (i) the net decrease in interest expense resulting from the
refinancing to occur on November 19, 1999 of the existing credit
agreements of two of AMFM's subsidiaries into a single new credit
agreement with an estimated average interest rate of 6.75%, (ii) the
net decrease in interest expense related to the purchase of $293,641
of aggregate principal amount of Capstar Communications' 10 3/4%
Senior Subordinated Notes due 2006 and estimated fees and expenses
pursuant to a tender offer which was completed on November 12, 1999,
funded with borrowings under the credit agreement and (iii) the net
increase in interest expense related to the exchange of the 12 5/8%
Series E Cumulative
P-26
<PAGE> 82
NOTES TO UNAUDITED PRO FORMA COMBINED
CONDENSED FINANCIAL INFORMATION -- (CONTINUED)
Exchangeable Preferred Stock of Capstar Communications for 12 5/8%
Senior Subordinated Exchange Debentures due 2006 expected to be
completed on November 23, 1999.
(19) Reflects the tax effect of the pro forma adjustments.
(20) Reflects the elimination of dividends related to the exchange of the
12 5/8% Series E Cumulative Exchangeable Preferred Stock of Capstar
Communications for 12 5/8% Senior Subordinated Exchange Debentures due
2006 expected to be completed on November 23, 1999.
(21) Reflects the elimination of preferred stock dividends related to (i)
the conversion of AMFM's $3.00 Convertible Exchangeable Preferred
Stock to AMFM common stock on August 24, 1999, pursuant to a notice of
redemption issued to holders and (ii) the conversion of AMFM's 7%
Convertible Preferred Stock to AMFM common stock expected to be
completed during the first quarter of 2000.
(22) The pro forma combined loss per common share data is computed by
dividing pro forma loss attributable to common stockholders by the
weighted average common shares assumed to be outstanding. A summary of
shares used in the pro forma combined loss per common share
calculation follows:
<TABLE>
<CAPTION>
NINE MONTHS
YEAR ENDED ENDED
DECEMBER 31, 1998 SEPTEMBER 30, 1999
----------------- ------------------
(IN THOUSANDS) (IN THOUSANDS)
<S> <C> <C>
Historical weighted average shares
outstanding................................. 137,979 160,511
Incremental weighted average shares relating
to:
53,553,966 shares of common stock issued
in connection with the Capstar merger
on July 13, 1999....................... 53,554 38,057
11,979,800 shares of common stock issued
upon the conversion of AMFM's $3.00
Convertible Exchangeable Preferred
Stock on August 24, 1999............... 11,980 10,356
6,079,088 shares of common stock to be
issued upon the conversion of AMFM's 7%
Convertible Preferred Stock............ 6,079 6,079
------- -------
Shares used in the pro forma combined
earnings per share calculation............ 209,592 215,003
======= =======
</TABLE>
P-27
<PAGE> 83
PROSPECTUS
$2,000,000,000
CLEAR CHANNEL COMMUNICATIONS, INC.
CCCI CAPITAL TRUST I
CCCI CAPITAL TRUST II
CCCI CAPITAL TRUST III
We will offer and sell, from time to time, in one or more offerings, the
debt and equity securities described in this prospectus. The total offering
price of these securities, in the aggregate, will not exceed $2.0 billion. We
will provide the specific terms of these securities in supplements to this
prospectus. You should carefully read this prospectus and the supplements before
you decide to invest in any of these securities.
CLEAR CHANNEL COMMUNICATIONS, INC.
We will offer and sell, from time to time, in one or more offerings:
- common stock
- debt securities
- junior subordinated debt securities
- preferred stock
- warrants
- stock purchase contracts
- stock purchase units
- guarantees
The stock purchase contracts will require a purchaser to buy a specific
amount of common stock or preferred stock, and they will obligate Clear Channel
to pay the purchasers specific fees. The stock purchase units will include these
stock purchase contracts and debt securities, junior subordinated debt
securities, debt obligations of the United States of America or its agencies or
instrumentalities, or preferred securities issued by CCCI Capital Trusts I, II
and III. The guarantees will be full, unconditional guarantees of the Clear
Channel Trusts' obligation to distribute specific amounts of cash to the holders
of Clear Channel Trust preferred securities.
THE CLEAR CHANNEL TRUSTS
The CCCI Capital Trusts I, II and III are each Delaware business trusts
that will offer and sell preferred securities, from time to time in one or more
offerings. Each Clear Channel Trust will use all of the proceeds from the sale
of its preferred securities to buy junior subordinated debt securities of Clear
Channel. The Clear Channel Trusts will receive cash payments from the junior
subordinated debt securities, and each trust will distribute these payments to
the holders of its preferred and common securities. Clear Channel will own all
of the common securities of the Clear Channel Trusts.
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR DETERMINED IF THIS
PROSPECTUS IS TRUTHFUL OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
FOR A DISCUSSION OF THE RISKS ASSOCIATED WITH AN INVESTMENT IN THE
SECURITIES, SEE "GENERAL DESCRIPTION OF SECURITIES AND RISK FACTORS" ON PAGE 6.
The date of this prospectus is April 26, 1999.
<PAGE> 84
EXPLANATORY NOTE
When we refer to Clear Channel in this prospectus, we are referring to
Clear Channel Communications, Inc. When we refer to the Clear Channel Trusts in
this prospectus, we are referring to the CCCI Capital Trusts. When the word "we"
"our" or "us" is used in this prospectus, we are referring to both Clear Channel
and the Clear Channel Trusts together.
WHERE YOU CAN FIND MORE INFORMATION
Clear Channel files annual, quarterly and special reports, proxy statements
and other information with the Securities and Exchange Commission. You may read
and copy any reports, statements, or other information Clear Channel files with
the SEC at its public reference rooms at 450 Fifth Street, N.W., Washington,
D.C. 20549, 7 World Trade Center, Suite 1300, New York, New York 10048; and 500
West Madison Street, Suite 1400, Chicago, Illinois 60661. Please call the SEC at
1-800-SEC-0330 for further information on the public reference rooms. Clear
Channel's filings are also available to the public on the internet, through a
database maintained by the SEC at http://www.sec.gov. In addition, you can
inspect and copy Clear Channel's reports, proxy statements and other information
at the offices of the New York Stock Exchange, 20 Broad Street, New York, New
York 10005, on which the common stock is listed.
We filed a registration statement on Form S-3 to register with the SEC the
securities described in this prospectus. This prospectus is part of that
registration statement. As permitted by SEC rules, this prospectus does not
contain all the information contained in the registration statement or the
exhibits to the registration statement. You may refer to the registration
statement and accompanying exhibits for more information about us and our
securities.
The SEC allows us to "incorporate by reference" into this document the
information Clear Channel filed with it. This means that we can disclose
important business, financial and other information to you by referring you to
other documents separately filed with the SEC. All information incorporated by
reference is part of this document, unless and until that information is updated
and superseded by the information contained in this document or any information
incorporated later.
We incorporate by reference the documents listed below:
1. Annual Report on Form 10-K for the fiscal year ended December 31, 1998.
2. Current Report on Form 8-K filed December 10, 1998, as amended by Form
8-K/A filed February 23, 1999 and Form 8-K/A filed April 12, 1999.
3. Current Report on Form 8-K filed October 9, 1998.
4. Current Report on Form 8-K filed July 10, 1998, as amended by Form 8-K/A
filed September 4, 1998, Form 8-K/A filed January 14, 1999 and Form
8-K/A filed February 23, 1999.
5. Current Report on Form 8-K filed March 12, 1998, as amended by Form
8-K/A filed on March 23, 1998 and Form 8-K/A filed on February 23, 1999.
6. Current Report on Form 8-K filed December 22, 1997, as amended by Form
8-K/A filed February 23, 1999.
7. Current Report on Form 8-K filed April 17, 1997.
We also incorporate by reference all future filings we make with the SEC
between the date of this document and the date upon which we sell all the
securities we offer with this document.
2
<PAGE> 85
You may obtain copies of filings referred to above at no cost by contacting
us at the following address: Corporate Secretary, Clear Channel Communications,
Inc., 200 Concord Plaza, Suite 600, San Antonio, Texas 78216, telephone: (210)
822-2828.
ABOUT THIS PROSPECTUS
This prospectus is part of a shelf registration statement that we filed
with the SEC. By using a shelf registration statement, we may sell, from time to
time, in one or more offerings, any combination of the securities described in
this prospectus. The total dollar amount of the securities we sell through these
offerings will not exceed $2.0 billion.
This prospectus only provides you with a general description of the
securities we may offer. Each time we sell securities, we will provide a
prospectus supplement that contains specific information about the terms of the
securities. The prospectus supplement may also add, update or change information
contained in this prospectus. You should read both this prospectus and any
prospectus supplement together with the additional information described under
the heading "Where You Can Find More Information."
This prospectus does not contain separate financial statements for the
Clear Channel Trusts. We do not believe these financial statements would be
useful since each trust is a direct or indirect wholly-owned subsidiary of Clear
Channel, and we file consolidated financial information under the Exchange Act.
The Clear Channel Trusts will not have any independent function other than to
issue common and preferred securities and to purchase junior subordinated debt
securities of Clear Channel. Clear Channel will provide a full, unconditional
guarantee of each trust's obligations under their respective common and
preferred securities.
You should rely only on the information contained or incorporated by
reference in this prospectus and the prospectus supplement. We have not
authorized anyone else to provide you with different information. If anyone
provides you with different or inconsistent information, you should not rely on
it. We will not make an offer to sell these securities in any state where the
offer or sale is not permitted. You should assume that the information appearing
in this prospectus, as well as the information we previously filed with the SEC
and incorporated by reference into this prospectus, is accurate only as of the
date of the documents containing the information.
CLEAR CHANNEL COMMUNICATIONS, INC.
Clear Channel is a diversified media company with two business segments:
broadcasting and outdoor advertising. Clear Channel was incorporated in Texas in
1974. As of December 31, 1998, it owned, programmed, or sold airtime for 204
domestic radio stations, two international radio stations and 18 domestic
television stations and it was one of the world's largest outdoor advertising
companies based on total advertising display inventory of 89,008 domestic
display faces and 213,566 international display faces. In addition, Clear
Channel owns the following interests in other radio broadcasting companies:
- 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;
3
<PAGE> 86
- a 40% equity interest in Grupo Acir Communicaciones, S.A. de C.V., one of
the largest radio broadcasters in Mexico owning or programming through
affiliations 164 radio stations serving 72 markets in Mexico; and
- a 50% equity interest in Radio Bonton, a.s., which owns an FM radio
station in the Czech Republic.
During 1998, Clear Channel derived approximately 48% of its net revenue
from broadcasting operations and approximately 52% from outdoor advertising
operations.
Clear Channel's principal executive offices are located at 200 Concord
Plaza, Suite 600, San Antonio, Texas 78216, telephone: (210) 822-2828.
RECENT DEVELOPMENTS
On October 8, 1998, Clear Channel entered into an agreement with Jacor
Communications, Inc. to combine the two companies by merging Jacor with and into
one of Clear Channel's wholly-owned subsidiaries. As of October 7, 1998, Jacor
was the nation's second largest radio group in terms of number of radio
stations, and the third largest radio group as measured by revenue. Jacor was
also a leading provider of syndicated radio programming. As of October 7, 1998,
Jacor owned, operated, represented or had entered into agreements to acquire 230
radio stations and one television station in 55 domestic markets. Jacor also
produces more than 50 syndicated programs and services for more than 4,000 radio
stations, including Rush Limbaugh, The Dr. Laura Schlessinger Show and Dr. Dean
Edell, the top three rated radio programs in the country.
Clear Channel structured the merger as a stock-for-stock transaction
whereby each share of Jacor common stock will convert into a number of shares of
Clear Channel common stock. The exchange ratio will be determined by a formula
based upon the average closing price of Clear Channel common stock during the 25
trading days ending two days prior to the closing of the merger. Assuming an
exchange ratio of 1.228 and assuming that no additional shares of Jacor common
stock are issued before the completion of the merger, Clear Channel will issue
approximately 63.3 million shares of its common stock in the merger to Jacor
stockholders and, following the merger, the Jacor stockholders will own
approximately 19.2% of Clear Channel's outstanding common stock. In addition, at
debt levels as of December 31, 1998, Clear Channel will assume approximately
$1.29 billion of Jacor's long-term debt, as well as Jacor's Liquid Yield Option
Notes having an accreted value of approximately $306 million.
On March 26, 1999, the shareholders of Clear Channel and Jacor approved the
merger. However, numerous other conditions must be satisfied before the
completion of the merger, including the receipt of regulatory approvals and the
completion of a review of the merger by the federal and state antitrust
authorities. Clear Channel intends to account for the merger as a purchase.
THE CLEAR CHANNEL TRUSTS
Each Clear Channel Trust is a statutory business trust formed under
Delaware law pursuant to a separate declaration of trust executed by Clear
Channel, as depositor for the Clear Channel Trust, and the trustees of the
trust, and the filing of a certificate of trust with the Delaware Secretary of
State. The declarations of trust will be amended and restated in their entirety
substantially in the form filed as an exhibit to the registration statement of
which this prospectus is a part and will be
4
<PAGE> 87
qualified as indentures under the Trust Indenture Act of 1939. Unless the
accompanying prospectus supplement provides otherwise, each Clear Channel Trust
exists for the sole purposes of
- issuing its preferred securities,
- investing the gross proceeds of the sale of its preferred securities in
junior subordinated debt securities of Clear Channel, and
- engaging in only those other activities necessary or incidental thereto.
All of each Clear Channel Trusts' common securities will be owned by Clear
Channel. The common securities will rank equally with the preferred securities
and payments on the common securities will be made on a pro rata basis with the
preferred securities. However, upon the occurrence and continuance of an event
of default under the applicable amended and restated declaration of trust, 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. Clear Channel will acquire common securities having an aggregate
liquidation amount equal to a minimum of 1% of the total capital of each Clear
Channel Trust.
Each Clear Channel Trust will have a term of at least 20 but not more than
50 years, but may terminate earlier as provided in the applicable amended and
restated declaration of trust. Each Clear Channel Trust's business and affairs
will be conducted by the trustees. Clear Channel will be entitled to appoint,
remove or replace any of, or increase or reduce the number of, the trustees of
each Clear Channel Trust. The duties and obligations of the trustees will be
governed by the amended and restated declaration of trust of each Clear Channel
Trust. At least one of the trustees of each Clear Channel Trust will be a person
who is an employee or officer of or who is affiliated with Clear Channel. One
trustee of each Clear Channel Trust will be a financial institution that is not
affiliated with Clear Channel, which will 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. 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 Clear
Channel Trust will be a legal entity having a principal place of business in, or
an individual resident of, the State of Delaware. Clear Channel will pay all
fees and expenses related to each Clear Channel Trust and the offering of the
preferred securities. Unless otherwise set forth in a 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 Clear Channel 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
The following table sets forth the ratio of earnings to combined fixed
charges and preferred stock dividends for Clear Channel.
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
--------------------------------
1998 1997 1996 1995 1994
---- ---- ---- ---- ----
<S> <C> <C> <C> <C>
1.83 2.32 3.63 3.32 5.54
</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
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income taxes less equity in undistributed net income or 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.
Clear Channel had no preferred stock outstanding and paid no cash dividends for
any period presented.
USE OF PROCEEDS
Unless indicated otherwise in a prospectus supplement, Clear Channel
expects to use the net proceeds from the sale of its securities for general
corporate purposes, including repayment of borrowings, working capital, capital
expenditures, stock repurchase programs and acquisitions. Unless otherwise
specified in the accompanying prospectus supplement, each Clear Channel Trust
will use all proceeds received from the sale of its preferred securities to
purchase junior subordinated debt securities of Clear Channel.
HOLDING COMPANY STRUCTURE
Clear Channel is a holding company and its assets consist primarily of
investments in its subsidiaries and majority-owned partnerships. Clear Channel'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 Clear Channel owns an equity interest will be
subject to prior claims of the person's creditors upon the person's liquidation
or reorganization. However, Clear Channel may itself be a creditor with
recognized claims against this person, but claims of Clear Channel would still
be subject to the prior claims of any secured creditor of this person and of any
holder of indebtedness of this person that is senior to that held by Clear
Channel. Accordingly, the holder of debt securities or junior subordinated debt
securities may be deemed to be effectively subordinated to those claims.
GENERAL DESCRIPTION OF SECURITIES AND RISK FACTORS
Clear Channel may offer shares of common stock or preferred stock, debt
securities, junior subordinated debt securities, warrants, stock purchase
contracts, stock purchase units, or any combination of them either individually
or as units consisting of one or more securities under this prospectus. Each
Clear Channel Trust may offer preferred securities under this prospectus.
THE SECURITIES TO BE OFFERED MAY INVOLVE A HIGH DEGREE OF RISK. THE RISKS
WILL BE SET FORTH IN THE PROSPECTUS SUPPLEMENT RELATING TO THE SECURITY. IN
ADDITION, THE RISK FACTORS, IF ANY, RELATING TO CLEAR CHANNEL'S BUSINESS WILL BE
SET FORTH IN A PROSPECTUS SUPPLEMENT.
DESCRIPTION OF SENIOR AND SUBORDINATED DEBT SECURITIES
The following description of Clear Channel's senior and subordinated debt
securities summarizes the general terms and provisions of its debt securities to
which any prospectus supplement may relate. We will describe the specific terms
of Clear Channel's debt securities and the extent, if any, to which the general
provisions summarized below may apply to any series of its debt securities in
the prospectus supplement relating to the series. In this prospectus, "debt
securities" will be used to refer to senior and subordinated debt securities,
but not to junior subordinated debt securities.
Clear Channel may issue its senior debt securities from time to time, in
one or more series under a senior indenture, between Clear Channel and The Bank
of New York, as senior trustee, or another senior trustee named in a prospectus
supplement. The form of senior indenture is filed as an exhibit to the
registration statement. Clear Channel may issue its subordinated debt securities
from time to
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time, in one or more series under a subordinated indenture, between Clear
Channel and The Bank of New York, as subordinated trustee, or another
subordinated trustee named in a prospectus supplement. The form of subordinated
indenture is filed as an exhibit to the registration statement. Together the
senior indenture and the subordinated indenture are called the indentures, and
together the senior trustee and the subordinated trustee are called the debt
trustees. None of the indentures will limit the amount of debt securities that
may be issued. The applicable indenture will provide that debt securities may be
issued up to an aggregate principal amount authorized by Clear Channel and may
be payable in any currency or currency unit designated by it or in amounts
determined by reference to an index.
GENERAL
The senior debt securities will be unsecured and will rank equally with
Clear Channel's other unsecured and unsubordinated debt, unless Clear Channel is
required to secure the senior debt securities as described below under
"-- Senior Debt Securities." Clear Channel's obligations under any subordinated
debt securities will be subordinate in right of payment to all of its senior
indebtedness, and will be described in an accompanying prospectus supplement.
Clear Channel will issue debt securities from time to time and offer its debt
securities on terms determined by market conditions at the time of sale.
Clear Channel may issue its debt securities 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. We will describe the federal
income tax consequences and other special considerations applicable to any
substantially discounted debt securities in the related prospectus supplement.
You should refer to the prospectus supplement for the following terms of
the debt securities offered hereby:
- the designation, aggregate principal amount and authorized denominations
of the debt securities;
- the percentage of the principal amount at which Clear Channel will issue
the debt securities;
- the date or dates on which the debt securities will mature;
- the annual interest rate or rates of the debt securities, or the method
of determining the rate or rates;
- the date or dates on which any interest will be payable, the date or
dates on which payment of any interest will commence and the regular
record dates for the interest payment dates;
- the terms of any mandatory or optional redemption, including any
provisions for any sinking, purchase or other similar funds, or repayment
options;
- the currency, currencies or currency units for which the debt securities
may be purchased and in which the principal, any premium and any interest
may be payable;
- if the currency, currencies or currency units for which the debt
securities may be purchased or in which the principal, any premium and
any interest may be payable is at Clear Channel's election or the
purchaser's election, the manner in which the election may be made;
- if the amount of payments on the debt securities is determined by an
index based on one or more currencies or currency units, or changes in
the price of one or more securities or commodities, the manner in which
the amounts may be determined;
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- the extent to which any of the debt securities will be issuable in
temporary or permanent global form, and the manner in which any interest
payable on a temporary or permanent global security will be paid;
- 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;
- information with respect to book-entry procedures, if any;
- a discussion of the federal income tax, accounting and other special
considerations, procedures and limitations with respect to the debt
securities; and
- any other specific terms of the debt securities not inconsistent with the
applicable indenture.
If Clear Channel sells any of the debt securities for one or more foreign
currencies or foreign currency units or if the principal of, premium, if any, or
interest on any series of debt securities will be payable in one or more foreign
currencies or foreign currency units, it will describe the restrictions,
elections, federal income tax consequences, specific terms and other information
with respect to the issue of debt securities and the currencies or currency
units in the related prospectus supplement.
Unless specified otherwise in a prospectus supplement, the principal of,
premium on, and 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. However, Clear Channel may make payment of
interest at its option by check mailed on or before the payment date to the
address of the person entitled to the interest payment as it appears on the
registry books of Clear Channel or its agents.
Unless specified otherwise in a prospectus supplement, Clear Channel will
issue the debt securities only in fully registered form and in denominations of
$1,000 and any integral multiple of $1,000. No service charge will be made for
any transfer or exchange of any debt securities, but Clear Channel may, except
in specific cases not involving any transfer, require payment of a sufficient
amount to cover any tax or other governmental charge payable in connection with
the transfer or exchange. Unless we specify otherwise in the prospectus
supplement, Clear Channel will pay interest on outstanding debt securities to
holders of record on the date 15 days immediately prior to the date the interest
is to be paid.
Clear Channel's rights and the rights of its creditors, including holders
of debt securities, to participate in any distribution of assets of any of Clear
Channel subsidiary upon its liquidation or reorganization or otherwise is
subject to the prior claims of creditors of the subsidiary, except to the extent
that Clear Channel's claims as a creditor of the subsidiary may be recognized.
Clear Channel's operations are conducted through its subsidiaries and,
therefore, Clear Channel 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 Clear Channel's subsidiaries.
GLOBAL SECURITIES
Clear Channel may issue debt securities of a series in whole or in part in
the form of one or more global securities and will deposit them with or on
behalf of a depositary identified in the prospectus supplement relating to that
series. Clear Channel may issue global securities 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
the global security to a nominee of the depositary or by a nominee of the
depositary to the depositary or another nominee of the depositary or by the
depositary or any nominee of the depositary to a successor or any nominee.
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The specific terms of the depositary arrangement relating to a series of
debt securities will be described in the prospectus supplement relating to that
series. It is anticipated that the following provisions will generally apply to
depositary arrangements.
Upon the issuance of a global security, the depositary for the global
security or its nominee will credit on its book entry registration and transfer
system the principal amounts of the individual debt securities represented by
the global security to the accounts of persons that have accounts with the
depositary. The accounts will be designated by the dealers, underwriters or
agents with respect to the debt securities or by Clear Channel if the debt
securities are offered and sold directly by it. Ownership of beneficial
interests in a global security will be limited to persons that have accounts
with the applicable depositary participants or persons that hold interests
through participants. Ownership of beneficial interests in the 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 purchasers of securities take physical
delivery of the securities in definitive form. These limits and 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 the global security, the depositary or the nominee will be
considered the sole owner or holder of the debt securities represented by the
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 the global security registered in their names;
- not receive or be entitled to receive physical delivery of any debt
security of that series in definitive form;
- not be considered the owners or holders thereof under the applicable
indenture governing the 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
registered owner of the global security representing the debt securities.
Neither Clear Channel, the applicable debt trustee for the debt securities, any
Paying Agent, nor the Security Registrar for the debt securities will have any
responsibility or liability for the records relating to or payments made on
account of beneficial ownership interests of the global security for the debt
securities or for maintaining, supervising or reviewing any records relating to
the beneficial ownership interests.
Clear Channel 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 the debt securities,
will immediately credit participants' accounts with payments in amounts
proportionate to their beneficial interests in the principal amount of the
global security for the debt securities as shown on the records of the
depositary or its nominee. Clear Channel also expects that payments by
participants to owners of beneficial interests in the global security held
through the 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." The payments will be the
responsibility of those participants.
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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 Clear Channel within 90 days, Clear Channel will issue individual
debt securities of that series in exchange for the global security representing
that series of debt securities. In addition, Clear Channel may at any time and
in its sole discretion, subject to any limitations described in the prospectus
supplement relating to the debt securities, determine not to have any debt
securities of a series represented by one or more global securities. In that
event, Clear Channel will issue individual debt securities of that series in
exchange for the global security or Securities representing that series of debt
securities. Further, if Clear Channel 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 that series may, on terms acceptable to Clear
Channel, the applicable debt trustee and the depositary for such global
security, receive individual debt securities of that series in exchange for the
beneficial interests, subject to any limitations described in the prospectus
supplement relating to the 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 the global security
equal in principal amount to the beneficial interest and to have the debt
securities registered in its name. Individual debt securities of the series so
issued will be issued in denominations, unless otherwise specified by Clear
Channel, of $1,000 and integral multiples of $1,000.
CONSOLIDATION, MERGER, CONVEYANCE OR TRANSFER
Each indenture prohibits Clear Channel's consolidation with or merger into
any other corporation or the transfer of Clear Channel's properties and assets
to any person, unless:
- the successor corporation is organized and existing under the laws of the
United States, any State thereof or the District of Columbia, and
expressly assumes by a supplemental indenture the punctual payment of the
principal of, premium on and interest on, all the outstanding debt
securities and the performance of every covenant in the applicable
indenture to be performed or observed on Clear Channel's part;
- immediately after giving effect to the transaction, no event of default
has happened and is continuing; and
- Clear Channel has delivered to the applicable debt trustee an officers'
certificate and an opinion of counsel, each stating that the
consolidation, merger, conveyance or transfer and the supplemental
indenture comply with the foregoing provisions relating to the
transaction.
In case of any consolidation, merger, conveyance or transfer, the successor
corporation will succeed to and be substituted for Clear Channel as obligor on
the debt securities, with the same effect as if it had been named as Clear
Channel in the applicable indenture. Unless otherwise specified in a prospectus
supplement, 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 Clear Channel or any Subsidiary.
EVENTS OF DEFAULT; WAIVER AND NOTICE OF DEFAULT; DEBT SECURITIES IN FOREIGN
CURRENCIES
An event of default when used in an indenture will mean any of the
following as to any series of debt securities:
- default for 30 days in payment of any interest, or, in the case of the
subordinated indenture, for a period of 90 days;
- default in payment of principal of or any premium at maturity;
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- default in payment of any sinking or purchase fund or similar obligation;
- default by Clear Channel in the performance of any other covenant or
warranty contained in the applicable indenture for the benefit of that
series which has not been remedied for a period of 90 days after notice
is given; or
- events of Clear Channel's bankruptcy, insolvency and reorganization.
A default under Clear Channel's other indebtedness 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 if an event of default described in the first
four bullet points above, if the event of default under the fourth bullet point
is with respect to less than all series of debt securities then outstanding, has
occurred and is 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 the series then outstanding, each series acting as a
separate class, may declare the principal or, in the case of original issue
discount securities, the portion specified in the terms thereof, of all
outstanding debt securities of the series and the accrued interest to be due and
payable immediately. Each indenture further provides that if an event of default
described in the fourth or fifth bullet points above, if the event of default
under the fourth bullet point is with respect to all series of debt securities
then outstanding, has occurred and is 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 specified in the
terms thereof, of all debt securities then outstanding and the accrued interest
to be due and payable immediately. However, upon certain conditions the
declarations may be annulled and past defaults, except for defaults in the
payment of principal of, premium on, or interest on, the 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 the series then
outstanding.
Under each indenture the applicable debt trustee must give notice to the
holders of each series of debt securities of all uncured defaults known to it
with respect to that series within 90 days after a default occurs. The term
"default" includes the events specified above without notice or grace periods.
However, in the case of any default of the type described in the fourth bullet
point above, no notice may be given until at least 90 days after the occurrence
of the event. The debt trustee will be protected in withholding notice if it in
good faith determines that the withholding of notice is in the interests of the
holders of the debt securities, except in the case of default in the payment of
principal of, premium on, or interest on, any of the debt securities, or default
in the payment of any sinking or purchase fund installment or analogous
obligations.
No holder of any debt securities of any series may institute any action
under either indenture unless:
- the holder has given the debt trustee written notice of a continuing
event of default with respect to that series;
- the holders of not less than 25% in aggregate principal amount of the
debt securities of the series then outstanding have requested the debt
trustee to institute proceedings in respect of the event of default;
- the holder or holders have offered the debt trustee reasonable indemnity
as the debt trustee may require;
- the debt trustee has failed to institute an action for 60 days; and
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- no inconsistent direction has been given to the debt trustee during the
60-day period by the holders of a majority in aggregate principal amount
of debt securities of the 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 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 the debt trustee with respect to a series of
debt securities. Each indenture provides that if an event of default occurs and
is continuing, the debt trustee will be required to use the degree of care of a
prudent person in the conduct of that person's own affairs in exercising its
rights and powers under the indenture. Each indenture further provides that the
debt trustee will not be required to expend or risk its own funds in the
performance of any of its duties under the indenture unless it has reasonable
grounds for believing that repayment of the funds or adequate indemnity against
the risk or liability is reasonably assured to it.
Clear Channel must furnish to the debt trustees within 120 days after the
end of each fiscal year a statement signed by one of its officers to the effect
that a review of its activities during the 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 the review, Clear Channel
has complied with all conditions and covenants of the indenture through the year
or, if Clear Channel is in default, specifying the default.
To determine whether the holders of the requisite principal amount of debt
securities have taken action as described above when the debt securities are
denominated in a foreign currency, the principal amount of the debt securities
will be deemed to be that amount of United States dollars that could be obtained
for the principal amount based on the applicable spot rate of exchange as of the
date the action is taken as evidenced to the debt trustee as provided in the
indenture.
To determine whether the holders of the requisite principal amount of debt
securities have taken action as described above when the debt securities are
original issue discount securities, the principal amount of the debt securities
will be deemed to be the portion of the principal amount that would be due and
payable at the time the action is taken upon a declaration of acceleration of
maturity.
MODIFICATION OF THE INDENTURES
The indentures provide that Clear Channel 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 Clear Channel's covenants;
- adding additional events of default;
- establishing the form or terms of any series of debt securities; or
- curing ambiguities or inconsistencies in the indenture or making other
provisions.
With specific exceptions, the applicable indenture or the rights of the
holders of the debt securities may be modified by Clear Channel 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 the
modification then outstanding, but no modification may be made without the
consent of the holder of each outstanding debt security affected which would:
- change the maturity of any payment of principal of, or any premium on, or
any installment of interest on any debt security;
- reduce the principal amount of or the interest or any premium on any debt
security;
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- change the method of computing the amount of principal of or interest on
any date;
- change any place of payment where, or the currency in which, any debt
security or any premium or interest is payable;
- impair the right to sue for the enforcement of any 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;
- reduce the percentage in principal amount of the outstanding debt
securities of any series where the consent of the holders is required for
any modification, or the consent of the holders is required for any
waiver of compliance with provisions of the applicable indenture or
specific defaults and their consequences provided for in the indenture;
or
- modify any of the provisions of specific sections of the applicable
indenture, including the provisions summarized in this section, except to
increase any percentage or to provide that other provisions of the
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 will generally cease to be of any further effect with
respect to a series of debt securities if Clear Channel delivers all debt
securities of that series, with limited exceptions, for cancellation to the
applicable debt trustee or all debt securities of that series not previously
delivered for cancellation to the applicable debt trustee have become due and
payable or will become due and payable or called for redemption within one year,
and Clear Channel has deposited with the applicable debt trustee as trust funds
the entire amount sufficient to pay at maturity or upon redemption all the debt
securities, no default with respect to the debt securities has occurred and is
continuing on the date of the deposit, and the deposit does not result in a
breach or violation of, or default under, the applicable indenture or any other
agreement or instrument to which Clear Channel is a party.
Clear Channel has a "legal defeasance option" under which it may terminate,
with respect to the debt securities of a particular series, all of its
obligations under the debt securities and the applicable indenture. In addition,
Clear Channel has a "covenant defeasance option" under which it may terminate,
with respect to the debt securities of a particular series, Clear Channel's
obligations with respect to the debt securities under specified covenants
contained in the applicable indenture. If Clear Channel exercises its legal
defeasance option with respect to a series of debt securities, payment of the
debt securities may not be accelerated because of an event of default. If Clear
Channel exercises its covenant defeasance option with respect to a series of
debt securities, payment of the debt securities may not be accelerated because
of an event of default related to the specified covenants.
Clear Channel may exercise its legal defeasance option or its covenant
defeasance option with respect to the debt securities of a series only if:
- Clear Channel deposits in trust with the applicable debt trustee cash or
debt obligations of the United States of America or its agencies or
instrumentalities for the payment of principal, premium and interest with
respect to the debt securities to maturity or redemption;
- Clear Channel 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 will
provide cash sufficient to pay the principal, premium, and interest when
due with respect to all the debt securities of that series to maturity or
redemption;
- 91 days pass after the deposit is made and during the 91-day period no
default described in the fifth bullet point under "-- Events of Default,
Waiver and Notice Of Default; Debt
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Securities in Foreign Currencies" above with respect to Clear Channel
occurs that is continuing at the end of the period,
- no default has occurred and is continuing on the date of the deposit;
- the deposit does not constitute a default under any other agreement
binding on Clear Channel;
- Clear Channel delivers to the applicable debt trustee an opinion of
counsel to the effect that the trust resulting from the deposit does not
constitute a regulated investment company under the Investment Company
Act of 1940;
- Clear Channel has delivered to the applicable debt trustee an opinion of
counsel addressing specific federal income tax matters relating to the
defeasance; and
- Clear Channel delivers to the applicable debt trustee an officers'
certificate and an opinion of counsel stating that all conditions to the
defeasance and discharge of the debt securities of that series have been
complied with.
The applicable debt trustee will hold in trust cash or debt obligations of
the United States of America or its agencies or instrumentalities deposited with
it as described above and will apply the deposited cash and the proceeds from
deposited debt obligations of the United States of America or its agencies or
instrumentalities to the payment of principal, premium, and interest with
respect to the debt securities of the defeased series.
CONCERNING THE DEBT TRUSTEES
Clear Channel will identify the debt trustee for the senior debt securities
and the debt trustee for the subordinated debt securities in the relevant
prospectus supplement. In specific instances, Clear Channel or the 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 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 those 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. 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 Clear Channel or its affiliated
companies and may engage in commercial transactions with Clear Channel and its
affiliated companies. The initial debt trustee under each indenture is The Bank
of New York, who currently serves as Clear Channel's transfer agent and
registrar for the common stock and is a lender to Clear Channel under its credit
facility.
SENIOR DEBT SECURITIES
In addition to the provisions previously described in this prospectus and
applicable to all debt securities, the following description of Clear Channel's
senior debt securities summarizes the general terms and provisions of its senior
debt securities to which any prospectus supplement may relate. Clear Channel
will describe the specific terms of the senior debt securities offered by any
prospectus supplement and the extent, if any, to which the general provisions
summarized below may apply to any series of its senior debt securities in the
prospectus supplement relating to that series.
Ranking of Senior Debt Securities
Unless we specify otherwise in a prospectus supplement for a particular
series of debt securities, all series of senior debt securities will be Clear
Channel's senior indebtedness and will be direct,
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unsecured obligations of Clear Channel ranking equally with all of Clear
Channel's other unsecured and unsubordinated indebtedness. Because Clear Channel
is a holding company, the debt securities will be effectively subordinated to
all existing and future liabilities, including indebtedness, of Clear Channel's
subsidiaries. See "Holding Company Structure."
Covenants
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. Clear Channel will not, nor will it permit any
Restricted Subsidiary to create, assume or incur
- any Mortgage on any stock or indebtedness of any Restricted Subsidiary to
secure any Debt of Clear Channel or any other person, other than the
senior debt securities; or
- any Mortgage on any Principal Property to secure any Debt of Clear
Channel or any other person, other than the senior debt securities,
without making provision for all the outstanding senior debt securities to be
secured equally with the Debt.
Any Mortgage on stock or indebtedness of a corporation existing at the time
a corporation becomes a Subsidiary or at the time stock or indebtedness of a
Subsidiary is acquired, and, with specific exceptions, any extension, renewal or
replacement of any Mortgage, will generally be excluded from this restriction.
The following permitted mortgages will be excluded from the restriction
referred to in the preceding paragraph:
- any Mortgage on property owned or leased by a corporation existing at the
time the corporation becomes a Restricted Subsidiary;
- any Mortgage on property existing at the time of its acquisition or to
secure payment of any part of the purchase price thereof or any Debt
incurred to finance the purchase thereof;
- any Mortgage on property to secure any part of the cost of development,
construction, alteration, repair or improvement of the property, or Debt
incurred to finance the cost;
- any Mortgage securing Debt of a Restricted Subsidiary owing to Clear
Channel or to another Restricted Subsidiary;
- any Mortgage existing on the date of the senior indenture;
- any Mortgage on Clear Channel's property or property of 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 the Mortgage;
- any Mortgage on any property subsequently acquired by Clear Channel or
any Restricted Subsidiary, concurrently with the acquisition or within
120 days, to secure or provide for the payment of any part of the
purchase price of the property, or any Mortgage assumed by Clear Channel
or any Restricted Subsidiary on any property subsequently acquired by
Clear Channel or any Restricted Subsidiary which was existing at the time
of the acquisition, provided that the amount of any Indebtedness secured
by any Mortgage created or assumed does not exceed
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the cost to Clear Channel or any Restricted Subsidiary of the property
covered by the Mortgage; and
- any extension, renewal or replacement of any Mortgage referred to in the
previous seven bullet points, provided that the principal amount of Debt
secured thereby may not exceed the principal amount of Debt so secured at
the time of the extension, renewal or replacement, and provided that the
Mortgage must be limited to all or part of the property which secured the
Mortgage so extended, renewed or replaced.
Notwithstanding the above, Clear Channel may, and may permit any Restricted
Subsidiary to, create, assume or incur any Mortgage on any Principal Property
without equally securing the senior debt securities if the aggregate amount of
all Debt then outstanding secured by the Mortgage and all similar Mortgages does
not exceed 15% of Clear Channel's total consolidated shareholders' equity,
including preferred stock, as shown on the audited consolidated balance sheet
contained in its latest annual report to shareholders. However, Debt secured by
Permitted Mortgages will not be included in the amount of the secured Debt.
Sale and Leaseback Transactions. Clear Channel will not, nor will it
permit any Restricted Subsidiary to, enter into any sale-leaseback transaction
providing for the leasing by Clear Channel or a Restricted Subsidiary of any
Principal Property, except for temporary leases for a term of not more than
three years, which has been or is to be sold or transferred by Clear Channel or
the Restricted Subsidiary to the person, unless:
- the sale-leaseback transaction occurs within the later of 120 days from
the date of acquisition of the Principal Property or the date of the
completion of construction or commencement of full operations on the
Principal Property, or
- within 120 days after the sale-leaseback transaction, Clear Channel
applies or causes to be applied to the retirement of its Funded Debt or
the Funded Debt of any Subsidiary, other than its Funded Debt which is
subordinate in right of payment to the senior debt securities, an amount
not less than the net proceeds of the sale of the Principal Property.
Notwithstanding the above provisions, Clear Channel may, and may permit any
Restricted Subsidiary to, effect any sale-leaseback transaction involving any
Principal Property, provided that the net sale proceeds from the sale-leaseback
transaction, together with all Debt secured by Mortgages other than Permitted
Mortgages, does not exceed 15% of Clear Channel's total consolidated
shareholders' equity as shown on the audited consolidated balance sheet
contained in Clear Channel's latest annual report to shareholders.
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 the person, and all
indebtedness incurred or assumed by the person in connection with the
acquisition of any business, property or asset, which in each case matures more
than one year after, or which 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 the person for a
period ending more than one year after the date as of which Funded Debt is being
determined. However, Funded Debt does not include:
- any indebtedness for the payment, redemption or satisfaction of which
money, or evidences of indebtedness, if permitted under the instrument
creating or evidencing the indebtedness, in the
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necessary amount has been irrevocably deposited in trust with a trustee
or proper depository either on or before the maturity or redemption date
thereof;
- any indebtedness of the person to any of its Subsidiaries or of any
Subsidiary to the person or any other Subsidiary; or
- any indebtedness incurred in connection with the financing of operating,
construction or acquisition projects, provided that the recourse for the
indebtedness is limited to the assets of the 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
Clear Channel or any of its subsidiaries, unless, in the opinion of Clear
Channel's Board of Directors, any of the properties are not in the aggregate of
material importance to the total business conducted by Clear Channel and its
Subsidiaries as an entirety.
"Restricted Subsidiary" means each Subsidiary as of the date of the
indenture and each Subsidiary created or acquired after the date of the
indenture, unless expressly excluded by resolution of Clear Channel's Board of
Directors before, or within 120 days following, the creation or acquisition.
"Subsidiary", when used with respect to Clear Channel, means any
corporation of which a majority of the outstanding voting stock is owned,
directly or indirectly, by Clear Channel or by one or more other Subsidiaries,
or both.
SUBORDINATED DEBT SECURITIES
In addition to the provisions previously described in this prospectus and
applicable to all debt securities, the following description of Clear Channel's
subordinated debt securities summarizes the general terms and provisions of its
subordinated debt securities to which any prospectus supplement may relate. We
will describe the specific terms of Clear Channel's subordinated debt securities
offered by any prospectus supplement and the extent, if any, to which the
general provisions summarized below may apply to any series of subordinated debt
securities in the prospectus supplement relating to that series.
Ranking of Subordinated Debt Securities
The subordinated debt securities will be subordinated in right of payment
to Clear Channel's other indebtedness 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 of Clear Channel's senior indebtedness and equally
with its trade creditors. Clear Channel may not make payment of principal of,
premium, if any, or interest on the subordinated debt securities and may not
acquire or make payment on account of any sinking fund for, the subordinated
debt securities 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 has been made or duly provided for in cash or in a manner
satisfactory to the holders of the senior indebtedness. In addition, the
subordinated indenture provides that if a default has occurred giving the
holders of the senior indebtedness the right to accelerate the maturity of that
senior indebtedness, or an event has occurred which, with the giving of notice,
or lapse of time, or both, would constitute an event of default, then unless and
until that event has been cured or waived or has ceased to exist, no payment of
principal, premium, if any, or interest
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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. Clear
Channel will 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 Clear Channel 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 the default
and notice thereof. Upon any distribution of assets in connection with Clear
Channel's dissolution, liquidation or reorganization, 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 Clear Channel's insolvency, holders of the
subordinated debt securities may recover ratably less than Clear Channel's
senior creditors.
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 incurred or created after the execution:
- Clear Channel's indebtedness for money borrowed by it, 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 Clear Channel;
- obligations with respect to letters of credit;
- Clear Channel's indebtedness constituting a guarantee of indebtedness of
others of the type referred to in the preceding two bullet points; or
- renewals, extensions or refundings of any of the indebtedness referred to
in the preceding three bullet points 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, the indebtedness or the
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 Clear Channel's junior subordinated debt
securities summarizes the general terms and provisions of its junior
subordinated debt securities to which any prospectus supplement may relate.
Clear Channel will describe the specific terms of the junior subordinated debt
securities and the extent, if any, to which the general provisions summarized
below may apply to any series of its junior subordinated debt securities in the
prospectus supplement relating to that series.
Clear Channel may issue its junior subordinated debt securities from time
to time, in one or more series under a junior subordinated indenture, between
Clear Channel and The Bank of New York, as junior subordinated trustee, or
another junior subordinated trustee named in a prospectus supplement. The form
of junior subordinated indenture is filed as an exhibit to the registration
statement.
GENERAL
The junior subordinated debt securities will be unsecured, junior
subordinated obligations of Clear Channel. The junior subordinated indenture
does not limit the amount of additional indebtedness Clear Channel or any of its
subsidiaries may incur. Since Clear Channel is a holding company, Clear
Channel's rights and the rights of its creditors, including the holders of
junior
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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 the subsidiary's creditors, except to the extent that Clear Channel
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. Clear Channel will issue junior subordinated debt
securities from time to time and offer its junior subordinated debt securities
on terms determined by market conditions at the time of sale.
In the event junior subordinated debt securities are issued to a Clear
Channel Trust or a trustee of a Clear Channel Trust in connection with the
issuance of preferred securities by that Clear Channel Trust, the junior
subordinated debt securities subsequently may be distributed pro rata to the
holders of the preferred securities in connection with the dissolution of the
Clear Channel Trust upon the occurrence of the events described in the
applicable prospectus supplement. Only one series of junior subordinated debt
securities will be issued to a Clear Channel Trust or a trustee of a Clear
Channel Trust in connection with the issuance of preferred securities by that
Clear Channel Trust.
You should refer to the applicable prospectus supplement for the following
terms of the junior subordinated debt securities offered hereby:
- the designation, aggregate principal amount and authorized denominations
of the junior subordinated debt securities;
- any limit on the aggregate principal amount of the junior subordinated
debt securities;
- the date or dates on which the junior subordinated debt securities will
mature;
- the annual interest rate or rates of the junior subordinated debt
securities, or the method of determining the rate or rates;
- the date or dates on which any interest will be payable, the date or
dates on which payment of any interest will commence and the regular
record dates for the interest payment dates;
- the terms of any mandatory or optional redemption, including any
provisions for any sinking, purchase or other similar funds or repayment
options;
- the currency, currencies or currency units for which the junior
subordinated debt securities may be purchased and the currency,
currencies or currency units in which the principal, any premium and any
interest may be payable;
- if the currency, currencies or currency units for which the junior
subordinated debt securities may be purchased or in which the principal,
any premium and any interest may be payable is at Clear Channel's
election or the purchaser's election, the manner in which the election
may be made;
- if the amount of payments on the junior subordinated debt securities is
determined by 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 the amounts may be
determined;
- the extent to which any of the junior subordinated 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;
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- the terms and conditions upon which the junior subordinated debt
securities may be convertible into or exchanged for common stock,
preferred stock, or indebtedness or other securities of any kind;
- information with respect to book-entry procedures, if any;
- a discussion of the federal income tax, accounting and other special
considerations, procedures and limitations with respect to the junior
subordinated debt securities; and
- any other specific terms of the junior subordinated debt securities not
inconsistent with the junior subordinated indenture.
If Clear Channel sells any of the junior subordinated debt securities for
one or more foreign currencies or foreign currency units or if the principal of,
premium, if any, or interest on any series of junior subordinated debt
securities will be payable in one or more foreign currencies or foreign currency
units, we will describe the restrictions, elections, federal income tax
consequences, specific terms and other information with respect to the issue of
junior subordinated debt securities and the currencies or currency units in the
applicable prospectus supplement.
Unless specified otherwise in the prospectus supplement, the principal of,
premium on, and interest on the junior subordinated debt securities will be
payable, and the junior subordinated debt securities will be transferable, at
the Corporate Trust Office of the junior subordinated indenture trustee in New
York, New York. However, Clear Channel may make payment of interest at its
option by check mailed on or before the payment date to the address of the
person entitled to the interest payment as it appears on the registry books of
Clear Channel or its agents.
Unless specified otherwise in the prospectus supplement, Clear Channel will
issue the junior subordinated debt securities only in fully registered form and
in denominations of $1,000 and any integral multiple of $1,000. No service
charge will be made for any transfer or exchange of any junior subordinated debt
securities, but Clear Channel may, except in specific cases not involving any
transfer, require payment of a sufficient amount to cover any tax or other
governmental charge payable in connection with the transfer or exchange. Unless
specified otherwise in the prospectus supplement, Clear Channel will pay
interest on outstanding junior subordinated debt securities to holders of record
on the date 15 days immediately prior to the date the interest is to be paid.
GLOBAL SECURITIES
Clear Channel may issue junior subordinated debt securities of a series 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 identified in the prospectus
supplement relating to that series. Clear Channel may issue global securities
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 junior
subordinated debt securities represented thereby, a global security may not be
transferred except as a whole by the depositary for the global security to a
nominee of the depositary or by a nominee of the depositary to the depositary or
another nominee of the depositary or by the depositary or any nominee of the
depositary to a successor or any nominee.
The specific terms of the depositary arrangement relating to a series of
junior subordinated debt securities will be described in the prospectus
supplement relating to that series.
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CONSOLIDATION, MERGER, CONVEYANCE OR TRANSFER
The junior subordinated indenture prohibits Clear Channel's consolidation
with or merger into any other corporation or the transfer of its properties and
assets to any person, unless:
- the successor corporation is organized and existing under the laws of the
United States, any State thereof or the District of Columbia, and
expressly assumes by a supplemental indenture the punctual payment of the
principal of, premium on and interest on, all the outstanding junior
subordinated debt securities and the performance of every covenant in the
junior subordinated indenture to be performed or observed on Clear
Channel's part;
- immediately after giving effect to the transaction, no event of default
has happened and is continuing; and
- Clear Channel has delivered to the junior subordinated indenture trustee
an officers' certificate and an opinion of counsel, each stating that the
consolidation, merger, conveyance or transfer and the supplemental
indenture comply with the foregoing provisions relating to the
transaction.
In case of any consolidation, merger, conveyance or transfer, the successor
corporation will succeed to and be substituted for Clear Channel as obligor on
the junior subordinated debt securities, with the same effect as if it had been
named as Clear Channel in the junior subordinated indenture. Other than the
restrictions on Mortgages described below, the junior subordinated indenture 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 Clear Channel or any
Subsidiary.
EVENTS OF DEFAULT; WAIVER AND NOTICE OF DEFAULT; JUNIOR SUBORDINATED DEBT
SECURITIES IN FOREIGN CURRENCIES
An event of default when used in a junior subordinated indenture will mean
any of the following as to any series of junior subordinated debt securities:
- default for 90 days in payment of any interest on the junior subordinated
debt securities;
- default in payment of principal or any premium at maturity;
- default in payment of any sinking or purchase fund or similar obligation;
- default by Clear Channel in the performance of any other covenant or
warranty contained in the junior subordinated indenture for the benefit
of that series which has not been remedied for a period of 90 days after
notice is given; or
- events of Clear Channel's bankruptcy, insolvency and reorganization.
A default under Clear Channel's other indebtedness will not be a default
under the junior subordinated indenture and a default under one series of junior
subordinated debt securities will not necessarily be a default under another
series.
The junior subordinated indenture provides that if an event of default
described in the first four bullet points above, if the event of default under
the fourth bullet point is with respect to less than all series of junior
subordinated debt securities then outstanding, has occurred and is 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 the series then outstanding, each series acting
as a separate class, may declare the principal or, in the case of original issue
discount securities, the portion specified in the terms thereof, of all
outstanding junior subordinated debt securities of that series and the accrued
interest to be due and payable
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immediately. The junior subordinated indenture further provides that if an event
of default described in the fourth or fifth bullet points above, if the event of
default under the fourth bullet point is with respect to all series of junior
subordinated debt securities then outstanding, has occurred and is continuing,
either the junior subordinated debt 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 specified in the terms thereof,
of all junior subordinated debt securities then outstanding and the accrued
interest to be due and payable immediately. However, upon certain conditions the
declarations may be annulled and past defaults, except for defaults in the
payment of principal of, premium on, or interest on, the 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 that series then outstanding, subject to the consent of the
holders of the preferred securities and the common securities of any Clear
Channel Trust as required by it declaration of trust in the event that the
junior subordinated debt securities are held as assets of the Clear Channel
Trust prior to a security exchange.
When used with respect to the junior subordinated debt securities which are
held as trust assets of a Clear Channel Trust pursuant to the declaration of
trust of the Clear Channel Trust, the term security exchange means the
distribution of the junior subordinated debt securities held by the Clear
Channel Trust in exchange for the preferred securities and the common securities
of the Clear Channel Trust in dissolution of the Clear Channel Trust pursuant to
the declaration of trust of the Clear Channel Trust.
Under the junior subordinated indenture the junior subordinated indenture
trustee must give notice to the holders of each series of junior subordinated
debt securities of all uncured defaults known to it with respect to that series
within 90 days after a default occurs. The term "default" includes the events
specified above without notice or grace periods. However, in the case of any
default of the type described in the fourth bullet point above, no notice may be
given until at least 90 days after the occurrence of the event. The junior
subordinated debt trustee will be protected in withholding notice if it in good
faith determines that the withholding of notice is in the interests of the
holders of the junior subordinated debt securities, except in the case of
default in the payment of principal of, premium on, or interest on, any of the
junior subordinated debt securities, or default in the payment of any sinking or
purchase fund installment or analogous obligations.
No holder of any junior subordinated debt securities of any series may
institute any action under either indenture unless:
- the holder has given the junior subordinated indenture trustee written
notice of a continuing event of default with respect to that series;
- the holders of not less than 25% in aggregate principal amount of the
junior subordinated debt securities of that series then outstanding have
requested the junior subordinated indenture trustee to institute
proceedings in respect of the event of default;
- the holder or holders have offered the junior subordinated indenture
trustee reasonable indemnity as the trustee may require;
- the junior subordinated indenture trustee has failed to institute an
action for 60 days after the notice, request and indemnity have been made
as described above; and
- no inconsistent direction has been given to the junior subordinated
indenture trustee during the 60-day period by the holders of a majority
in aggregate principal amount of junior subordinated debt securities of
the series then outstanding, subject to the consent of the holders of the
preferred securities and the common securities of any Clear Channel Trust
as
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required by it declaration of trust in the event that the junior
subordinated debt securities are held as assets of the Clear Channel
Trust prior to a security exchange.
The holders of a majority in aggregate principal amount of the junior
subordinated debt securities of any series affected and then outstanding,
subject to the consent of the holders of the preferred securities and the common
securities of any Clear Channel Trust as required by its declaration of trust in
the event that the junior subordinated debt securities are held as assets of the
Clear Channel Trust prior to a security exchange, will have the right, subject
to limitations, to direct the time, method and place of conducting any
proceeding for any remedy available to the junior subordinated indenture trustee
or exercising any trust or power conferred on the junior subordinated indenture
trustee with respect to the series of junior subordinated debt securities. The
junior subordinated indenture provides that if an event of default occurs and is
continuing, the junior subordinated indenture trustee will be required to use
the degree of care of a prudent person in the conduct of the person's own
affairs in exercising its rights and powers under the indenture. The junior
subordinated indenture further provides that the junior subordinated indenture
trustee will not be required to expend or risk its own funds in the performance
of any of its duties under the indenture unless it has reasonable grounds for
believing that repayment of the funds or adequate indemnity against the risk or
liability is reasonably assured to it.
Clear Channel must furnish to the junior subordinated indenture trustees
within 120 days after the end of each fiscal year a statement signed by one of
its officers to the effect that a review of its activities during the 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 the review, Clear Channel has complied
with all conditions and covenants of the indenture through the year or, if Clear
Channel is in default, specifying the default.
If any junior subordinated debt securities are denominated in a 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 described in this prospectus, the
principal amount of the junior subordinated debt securities will be deemed to be
that amount of United States dollars that could be obtained for the principal
amount on the basis of the spot rate of exchange into United States dollars for
the currency in which the junior subordinated debt securities are denominated as
of the date the taking of the action by the holders of the requisite principal
amount is evidenced to the junior subordinated indenture trustee as provided in
the 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 described in this prospectus, the principal amount of the junior
subordinated debt securities will be deemed to be the portion of the principal
amount that would be due and payable at the time of the taking of the action
upon a declaration of acceleration of maturity thereof.
MODIFICATION OF THE JUNIOR SUBORDINATED INDENTURE
The junior subordinated indenture provides that Clear Channel 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 Clear Channel's covenants, adding
additional events of default, establishing the form or terms of any series of
junior subordinated debt securities or curing ambiguities or inconsistencies in
the indenture or making other provisions.
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With specific exceptions, the junior subordinated indenture or the rights
of the holders of the junior subordinated debt securities may be modified by
Clear Channel 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 the modification then
outstanding, subject to the consent of the holders of the preferred securities
and the common securities of any Clear Channel Trust as required by its
declaration of trust in the event that the junior subordinated debt securities
are held as assets of the Clear Channel Trust prior to a security exchange, but
no modification may be made without the consent of the holder of each
outstanding junior subordinated debt security affected, subject to the consent
of the holders of the preferred securities and the common securities of any
Clear Channel Trust as required by its declaration of trust in the event that
the junior subordinated debt securities are held as assets of the Clear Channel
Trust prior to a security exchange, which would:
- change the maturity of any payment of principal of, or any premium on, or
any installment of interest on any junior subordinated debt security;
- reduce the principal amount of or the interest or any premium on any
junior subordinated debt security;
- change the method of computing the amount of principal of or interest on
any date;
- change any place of payment where, or the currency in which, any junior
subordinated debt security or any premium or interest is payable;
- impair the right to sue for the enforcement of any 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;
- reduce the percentage in principal amount of the outstanding junior
subordinated debt securities of any series where the consent of the
holders is required for any modification, or the consent of the holders
is required for any waiver of compliance with the provisions of the
junior subordinated indenture or specific defaults and their consequences
provided for in the indenture; or
- modify any of the provisions of specific sections of the junior
subordinated indenture, including the provisions summarized in this
section, except to increase any percentage or to provide that other
provisions of the indenture cannot be modified or waived without the
consent of the holder of each outstanding debt security affected thereby.
SATISFACTION AND DISCHARGE OF THE JUNIOR SUBORDINATED INDENTURE; DEFEASANCE
The junior subordinated indenture will generally cease to be of any further
effect with respect to a series of junior subordinated debt securities if Clear
Channel delivers all junior subordinated debt securities of that series, with
limited exceptions, for cancellation to the junior subordinated indenture
trustee or all junior subordinated debt securities of that series not previously
delivered for cancellation to the junior subordinated indenture trustee have
become due and payable or will become due and payable or called for redemption
within one year, and Clear Channel has deposited with the junior subordinated
indenture trustee as trust funds the entire amount sufficient to pay at maturity
or upon redemption all the junior subordinated debt securities, no default with
respect to the junior subordinated debt securities has occurred and is
continuing on the date of the deposit, and the deposit does not result in a
breach or violation of, or default under, the junior subordinated indenture or
any other agreement or instrument to which Clear Channel is a party.
Clear Channel has a "legal defeasance option" under which it may terminate,
with respect to the junior subordinated debt securities of a particular series,
all of its obligations under the junior
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subordinated debt securities and the junior subordinated indenture. In addition,
Clear Channel has a "covenant defeasance option" under which it may terminate,
with respect to the junior subordinated debt securities of a particular series,
its obligations with respect to the junior subordinated debt securities under
specified covenants contained in the junior subordinated indenture. If Clear
Channel exercises its legal defeasance option with respect to a series of junior
subordinated debt securities, payment of the junior subordinated debt securities
may not be accelerated because of an event of default. If Clear Channel
exercises its covenant defeasance option with respect to a series of junior
subordinated debt securities, payment of the junior subordinated debt securities
may not be accelerated because of an event of default related to the specified
covenants.
Clear Channel may exercise its legal defeasance option or its covenant
defeasance option with respect to the junior subordinated debt securities of a
series only if:
- Clear Channel deposits in trust with the junior subordinated indenture
trustee cash or debt obligations of the United States of America or its
agencies or instrumentalities for the payment of principal, premium and
interest with respect to the junior subordinated debt securities to
maturity or redemption;
- Clear Channel 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 will provide cash sufficient to pay the principal,
premium, and interest when due with respect to all the junior
subordinated debt securities of that series to maturity or redemption;
- 91 days pass after the deposit is made and during the 91-day period no
default described in the fifth bullet point under "-- Events of Default,
Waiver and Notice of Default; Junior Subordinated Debt Securities in
Foreign Currencies" above with respect to Clear Channel occurs that is
continuing at the end of the period,
- no default has occurred and is continuing on the date of the deposit;
- the deposit does not constitute a default under any other agreement
binding on Clear Channel;
- Clear Channel delivers to the junior subordinated indenture trustee an
opinion of counsel to the effect that the trust resulting from the
deposit does not constitute a regulated investment company under the
Investment Company Act of 1940;
- Clear Channel has delivered to the junior subordinated indenture trustee
an opinion of counsel addressing specific federal income tax matters
relating to the defeasance; and
- Clear Channel delivers to the junior subordinated indenture trustee an
officers' certificate and an opinion of counsel stating that all
conditions to the defeasance and discharge of the junior subordinated
debt securities of that series have been complied with.
The junior subordinated indenture trustee will hold in trust cash or debt
obligations of the United States of America or its agencies or instrumentalities
deposited with it as described above and will apply the deposited cash and the
proceeds from deposited debt obligations of the United States of America or its
agencies or instrumentalities to the payment of principal, premium, 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 specific
instances, Clear Channel or the holders of a majority of the then outstanding
principal amount of the junior subordinated debt securities issued under an
indenture may remove the junior subordinated indenture trustee and appoint a
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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 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 those 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. 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 Clear Channel or its affiliated companies and may engage in
commercial transactions with Clear Channel and its affiliated companies. The
initial junior subordinated indenture trustee under the junior subordinated
indenture is The Bank of New York, who currently serves as Clear Channel's
transfer agent and registrar for the common stock and is a lender to Clear
Channel under its credit facility.
CERTAIN COVENANTS OF CLEAR CHANNEL APPLICABLE TO THE JUNIOR SUBORDINATED DEBT
SECURITIES
If junior subordinated debt securities are issued to a Clear Channel Trust
in connection with the issuance of preferred securities by the Clear Channel
Trust, Clear Channel covenants in the junior subordinated indenture that, so
long as the preferred securities of the Clear Channel Trust remain outstanding,
Clear Channel 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 the time
- Clear Channel is in default with respect to its guarantee payments or
other payment obligations under the related guarantee;
- an event of default with respect to the junior subordinated debt
securities has occurred; or
- in the event that junior subordinated debt securities are issued to the
applicable Clear Channel Trust in connection with the issuance of
preferred securities by the Clear Channel Trust, Clear Channel has given
notice of its election to defer payments of interest on the junior
subordinated debt securities by extending the interest payment period as
provided in the terms of the junior subordinated debt securities and the
period, or any extension thereof, is continuing.
However, the foregoing restrictions will not apply to
- dividends, redemptions, purchases, acquisitions, distributions or
payments made by Clear Channel by way of issuance of shares of its
capital stock;
- any declaration of a dividend under a shareholder rights plan or in
connection with the implementation of a shareholder rights plan, the
issuance of Clear Channel's capital stock under a shareholder rights plan
or the redemption or repurchase of any right distributed pursuant to a
shareholder rights plan;
- payments of accrued dividends by Clear Channel upon the redemption,
exchange or conversion of any preferred stock as may be outstanding from
time to time in accordance with the terms of the preferred stock;
- cash payments made by Clear Channel 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
the preferred stock;
- payments under the guarantees; or
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- purchases of common stock related to the issuance of common stock or
rights under any of Clear Channel'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 Clear
Channel Trust in connection with the issuance of preferred securities by the
Clear Channel Trust, for so long as the preferred securities of the Clear
Channel Trust remain outstanding, Clear Channel has agreed
- to remain the sole direct or indirect owner of all the outstanding common
securities issued by the Clear Channel Trust and not to cause or permit
the common securities to be transferred except to the extent permitted by
the declaration of the Clear Channel Trust; provided that any of Clear
Channel's permitted successors under the junior subordinated indenture
may succeed to its ownership of the common securities;
- to comply fully with all its obligations and agreements under the
declaration; and
- not to take any action which would cause the Clear Channel 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 Clear Channel's other indebtedness 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 of Clear Channel's senior indebtedness and will
rank equally with its 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 the senior indebtedness. In addition, the junior subordinated
indenture provides that if a default has occurred giving the holders of the
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 an event of default, then unless and until that event has been cured
or waived or has 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. Clear Channel will 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 Clear Channel 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 the default and
notice thereof. Upon any distribution of Clear Channel's assets in connection
with its dissolution, liquidation or reorganization, 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 Clear Channel's insolvency, holders of
the junior subordinated debt securities may recover ratably less than Clear
Channel's senior creditors.
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
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outstanding on the date of execution of the junior subordinated indenture or
incurred or created after the execution
- Clear Channel's indebtedness for money borrowed by it, including purchase
money obligations with an original maturity in excess of one year, or
evidenced by securities, notes, bankers' acceptances or other corporate
debt securities or similar instruments issued by Clear Channel other than
the junior subordinated debt securities;
- obligations with respect to letters of credit;
- Clear Channel's indebtedness constituting a guarantee of indebtedness of
others of the type referred to in the preceding two bullet points; or
- renewals, extensions or refundings of any of the indebtedness referred to
in the preceding three bullet points 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, the indebtedness or the
renewal, extension or refunding thereof is not superior in right of
payment to the junior subordinated debt securities.
DESCRIPTION OF PREFERRED STOCK
Clear Channel's board of directors may issue up to 2,000,000 shares of
Class A preferred stock and up to 8,000,000 shares of Class B preferred stock.
Either class of preferred stock may be issued in one or more series, and the
rights, preferences, privileges and qualifications of the preferred stock may be
fixed by the board of directors without any further vote or action by the
shareholders. However, shares of Class B preferred stock will not be entitled to
more than one vote per share when the shares are voted as a class with common
shareholders. In addition, the board of directors and management of Clear
Channel have undertaken not to issue, without prior shareholder approval, Class
B preferred stock
- for any defensive or anti-takeover purpose;
- to implement any shareholders' rights plan; or
- with features intended to make any attempted acquisition of Clear Channel
more difficult or costly.
However, the restrictions do not apply to the 2,000,000 shares of Class A
preferred stock which are currently authorized.
The issuance of either class of preferred stock could decrease the amount
of earnings and assets available for distribution to common shareholders. In
addition, the issuance of either class of preferred stock could adversely affect
the rights and powers, including voting rights, of common shareholders and may
have the effect of delaying, deferring or preventing a change in control of
Clear Channel. No shares of either class 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
Clear Channel's board of directors has the authority to issue up to
600,000,000 shares of common stock. As of April 8, 1999, 266,070,115 shares of
common stock were outstanding. The board of directors has submitted a proposal
to the shareholders to approve an amendment to Clear Channel's Restated Articles
of Incorporation to increase the authorized number of shares of common stock
from 600,000,000 shares to 900,000,000 shares. Common shareholders are entitled
to one vote per share on all matters submitted to a vote of shareholders. In
addition common stockholders may
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receive dividends, if any, on a pro rata basis that may be declared from time to
time by the board of directors from legally available funds. However, the
payment of any dividends on shares of common stock would be subject to the
payment of any preferential dividends on any preferred stock that may be
outstanding. Upon liquidation, dissolution or winding up of Clear Channel,
common shareholders are entitled to share ratably in any assets available for
distribution to shareholders after payment of all Clear Channel's obligations
and all preferential distributions payable of the holders of any shares of
preferred stock then outstanding.
Common 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, Clear Channel and several of its shareholders at the time,
including L. Lowry Mays and B.J. McCombs, entered into a Buy-Sell 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. The Buy-Sell Agreement provides that in the event that
L. Lowry Mays, B.J. McCombs or their heirs, legal representatives, successors
and assigns desire to dispose of their shares, other than by disposition by will
or intestacy or through gifts to the party's spouse or children, the shares must
be offered for a period of 30 days to Clear Channel. Any shares not purchased by
Clear Channel must then be offered for a period of 30 days to the other parties
to the Buy-Sell Agreement. If all of the offered shares are not purchased by
Clear Channel or the other parties to the Buy-Sell Agreement, the party offering
his shares may sell them to a third party during the following 90-day period at
a price and on terms not more favorable than those offered to Clear Channel and
the other parties. In addition, L. Lowry Mays, B.J. McCombs or their heirs,
legal representatives, successors and assigns 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 sale that all parties to the Buy-Sell Agreement will be
offered the same price and terms for their shares. The Buy-Sell Agreement will
continue in effect following any offering under this prospectus and may preserve
the control of the present principal shareholders.
TEXAS BUSINESS COMBINATION LAW
Clear Channel is governed by the provisions of the Texas Business
Corporation Act. The act imposes a special voting requirement for the approval
of specific business combinations and related party transactions between public
corporations and affiliated stockholders unless the board of directors of the
corporation approves the transaction or the acquisition of shares by the
affiliated stockholder prior to the affiliate stockholders becoming an
affiliated stockholder. The act prohibits specific mergers, sales of assets,
reclassifications and other transactions between stockholders beneficially
owning 20% or more of the outstanding stock of a Texas public corporation for a
period of three years following the stockholder acquiring shares representing
20% or more of the corporation's voting power unless two-thirds of the
unaffiliated stockholders approve the transaction at a meeting held no earlier
than six months after the stockholder acquires that ownership. A vote of
stockholders is not necessary if the board of directors approves the transaction
or approves the purchase of shares by the affiliated stockholder before the
affiliated stockholder acquires beneficial ownership of 20% of the shares, or if
the affiliated stockholder was an affiliated stockholder before December 31,
1996, and continued as such through the date of the transaction.
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FOREIGN OWNERSHIP
As a consequence of the restrictions imposed by the Communications Act of
1934 on ownership of common stock by aliens, Clear Channel's bylaws were amended
effective December 31, 1983 to provide that
- not more than one-fifth of the shares outstanding will 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;
- Clear Channel will 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;
- no person who is an alien may be elected or serve as an officer or
director of Clear Channel; and
- if the stock records of Clear Channel at any time reflect one-fifth alien
ownership, no transfers of additional shares to aliens will be made and,
if it is found that any additional shares are in fact held by or for the
account of an alien, the shares will not be entitled to vote, to receive
dividends or to have any other rights.
An alien owning shares in excess of one-fifth of the total number of
outstanding shares will be required to transfer them to a United States citizen
or to Clear Channel. This restriction will be applicable to any shares of common
stock offered under this prospectus and to the issuance or transfer of the
shares after the date of this prospectus. Clear Channel's stock certificates may
bear a legend setting forth this restriction. Since the bylaws were amended, the
Communications Act has been revised to remove the limitations on alien officers
and directors.
DESCRIPTION OF WARRANTS
Clear Channel 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 the 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 Clear Channel 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 will act solely as an agent of Clear Channel 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.
GENERAL
If warrants are offered, the prospectus supplement will describe the terms
of the warrants, including the following:
- the offering price;
- the currency, currencies or currency units for which warrants may be
purchased;
- 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 the debt securities or junior subordinated debt securities
may be purchased upon such exercise;
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- the designation, number of shares and terms of the preferred stock
purchasable upon exercise of the preferred stock warrants and the price
at which the shares of preferred stock may be purchased upon such
exercise;
- the designation, number of shares and terms of the common stock
purchasable upon exercise of the common stock warrants and the price at
which the shares of common stock may be purchased upon such exercise;
- 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 debt
security, junior subordinated debt security or share of preferred stock
or common stock;
- 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;
- the date on which the right to exercise the warrants will commence and
the date on which the right will expire;
- whether the warrants will be issued in registered or bearer form;
- a discussion of the federal income tax, accounting and other special
considerations, procedures and limitations relating to the warrants; and
- 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 various
securities purchasable upon the 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 the exercise
or to enforce the covenants in the indenture or the junior subordinated
indenture or to receive payments of dividends, if any, on the preferred stock or
common stock purchasable upon the exercise or to exercise any applicable right
to vote. If Clear Channel maintains the ability to reduce the exercise price of
any stock warrant and the right is triggered, it will comply with the federal
securities laws, including Rule 13e-4 under the Exchange Act of 1934, to the
extent applicable.
EXERCISE OF WARRANTS
Each warrant will entitle the holder to purchase a principal amount of debt
securities or junior subordinated debt securities or a number of shares of
preferred stock or common stock at the exercise price as will in each case be
set forth in, or calculable from, the prospectus supplement relating to the
warrant. Warrants may be exercised at the times that are set forth in the
prospectus supplement relating to the warrants. After the close of business on
the date on which the warrant expires, or any later date to which Clear Channel
may extend the expiration date, unexercised warrants will become void.
Subject to any restrictions and additional requirements that may be set
forth in a prospectus supplement relating thereto, warrants may be exercised by
delivery to the warrant agent of the certificate evidencing the 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 the 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 the payment and the certificate
representing the warrants to be exercised, properly completed and duly executed
at the corporate trust
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office of the warrant agent or any other office indicated in the prospectus
supplement, Clear Channel 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 the exercise. If fewer than all of the
warrants represented by a 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 specific 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, Clear Channel 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. Clear Channel may, at its option,
reduce the exercise price at any time. No fractional shares will be issued upon
exercise of stock warrants, but Clear Channel will pay the cash value of any
fractional shares otherwise issuable. In case of any consolidation, merger, or
sale or conveyance of the property of Clear Channel as an entirety or
substantially as an entirety, the holder of each outstanding stock warrant will
have the right upon the exercise 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 the stock
warrants were exercisable immediately prior thereto.
NO RIGHTS AS SHAREHOLDERS
Holders of stock warrants will not be entitled, by virtue of being the
holders, to vote, to consent, to receive dividends, to receive notice as
shareholders with respect to any meeting of shareholders for the election of
Clear Channel's directors or any other matter, or to exercise any rights
whatsoever as its shareholders.
DESCRIPTION OF STOCK PURCHASE
CONTRACTS AND STOCK PURCHASE UNITS
Clear Channel may issue stock purchase contracts. Stock purchase contracts
are contracts obligating holders to purchase from Clear Channel, and Clear
Channel 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. The formulas may include anti-dilution provisions to
adjust the number of shares issuable under the stock purchase contracts upon
events that would otherwise dilute the interests of the holders. 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,
junior subordinated debt securities, debt obligations of the United States of
America or its agencies or instrumentalities, or preferred securities securing
the holders' obligations to purchase the common stock or the preferred stock
under the stock purchase contracts.
When stock purchase units include debt obligations of the United States of
America or its agencies or instrumentalities, the principal of the debt
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 unless the holder of the units settles its obligations under
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the stock purchase contracts early through the delivery of consideration to
Clear Channel or its agent in the manner discussed below.
When stock purchase units include junior subordinated debt securities or
preferred securities, the junior subordinated debt securities or preferred
securities will automatically be presented to the applicable Clear Channel Trust
for redemption at 100% of face or liquidation value and the Clear Channel Trust
will present junior subordinated debt securities in an equal principal amount to
Clear Channel for redemption at 100% of principal amount unless there is an
early settlement or the holder elects to pay the consideration specified in the
stock purchase contracts. Amounts received in respect of the redemption will
automatically be transferred to Clear Channel 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 Clear Channel to
make periodic payments to the holders of the stock purchase units or vice versa,
and the payments may be unsecured or refunded on some basis. The stock purchase
contracts may require holders to secure their obligations in a specified manner.
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 any form and calculated pursuant to any 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 the stock purchase contracts, subject
to adjustment in specific 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 debt obligations of the United States of
America or its agencies or instrumentalities. In the event of either an 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 Clear Channel's security
interest.
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
Each Clear Channel 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 trust under which each Clear Channel Trust
is formed will be replaced by an amended and restated declaration of trust,
which will authorize the regular trustees of the Clear Channel Trust to issue on
behalf of the Clear Channel Trust one series of preferred securities. Each
amended and restated declaration of trust will be qualified as an indenture
under the Trust Indenture Act. The preferred securities will have terms,
including distributions, redemption, voting, liquidation rights and other
preferred, deferred or other special rights or restrictions as will be set forth
in the related amended and restated declaration of trust or made part of the
declaration by the Trust Indenture Act. Reference is made to any prospectus
supplement relating to the preferred securities of a Clear Channel Trust for
specific terms, including
- the specific designation of the preferred securities;
- the number of preferred securities issued by the Clear Channel Trust;
- the annual distribution rate, or method of calculation of the rate, for
preferred securities issued by the Clear Channel Trust, the date or dates
upon which the distributions will be payable and the record date or dates
for the payment of the distributions;
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- whether distributions on preferred securities issued by the Clear Channel
Trust will be cumulative, and, in the case of preferred securities having
cumulative distribution rights, the date or dates or method of
determining the date or dates from which distributions on preferred
securities issued by the Clear Channel Trust will be cumulative;
- the amount or amounts which will be paid out of the assets of the Clear
Channel Trust to the holders of preferred securities of the Clear Channel
Trust upon voluntary or involuntary liquidation, dissolution, winding-up
or termination of the Clear Channel Trust;
- the obligation or right, if any, of the Clear Channel Trust to purchase
or redeem preferred securities issued by the Clear Channel 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 the Clear
Channel Trust will or may be purchased or redeemed, in whole or in part,
pursuant to an obligation or right;
- the voting rights, if any, of preferred securities issued by the Clear
Channel 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 Clear Channel Trusts, or of both, as a condition to specified
actions or amendments to the declaration of the Clear Channel Trust;
- 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 Clear Channel; and
- any other relevant rights, preferences, privileges, limitations or
restrictions of preferred securities issued by the Clear Channel Trust
consistent with the declaration of the Clear Channel Trust or with
applicable law.
All preferred securities offered hereby will be guaranteed by Clear Channel
as and to the extent set forth below under "Description of the Guarantees."
Federal income tax considerations applicable to any offering of preferred
securities will be described in the applicable prospectus supplement.
In connection with the issuance of preferred securities, each Clear Channel
Trust will issue one series of common securities. The amended and restated
declaration of each Clear Channel Trust will authorize the regular trustees of
the Clear Channel Trust to issue one series of common securities having terms
including distributions, redemption, voting, liquidation rights or restrictions
as set forth in the amended and restated declaration. The terms of the common
securities issued by a Clear Channel Trust will be substantially identical to
the terms of the preferred securities issued by the Clear Channel Trust. The
common securities will rank equally with the preferred securities and payments
on the common securities will be made on a pro rata basis with the preferred
securities. However, if an event of default under the amended and restated
declaration of trust occurs and is continuing, the rights of the holders of the
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 the preferred securities. Generally, the common securities issued by
a Clear Channel Trust will also carry the right to vote and to appoint, remove
or replace any of the trustees of the Clear Channel Trust. All the common
securities of a Clear Channel Trust will be owned by Clear Channel or its
subsidiary.
As long as payments of interest and other payments are made when due on the
junior subordinated debt securities, the payments will be sufficient to cover
distributions and other payments due on the preferred securities primarily
because 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 the interest rate and
interest and other payment
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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 amended and restated declaration
of any Clear Channel Trust occurs and is continuing, then the holders of
preferred securities of the Clear Channel Trust would rely on the enforcement by
the property trustee of its rights as a holder of the junior subordinated debt
securities deposited in the Clear Channel Trust against Clear Channel. In
addition, the holders of a majority in liquidation amount of the 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 power conferred upon the property trustee under the
amended and restated declaration of trust, including the right to direct the
property trustee to exercise the remedies available to it as a holder of the
junior subordinated debt securities. If the property trustee fails to enforce
its rights under the junior subordinated debt securities deposited in the Clear
Channel Trust, any holder of the preferred securities may, to the extent
permitted by applicable law, after a period of 60 days has elapsed from the
holder's written request, institute a legal proceeding against Clear Channel to
enforce the property trustee's rights under the 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 amended and restated declaration of any Clear Channel Trust occurs and is
continuing and the event is attributable to the failure of Clear Channel to pay
interest or principal on the junior subordinated debt securities on the date the
interest or principal is otherwise payable, or in the case of redemption, on the
redemption date, then a holder of preferred securities of the Clear Channel
Trust may also directly institute a proceeding for enforcement of payment to the
holder of the principal of or interest on the junior subordinated debt
securities having a principal amount equal to the aggregate liquidation amount
of the preferred securities held by the holder on or after the respective due
date specified in the junior subordinated debt securities without first
directing the property trustee to enforce the terms of the junior subordinated
debt securities or instituting a legal proceeding against Clear Channel to
enforce the property trustee's rights under the junior subordinated debt
securities. In connection with a direct action, the rights of Clear Channel will
be substituted for the rights of the holder of the preferred securities under
the amended and restated declaration of trust to the extent of any payment made
by Clear Channel to the holder of the preferred securities in a direct action.
The holders of preferred securities of a Clear Channel 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.
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 may provide customary commercial
banking services to Clear Channel and its subsidiaries and participate in
various financing agreements of Clear Channel in the ordinary course of their
business. Initially, the property trustee is The Bank of New York, who currently
serves as Clear Channel's transfer agent and registrar for the common stock and
is a lender to Clear Channel under its credit facility.
DESCRIPTION OF GUARANTEES
Set forth below is a summary of information concerning the guarantees that
will be executed and delivered from time to time by Clear Channel for the
benefit of the holders of preferred securities of a Clear Channel 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 guarantee trustee with respect to the guarantee, for the benefit of holders
of the preferred securities of the applicable Clear Channel Trust. The terms of
each guarantee will be set forth in the guarantee or made part of the guarantee
by the Trust Indenture Act.
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<PAGE> 118
GENERAL
Pursuant to each guarantee, Clear Channel will irrevocably and
unconditionally agree, to the extent set forth in the guarantee, to pay in full,
to the holders of the preferred securities issued by the applicable Clear
Channel Trust, the guarantee payments, to the extent not paid by the Clear
Channel Trust, regardless of any defense, right of set-off or counterclaim that
the Clear Channel Trust may have or assert. The following distributions and
other payments with respect to preferred securities issued by a Clear Channel
Trust to the extent not made or paid by the Clear Channel Trust, will be subject
to the guarantee without duplication:
- any accrued and unpaid distributions on the preferred securities, but
only to the extent that in each case Clear Channel has made a payment to
the property trustee of interest on the junior subordinated debt
securities;
- the redemption price, including all accrued and unpaid distributions to
the date of redemption, with respect to any preferred securities called
for redemption by the Clear Channel Trust, but only to the extent that in
each case Clear Channel has made a payment to the property trustee of
interest or principal on the junior subordinated debt securities
deposited in the Clear Channel Trust as trust assets; and
- upon a voluntary or involuntary liquidation, dissolution, winding-up or
termination of the Clear Channel Trust, other than in connection with the
distribution of related junior subordinated debt securities to the
holders of the preferred securities or the redemption of all the
preferred securities upon the maturity or redemption of the junior
subordinated debt securities, the lesser of
(1) the aggregate of the liquidation amount and all accrued and unpaid
distributions on the preferred securities to the date of payment, to
the extent the Clear Channel Trust has funds available, and
(2) the amount of assets of the Clear Channel Trust remaining available
for distribution to holders of the preferred securities upon
liquidation of the Clear Channel Trust.
Clear Channel's obligation to make a guarantee payment may be satisfied by
direct payment of the required amounts by Clear Channel to the holders of the
applicable preferred securities or by causing the applicable Clear Channel Trust
to pay the amounts to the 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 the preferred securities only if and to the
extent that Clear Channel has made a payment to the property trustee of interest
or principal on the junior subordinated debt securities deposited in the
applicable Clear Channel Trust as trust assets. If Clear Channel does not make
interest or principal payments on the junior subordinated debt securities
deposited in the applicable Clear Channel Trust as trust assets, the property
trustee will not make distributions on the preferred securities of the Clear
Channel Trust and the Clear Channel Trust will not have the necessary funds
available to make these payments.
Clear Channel's obligations under the declaration for each Clear Channel
Trust, the guarantee issued with respect to preferred securities issued by the
Clear Channel Trust, the junior subordinated debt securities purchased by the
Clear Channel Trust and the junior subordinated indenture in the aggregate will
provide a full and unconditional guarantee on a subordinated basis by Clear
Channel of payments due on the preferred securities issued by the Clear Channel
Trust.
CERTAIN COVENANTS OF CLEAR CHANNEL
In each guarantee, Clear Channel will covenant that, so long as any
preferred securities issued by the applicable Clear Channel Trust remain
outstanding, Clear Channel will not declare or pay any
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<PAGE> 119
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 to these amounts, if at the time
- Clear Channel will be in default with respect to its guarantee payments
or other payment obligations under the guarantee;
- any event of default under the related amended and restated declaration
of trust has occurred; or
- in the event that junior subordinated debt securities are issued to the
applicable Clear Channel Trust in connection with the issuance of
preferred securities by the Clear Channel Trust, Clear Channel has given
notice of its election to defer payments of interest on the junior
subordinated debt securities by extending the interest payment period as
provided in the terms of the junior subordinated debt securities and the
period, or any extension thereof, is continuing.
However, the foregoing restrictions will not apply to
- dividends, redemptions, purchases, acquisitions, distributions or
payments made by Clear Channel by way of issuance of shares of its
capital stock;
- 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 Clear Channel under a shareholder rights
plan or the redemption or repurchase of any right distributed pursuant to
a shareholder rights plan;
- payments of accrued dividends by Clear Channel upon the redemption,
exchange or conversion of any preferred stock as may be outstanding from
time to time in accordance with the terms of the preferred stock;
- cash payments made by Clear Channel 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
the preferred stock;
- payments under the guarantees; or
- purchases of common stock related to the issuance of common stock or
rights under any of Clear Channel'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 Clear Channel Trust
remain outstanding, Clear Channel has agreed to remain the sole direct or
indirect owner of all the outstanding common securities issued by the Clear
Channel Trust and not to cause or permit the common securities to be transferred
except to the extent permitted by the declaration of the Clear Channel Trust,
provided that any permitted successor of Clear Channel under the junior
subordinated indenture may succeed to Clear Channel's ownership of the common
securities, and to use reasonable efforts to cause the Clear Channel 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.
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 Clear Channel Trust. The manner of
obtaining any such approval of holders of the preferred securities will be set
forth in an accompanying
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<PAGE> 120
prospectus supplement. All guarantees and agreements contained in a guarantee
will bind the successors, assignees, receivers, trustees and representatives of
Clear Channel and will inure to the benefit of the holders of the preferred
securities of the applicable Clear Channel Trust then outstanding. Except in
connection with a consolidation, merger, conveyance, or transfer of assets
involving Clear Channel that is permitted under the junior subordinated
indenture, Clear Channel 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 Clear Channel Trust upon full
payment of the redemption price of all preferred securities of the Clear Channel
Trust, or upon distribution of the junior subordinated debt securities to the
holders of the preferred securities of the Clear Channel Trust in exchange for
all the preferred securities issued by the Clear Channel Trust, or upon full
payment of the amounts payable upon liquidation of the Clear Channel Trust.
Nevertheless, 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 Clear Channel Trust must restore payment of
any sums paid under the preferred securities or the guarantee.
STATUS OF THE GUARANTEES
Clear Channel's obligations to make the guarantee payments to the extent
set forth in the applicable guarantee will constitute an unsecured obligation of
Clear Channel and will rank subordinate and junior in right of payment to all
other indebtedness, liabilities and obligations of Clear Channel and any
guarantees, endorsements or other contingent obligations of Clear Channel,
except those made on an equal basis or subordinate by their terms, and senior to
all capital stock issued by Clear Channel and to any guarantee entered into by
Clear Channel in respect of any of its capital stock. Clear Channel's
obligations under each guarantee will rank equally with each other guarantee.
Because Clear Channel is a holding company, Clear Channel's obligations under
each guarantee are also effectively subordinated to all existing and future
liabilities, including trade payables, of Clear Channel's subsidiaries, except
to the extent that Clear Channel is a creditor of the subsidiaries recognized as
such. Each amended and restated declaration of trust will provide that each
holder of preferred securities issued by the applicable Clear Channel Trust, by
acceptance thereof, agrees to the subordination provisions and other terms of
the related guarantee.
The guaranteed party may institute a legal proceeding directly against
Clear Channel to enforce its rights under a 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 Clear Channel Trust. The
guarantee trustee will enforce the guarantee on behalf of the holders of the
preferred securities. The holders of not less than a majority in aggregate
liquidation amount of the preferred securities issued by the applicable Clear
Channel 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 Clear Channel Trust may institute a legal
proceeding directly against Clear Channel to enforce its rights under the
guarantee, without first instituting a legal proceeding against the applicable
Clear Channel Trust, or any other person or entity. However, if Clear Channel
has failed to make a guarantee payment, a holder of preferred securities may
directly institute a proceeding against Clear Channel for enforcement of the
holder's right to receive payment under the guarantee. Clear Channel waives any
right or remedy to require that any action be brought first against a Clear
Channel Trust or any other person or entity before proceeding directly against
Clear Channel.
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MISCELLANEOUS
Clear Channel will be required to provide annually to the guarantee trustee
a statement as to the performance by Clear Channel of its obligations under each
guarantee and as to any default in the performance. Clear Channel is required to
file annually with the guarantee trustee an officer's certificate as to Clear
Channel'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 those duties as are specifically set forth in the applicable
guarantee and, after default with respect to a guarantee, will 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 that 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
Clear Channel and its affiliates may each be considered a "party in
interest" within the meaning of the Employee Retirement Income Security Act or a
"disqualified person" within the meaning of Section 4975 of the Internal Revenue
Code with respect to many employee benefit plans that are subject to ERISA. The
purchase of any securities offered by this prospectus by a plan that is subject
to the fiduciary responsibility provisions of ERISA or the prohibited
transaction provisions of Section 4975 of the Internal Revenue Code, including
individual retirement arrangements and other plans described in Section
4975(e)(1), and with respect to which Clear Channel or any affiliate of Clear
Channel is a service provider, a party in interest or a disqualified person, may
constitute or result in a prohibited transaction under ERISA or Section 4975 of
the Internal Revenue Code, unless the securities offered by this prospectus are
acquired pursuant to and in accordance with an applicable exemption. Any pension
or other employee benefit plan proposing to acquire any securities offered by
this prospectus should consult with its counsel.
PLAN OF DISTRIBUTION
Clear Channel or the Clear Channel Trusts may sell the securities offered
by this prospectus
- through underwriters or dealers;
- through agents;
- directly to purchasers; or
- through a combination of any such methods of sale.
Any underwriter, dealer or agent may be deemed to be an underwriter within
the meaning of the Securities Act of 1933. The prospectus supplement relating to
the securities offered by this prospectus will set forth
- their offering terms, including the name or names of any underwriters,
dealers or agents;
- the purchase price of the securities offered by this prospectus;
- the proceeds to Clear Channel or the Clear Channel Trusts from the sale;
- any underwriting discounts, commissions and other items constituting
compensation to underwriters, dealers or agents;
- any initial public offering price;
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<PAGE> 122
- any discounts or concessions allowed or reallowed or paid by underwriters
or dealers to other dealers; and
- any securities exchanges on which the securities offered by this
prospectus may be listed.
If underwriters or dealers are used in the sale, the securities offered by
this prospectus 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;
- at market prices prevailing at the time of sale;
- at prices related to the prevailing market prices; or
- at negotiated prices.
The securities offered by this prospectus may be offered to the public
either through underwriting syndicates represented by one or more managing
underwriters or directly by one or more of those firms. Unless otherwise set
forth in the prospectus supplement, the obligations of underwriters or dealers
to purchase the securities offered by this prospectus will be subject to
specific conditions precedent and the underwriters or dealers will be obligated
to purchase all the securities offered by this prospectus 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.
The securities offered by this prospectus may be sold directly by Clear
Channel or the Clear Channel Trusts or through agents designated by Clear
Channel or the Clear Channel Trusts. Any agent involved in the offer or sale of
the securities offered by this prospectus in respect of which this prospectus is
delivered will be named, and any commissions payable by Clear Channel or the
Clear Channel Trusts to the agent will be set forth, in the prospectus
supplement. Unless otherwise indicated in the prospectus supplement, any agent
will be acting on a best efforts basis for the period of its appointment.
If so indicated in the prospectus supplement, Clear Channel or the Clear
Channel Trusts will authorize underwriters, dealers or agents to solicit offers
by specific institutions to purchase securities offered by this prospectus from
Clear Channel or the Clear Channel 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. The 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
the contracts. The underwriters and other persons soliciting the contracts will
have no responsibility for the validity or performance of any of the contracts.
Underwriters, dealers and agents may be entitled under agreements entered
into with Clear Channel or the Clear Channel Trusts to indemnification by Clear
Channel or the Clear Channel Trusts against civil liabilities, including
liabilities under the Securities Act, or to contribution by Clear Channel or the
Clear Channel Trusts to payments they may be required to make in respect
thereof. The terms and conditions of the 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, Clear
Channel or the Clear Channel Trusts in the ordinary course of business.
Each series of securities offered by this prospectus may be a new issue of
securities with no established trading market. Any underwriters to whom
securities offered by this prospectus are sold by Clear Channel or the Clear
Channel Trusts for public offering and sale may make a market in the securities
offered by this prospectus, but the underwriters will not be obligated to do so
and may
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<PAGE> 123
discontinue any market making at any time without notice. No assurance can be
given as to the liquidity of the trading market for any securities offered by
this prospectus.
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 those transactions. These transactions, if commenced, may be
discontinued at any time.
LEGAL OPINIONS
The validity of the securities will be passed upon for Clear Channel by its
special counsel, Akin, Gump, Strauss, Hauer & Feld, L.L.P., San Antonio, Texas.
However, matters of Delaware law relating to the validity of the preferred
securities will be passed upon for Clear Channel and the Clear Channel Trusts by
Morris, Nichols, Arsht & Tunnell, Wilmington, Delaware, special Delaware counsel
to Clear Channel and the Clear Channel Trusts. The validity of the 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 Clear Channel and, as of April 8, 1999, owned
approximately 131,000 shares of common stock, including presently exercisable
options to acquire approximately 114,500 shares.
EXPERTS
The consolidated financial statements of Clear Channel at December 31, 1998
and 1997, and for each of the three years in the period ended December 31, 1998,
and the financial statement schedule included in Clear Channel's Annual Report
on Form 10-K for the year ended December 31, 1998, have been audited by Ernst &
Young LLP, independent auditors, as set forth in their reports thereon
incorporated by reference elsewhere herein which are based in part on the
reports of KPMG, independent auditors, as to the year ended December 31, 1996,
and KPMG LLP, independent auditors, as to the two year ended December 31, 1998.
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 Clear Channel's Annual Report on Form 10-K for
the fiscal year ended December 31, 1998, have been audited by KPMG, independent
auditors, as set forth in their report dated March 4, 1997 included in Clear
Channel'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 years ended December 31, 1998 and 1997, (not
separately presented in Clear Channel's Annual Report on Form 10-K for the
fiscal year ended December 31, 1998) are incorporated by reference herein in
reliance upon the report of KPMG LLP, independent certified public accountants,
and upon the authority of that firm as experts in accounting and auditing.
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The consolidated financial statements incorporated in this Registration
Statement 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, included in Clear Channel's Current
Report on Form 8-K dated March 12, 1998, as amended by Form 8-K/A filed on March
23, 1998 and Form 8-K/A filed on February 23, 1999, have been so incorporated in
reliance on the report of PricewaterhouseCoopers 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 Joint
Proxy Statement/Prospectus and elsewhere in the Registration Statement are
included in Clear Channel'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 in reliance upon the authority of said firm as experts in
giving said reports.
The combined financial statements of Eller Investment Company, Inc. as of
and for the year ended December 31, 1994, incorporated by reference in this
prospectus and elsewhere in the registration statement are included in Clear
Channel'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 in reliance
upon the authority of said firm as experts in giving said reports.
The consolidated financial statements of More Group Plc. as of December 31,
1997 and for the year ended December 31, 1997, included in Clear Channel's
Current Report on Form 8-K/A dated September 4, 1998, as amended by Form 8-K/A
filed on January 14, 1999, and Form 8-K/A filed on February 23, 1999, have been
audited by Price Waterhouse Chartered Accountants and Registered Auditors,
London, England and are incorporated by reference herein in reliance upon the
report of said firm as experts in auditing and accounting.
The consolidated balance sheets of Jacor Communications, Inc. and its
Subsidiaries as of December 31, 1998 and 1997 and the consolidated statements of
operations and comprehensive income, shareholders' equity, and cash flows for
each of the three years in the period ended December 31, 1998, have been
incorporated herein in reliance on the reports of PricewaterhouseCoopers LLP,
independent accountants, given on the authority of that firm as experts in
accounting and auditing.
The consolidated balance sheets of Jacor Communications, Inc. and its
Subsidiaries as of December 31, 1997 and 1996 and the consolidated statements of
operations, shareholders' equity, and cash flows for each of the three years in
the period ended December 31, 1997, have been incorporated herein in reliance on
the reports of PricewaterhouseCoopers LLP, independent accountants, given on the
authority of that firm as experts in accounting and auditing.
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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 US 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 TO THE DATE HEREOF.
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
PROSPECTUS SUPPLEMENT
Forward Looking Statements................ S-2
Summary................................... S-3
Risk Factors.............................. S-11
Use of Proceeds........................... S-19
Common Stock Price Range and Dividends.... S-20
Capitalization............................ S-21
The AMFM Merger........................... S-22
Business.................................. S-30
Description of Convertible Notes.......... S-38
Certain Federal Income Tax
Considerations.......................... S-46
Underwriting.............................. S-51
Available Information..................... S-53
Experts................................... S-53
Legal Opinions............................ S-55
Unaudited Pro Forma Combined Condensed
Financial Statements.................... P-1
PROSPECTUS
Where You Can Find More Information....... 2
About This Prospectus..................... 3
Clear Channel Communications, Inc......... 3
Recent Developments....................... 4
The Clear Channel Trusts.................. 4
Ratio of Earnings to Combined Fixed
Charges and Preferred Stock Dividends... 5
Use of Proceeds........................... 6
Holding Company Structure................. 6
General Description of Securities and Risk
Factors................................. 6
Description of Senior and Subordinated
Debt Securities......................... 6
Description of Junior Subordinated Debt
Securities.............................. 18
Description of Preferred Stock............ 28
Description of Common Stock............... 28
Description of Warrants................... 30
Description of Stock Purchase Contracts
and Stock Purchase Units................ 32
Description of Preferred Securities....... 33
Description of Guarantees................. 35
ERISA Matters............................. 39
Plan of Distribution...................... 39
Legal Opinions............................ 41
Experts................................... 41
</TABLE>
[CLEAR CHANNEL LOGO]
CLEAR CHANNEL
COMMUNICATIONS, INC.
$900,000,000
1.5% SENIOR CONVERTIBLE NOTES DUE 2002
DEUTSCHE BANC ALEX. BROWN
SALOMON SMITH BARNEY
BANC OF AMERICA SECURITIES LLC
CREDIT SUISSE FIRST BOSTON
GOLDMAN, SACHS & CO.
MERRILL LYNCH & CO.
MORGAN STANLEY DEAN WITTER
PAINEWEBBER INCORPORATED
SCHRODER & CO. INC.
BANCBOSTON ROBERTSON STEPHENS
FIRST UNION SECURITIES INC.
ING BARINGS
THOMAS WEISEL PARTNERS LLC
Prospectus Supplement
November 19, 1999
(including Prospectus
dated April 26, 1999)
