As part of those discussions, one topic being debated is a pre-packaged bankruptcy, one source said. A second person familiar with the matter stressed the talks are at an early stage. Both sources said the senior lenders might be interested in trading debt for assets, though such talks have not entered a serious stage, one of the sources said.Some additional insight from the Post:
What Clear Channel has in its favor is that it owes senior lenders $16 billion of its $18 billion in long-term debt, and for the most part the senior lenders may not be interested in forcing a bankruptcy, said two sources close to the situation.The theme of too big to fail seems to be quite a thorny issue these days. However, GSO owner Blackstone is definitely sweating the rapidly increasing cash burn at CCU: by some estimate the company, which has $1.6 billion in annual interest expense and about $1.2 in cash flow, which together with its cash hoard of $1.6 billion will last CCU about 18 months. As the Nortel situation demonstrated, companies will likely not wait until the last moment before filing due to the uncertainty of procuring DIPs on good (or any) terms, especially once the credit market turns sour again. As such, it will not be surprising to see a major out of court debt-for-equity/assets exchange in the coming months.
A significant number of the lenders, including GSO Capital, bought debt in Clear Channel from underwriters, who used leverage to help reduce their exposure at a time when the credit markets were seizing up.
The only real loser? Bain and Tommy Lee, who sued the bank syndicate to let them complete the deal. Whoever said integrity pays... Sphere: Related Content Print this post