Reuters Breaking News: Clear Channel sets meeting for LBO loan sale

Clear Channel Communications Inc will begin selling a portion of its $10.7 billion term loan B to loan investors Tuesday morning, a source close to the deal told Reuters Loan Pricing Corp.

The term loan tranche is one part of a larger $19.1 billion financing that backs the company’s recently renegotiated $17.9 billion leveraged buyout by Bain Capital Partners and Thomas H. Lee Partners.

The loan sale will be led by a Citigroup-led underwriting team. The banks are expected to offer $2 billion to $3 billion of the term loan tranche initially and are expected to only sell more if there is sufficient demand for the deal.

Clear Channel Communications’ revised LBO funding plan consists of $19.1 billion in debt financing and $2.4 billion in equity financing, according to a recent filing with the Securities and Exchange Commission.

The company will raise $15.771 billion through a senior secured bank loan, $1 billion in a receivables-based credit facility and $2.31 billion in senior notes.

The bank loan will consist of a $2 billion, six-year revolver, a $1.115 billion, six-year term loan A tranche, a $10.7 billion, 7.5-year term loan B tranche, a $706 million, 7.5-year term loan C tranche and a $1.25 billion 7.5-year, delayed-draw term loan tranche.

The term loan A and revolving tranches are priced at 340 basis points over the London interbank offered rate, according to the filing, while the term loan B, term loan C and the delayed-draw tranche are priced at 365 basis points over Libor.

Clear Channel also will issue a $1 billion receivables-based credit facility subject to a borrowing base, priced at 240 basis points over Libor and carrying a 37.5 basis-point commitment fee.

In addition, Clear Channel will raise $980 million in 10.75 percent senior cash pay notes due 2016 and $1.33 billion in 11-11.75 percent senior toggle notes due 2016.

The equity contribution from the sponsors on this deal is $2.4 billion.

The bank syndicate backing the company’s revised LBO has fully funded the debt financing in an escrow account. Bank of New York serves as the escrow agent.

Under the terms of the amended merger agreement, Clear Channel shareholders will receive $36 in cash or stock for each share they own.

The bank syndicate consists of Citigroup, Deutsche Bank, Morgan Stanley, Credit Suisse, Royal Bank of Scotland and Wachovia Securities.

(Reporting by Faris Khan; editing by Dena Aubin)