Filed Pursuant to Rule 424(b)(5)
Registration No. 333-76942
PROSPECTUS SUPPLEMENT
NOVEMBER 5, 2003
(To Prospectus dated April 4, 2002)
$250,000,000
(CLEAR CHANNEL LOGO)
CLEAR CHANNEL COMMUNICATIONS, INC.
3.125% SENIOR NOTES DUE 2007
---------------------
We will pay interest on the notes on February 1 and August 1 of each year,
beginning August 1, 2004. The notes will mature on February 1, 2007.
The notes will be unsecured obligations and will rank equally with our other
unsecured senior indebtedness from time to time outstanding. The notes will be
issued only in denominations of $1,000 and in integral multiples of $1,000.
SEE "RISK FACTORS" BEGINNING ON PAGE S-4 FOR A DISCUSSION OF CERTAIN RISKS YOU
SHOULD CONSIDER IN CONNECTION WITH INVESTING IN THE NOTES.
---------------------
PER NOTE TOTAL
-------- ------------
Price to Public(1).......................................... 99.874% $249,685,000
Underwriting Discount....................................... 0.121% $ 302,500
Proceeds, before expenses, to Clear Channel................. 99.753% $249,382,500
---------------
(1) Plus accrued interest, if any, from November 14, 2003, if settlement occurs
after that date.
The notes will not be listed on any securities exchange. Currently, there is no
active public market for the notes.
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities or determined if this
prospectus supplement or the accompanying prospectus is truthful or complete.
Any representation to the contrary is a criminal offense.
The underwriter expects to deliver the notes in book-entry form only through the
facilities of The Depository Trust Company for the accounts of its participants,
including Euroclear or Clearstream, on or about November 14, 2003.
---------------------
BANC OF AMERICA SECURITIES LLC
TABLE OF CONTENTS
PROSPECTUS SUPPLEMENT
PAGE
----
Cautionary Statement Regarding Forward-Looking Statements... S-3
Risk Factors................................................ S-4
Business.................................................... S-11
Ratio of Earnings to Fixed Charges.......................... S-13
Use of Proceeds............................................. S-13
Description of the Notes.................................... S-14
Certain U.S. Federal Income Tax Consequences................ S-17
Underwriting................................................ S-20
Where You Can Find More Information......................... S-21
Experts..................................................... S-21
Legal Opinions.............................................. S-21
PROSPECTUS
About This Prospectus....................................... 3
Clear Channel Communications, Inc........................... 3
Recent Developments......................................... 5
The Clear Channel Trusts.................................... 5
Ratio of Earnings to Combined Fixed Charges and Preferred
Stock Dividends........................................... 6
Use of Proceeds............................................. 6
Holding Company Structure................................... 7
General Description of Securities and Risk Factors.......... 7
Description of Senior and Subordinated Debt Securities...... 7
Description of Junior Subordinated Debt Securities.......... 18
Description of Preferred Stock.............................. 27
Description of Common Stock................................. 27
Description of Warrants..................................... 29
Description of Stock Purchase Contracts and Stock Purchase
Units..................................................... 31
Description of Preferred Securities......................... 32
Description of Guarantees................................... 34
ERISA Matters............................................... 37
Plan of Distribution........................................ 37
Legal Opinions.............................................. 39
Experts..................................................... 39
Where You Can Find More Information......................... 39
S-2
You should rely only on the information contained in this prospectus
supplement and the accompanying prospectus. We have not, and the underwriter has
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 underwriter is 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.
References to "Clear Channel," "we," "us" and "our" in this prospectus
supplement and the accompanying prospectus are to Clear Channel Communications,
Inc. and its consolidated subsidiaries.
---------------------
CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS
This prospectus supplement contains 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 United States and in
other countries in which we currently do business;
- the impact of the geopolitical environment;
- the effect of leverage on our financial position and earnings;
- our ability to integrate the operations of recently acquired companies;
- shifts in population and other demographics;
- industry conditions, including competition;
- fluctuations in operating costs;
- technological changes and innovations;
- changes in labor conditions;
- fluctuations in exchange rates and currency values;
- capital expenditure requirements;
- litigation settlements;
- legislative or regulatory requirements;
- interest rates;
- taxes;
- access to capital markets; and
- additional risks referenced in this prospectus supplement, the documents
incorporated by reference herein and our other filings with the
Securities and Exchange Commission ("SEC").
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 document might not occur as currently
contemplated.
S-3
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 accompanying prospectus and in
the documents incorporated by reference before deciding whether to purchase our
securities.
WE HAVE A LARGE AMOUNT OF INDEBTEDNESS
We currently use a significant portion of our operating income for debt
service. Our leverage could make us vulnerable to an increase in interest rates
or a downturn in the operating performance of our businesses or a decline in
general economic conditions. At September 30, 2003, we had debt outstanding of
$7.3 billion and shareholders' equity of $15.3 billion. We may continue to
borrow funds to finance acquisitions of radio broadcasting, outdoor advertising
and live entertainment properties, as well as for other purposes. Our debt
obligations could increase substantially because of the debt levels of companies
that we may acquire in the future. As of November 4, 2003, we were permitted to
borrow up to $1.2 billion under our multi-currency credit facility at a floating
rate, which at November 4, 2003 was equal to the London InterBank Offered Rate
("LIBOR") plus 0.625%. As of November 4, 2003, we had $1.1 billion in borrowings
outstanding under our reducing revolving credit facility and $131.6 million
under our multi-currency facility.
Such a large amount of indebtedness could have negative consequences for
us, including without limitation:
- 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 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.
OUR BUSINESS IS DEPENDENT UPON THE PERFORMANCE OF KEY EMPLOYEES, ON-AIR TALENT
AND PROGRAM HOSTS
Our business is dependent upon the performance of certain key employees. 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 our interests
in those relationships, we can give no assurance that all or any of these key
employees will remain with us or will retain their audiences. Competition for
these individuals is intense and many of our key employees are at-will employees
who are under no legal obligation to remain with us. Our competitors may choose
to extend offers to any of these individuals on terms which we may be unwilling
to meet. In addition, any or all of our key employees may decide to leave for a
variety of personal or other reasons beyond our control. Furthermore, the
popularity and audience loyalty of our key on-air talent and program hosts is
highly sensitive to rapidly changing public tastes. A loss of such popularity or
audience loyalty is beyond our control and could limit our ability to generate
revenues.
DOING BUSINESS IN FOREIGN COUNTRIES CREATES CERTAIN RISKS NOT FOUND IN DOING
BUSINESS IN THE UNITED STATES
Doing business in foreign countries carries with it certain risks that are
not found in doing business in the United States. We currently derive a portion
of our revenues from international radio broadcasting, outdoor advertising and
live entertainment operations in countries around the world and a key element of
our business
S-4
strategy is to expand our international operations. The risks of doing business
in foreign countries that could result in losses against which we are not
insured include:
- exposure to local economic conditions;
- 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;
- investment restrictions or requirements;
- expropriations of property;
- the potential instability of foreign governments;
- the risk of insurrections;
- risks of renegotiation or modification of existing agreements with
governmental authorities;
- foreign exchange restrictions;
- withholding and other taxes on remittances and other payments by
subsidiaries; 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.
We currently maintain no derivative instruments to reduce the exposure to
translation or transaction risk.
EXTENSIVE GOVERNMENT REGULATION MAY LIMIT OUR BROADCASTING OPERATIONS
The federal government extensively regulates the domestic broadcasting
industry, and any changes in the current regulatory scheme could significantly
affect us. Our broadcasting businesses depend upon maintaining broadcasting
licenses issued by the Federal Communications Commission ("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
resulting in the loss of one or more of our broadcasting licenses.
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 make it impossible for us to complete potential
acquisitions or require us to divest stations we have already acquired. Most
significantly, in June 2003 the FCC adopted a decision comprehensively modifying
its media ownership rules. Among other changes, the modified rules would
establish a new methodology for defining local radio markets and counting
stations within those markets, limit our ability to transfer intact combinations
of stations that did not comply with the new rules, and require us to terminate
within two years certain of our agreements whereby we provide programming to or
sell advertising on radio stations we do not own. The modified rules would also
allow increased ownership of TV stations at the local and national level and
permit additional local cross-ownership of daily newspapers, television stations
and radio stations. A federal court, however, has issued a stay preventing the
implementation of the modified media ownership rules and is currently
considering appeals of those rules by numerous parties, including us. The
modified rules are also subject to various petitions for reconsideration before
the FCC and possible actions by Congress. We cannot predict the ultimate outcome
of
S-5
the media ownership proceeding or its effect on our ability to acquire broadcast
stations in the future, to complete acquisitions that we have agreed to make, to
continue to own and freely transfer groups of stations that we have already
acquired, or to continue our existing agreements to provide programming to or
sell advertising on stations we do not own.
Moreover, the FCC's existing rules 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 rules could require us to divest radio stations we currently own in
markets or areas where we also own television stations. Our acquisition of
television stations in five local markets or areas in our merger with The
Ackerley Group resulted in our owning more radio stations in these markets or
areas than is permitted by these rules. The FCC has given us a temporary period
of time to divest the necessary radio and/or television stations to come into
compliance with the rules.
Other changes in governmental regulations and policies may have a material
impact on us. For example, we currently provide programming to several
television stations we do not own. These programming arrangements are made
through contracts known as local marketing agreements. The FCC's rules and
policies regarding television local marketing agreements 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 adopted rules
which under certain circumstances subject previously nonattributable debt and
equity interests in communications media to the FCC's multiple ownership
restrictions. These rules may limit our ability to expand our media holdings.
ANTITRUST REGULATIONS MAY LIMIT FUTURE ACQUISITIONS
Additional acquisitions by us of radio and television stations, outdoor
advertising properties and live entertainment operations or entities may require
antitrust review by federal antitrust agencies and may require review by foreign
antitrust agencies under the antitrust laws of foreign jurisdictions. We can
give no assurances that the Department of Justice ("DOJ") or the Federal Trade
Commission or foreign antitrust agencies will not seek to bar us from acquiring
additional radio or television stations or outdoor advertising or entertainment
properties in any market where we already have a significant position. Following
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, HEALTH, SAFETY AND LAND USE LAWS AND REGULATIONS MAY LIMIT OR
RESTRICT SOME OF OUR OPERATIONS
As the owner or operator of various real properties and facilities,
especially in our outdoor advertising and live entertainment venue operations,
we must comply with various foreign, federal, state and local environmental,
health, safety and land use laws and regulations. We and our properties are
subject to such laws and regulations relating to the use, storage, disposal,
emission and release of hazardous and non-hazardous substances and employee
health and safety, as well as zoning and noise level restrictions which may
affect, among other things, the hours of operations of our live entertainment
venues. Historically, we have not incurred significant expenditures to comply
with these laws. However, additional laws, which may be passed in the future, or
a finding of a violation of or liability under existing laws, could require us
to make significant expenditures and otherwise limit or restrict some of our
operations.
GOVERNMENT REGULATION OF OUTDOOR ADVERTISING MAY RESTRICT OUR OUTDOOR
ADVERTISING OPERATIONS
The outdoor advertising industry that operates domestically is subject to
extensive governmental regulation at the federal, state and local level. These
regulations include restrictions on the construction,
S-6
repair, upgrading, height, size and location of and, in some instances, content
of advertising copy being displayed on outdoor advertising structures. In
addition, the outdoor advertising industry that operates in foreign countries is
subject to certain foreign governmental regulation. Compliance with existing and
future regulations could have a significant financial impact.
Federal law, principally the Highway Beautification Act of 1965, requires,
as a condition to federal highway assistance, states to implement legislation to
restrict billboards located within 660 feet of, or visible from, highways except
in commercial or industrial areas and requires certain additional size, spacing
and other limitations. Every state has implemented laws and regulations in
compliance with the Highway Beautification Act, including the removal of any
illegal signs on these highways at the owner's expense and without any
compensation. Federal law does not require removal of existing lawful
billboards, but does require the payment of just compensation if a state or
political subdivision compels the removal of a lawful billboard along a
federally aided primary or interstate highway. State governments have purchased
and removed legal nonconforming billboards in the past, using a portion of
federal funding, and may do so in the future.
State and local governments 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 billboard to the applicable regulations at its
own cost without any compensation. Several municipalities within our existing
markets have adopted amortization ordinances. Restrictive regulations also limit
our ability to rebuild or replace nonconforming billboards. We can give no
assurance that we will be successful in negotiating acceptable arrangements in
circumstances in which our billboards are subject to removal or amortization,
and what effect, if any, such regulations may have on our operations.
In addition, we are unable to predict what additional regulations may be
imposed on outdoor advertising in the future. The outdoor advertising industry
is heavily regulated and at various times and in various markets can be expected
to be subject to varying degrees of regulatory pressure affecting the operation
of advertising displays. Legislation regulating the content of billboard
advertisements and additional billboard restrictions has 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 significant financial
impact on us by requiring us to make significant expenditures or otherwise
limiting or restricting some of our operations.
CHANGES IN RESTRICTIONS ON OUTDOOR TOBACCO AND ALCOHOL ADVERTISING MAY POSE
RISKS
Out-of-court settlements between the major U.S. tobacco companies and all
50 states include a ban on the outdoor advertising of tobacco products. State
and local governments continue to initiate proposals designed to limit outdoor
advertising of alcohol. Other products and services may be targeted in the
future. 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. Any significant reduction in alcohol related
advertising due to content-related restrictions could cause a reduction in our
direct revenue from such advertisements and a simultaneous increase in the
available space on the existing inventory of billboards in the outdoor
advertising industry.
S-7
FUTURE ACQUISITIONS COULD POSE RISKS
We may acquire media-related assets and other assets or businesses that we
believe will assist our customers in marketing their products and services. Our
acquisition strategy involves numerous risks, including:
- certain of our acquisitions may prove unprofitable and fail to generate
anticipated cash flows;
- to successfully manage a rapidly expanding and significantly larger
portfolio of broadcasting, outdoor advertising, entertainment and other
properties, we may need to:
- recruit additional senior management as we cannot be assured that senior
management of acquired companies will continue to work for us and, in
this highly competitive labor market, we cannot be certain that any of
our recruiting efforts will succeed, and
- expand corporate infrastructure to facilitate the integration of our
operations with those of acquired properties, because failure to do so
may cause us to lose the benefits of any expansion that we decide to
undertake by leading to disruptions in our ongoing businesses or by
distracting our management;
- entry into markets and geographic areas where we have limited or no
experience;
- we may encounter difficulties in the integration of operations and
systems;
- our 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 TO IMPLEMENT ACQUISITIONS COULD POSE RISKS
We face stiff competition from other broadcasting, outdoor advertising and
live entertainment 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.
Since the terms and availability of this financing depend to a large degree upon
general economic conditions and third parties over which we have no control, we
can give no assurance that we will obtain the needed financing or that we will
obtain such financing on attractive terms. In addition, our ability to obtain
financing depends on a number of other factors, many of which are also beyond
our control, such as interest rates and national and local business conditions.
If the cost of obtaining needed financing is too high or the terms of such
financing are otherwise unacceptable in relation to the acquisition opportunity
we are presented with, we may decide to forego that opportunity. 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 shareholders.
WE FACE INTENSE COMPETITION IN THE BROADCASTING, OUTDOOR ADVERTISING AND LIVE
ENTERTAINMENT INDUSTRIES
Our business segments are in highly competitive industries, and we may not
be able to maintain or increase our current audience ratings and advertising and
sales revenues. Our radio stations and outdoor advertising properties compete
for audiences and advertising revenues with other radio stations and outdoor
advertising companies, as well as with other media, such as newspapers,
magazines, television, direct mail and Internet based media, within their
respective markets. Audience ratings and market shares are subject to change,
which could have the effect of reducing our revenues in that market. Our live
entertainment operations compete with other venues to serve artists likely to
perform in that general region and, in the markets in which we promote musical
concerts, we face competition from promoters, as well as from certain artists
who promote their own concerts. These competitors may engage in more extensive
development
S-8
efforts, undertake more far reaching marketing campaigns, adopt more aggressive
pricing policies and make more attractive offers to existing and potential
customers or artists. Our competitors may develop services, advertising media or
entertainment venues that are equal or superior to those we provide or that
achieve greater market acceptance and brand recognition than we achieve. It is
possible that new competitors may emerge and rapidly acquire significant market
share in any of our business segments. Other variables that could adversely
affect our financial performance by, among other things, leading to decreases in
overall revenues, the numbers of advertising customers, advertising fees, event
attendance, ticket prices or profit margins include:
- unfavorable economic conditions, both general and relative to the radio
broadcasting, outdoor advertising, live entertainment and all related
media industries, which may cause companies to reduce their expenditures
on advertising or corporate sponsorship or reduce the number of persons
willing to attend live entertainment events;
- unfavorable shifts in population and other demographics which may cause
us to lose advertising customers and audience as people migrate to
markets where we have a smaller presence, or which may cause advertisers
to be willing to pay less in advertising fees if the general population
shifts into a less desirable age or geographical demographic from an
advertising perspective;
- an increased level of competition for advertising dollars, which may lead
to lower advertising rates as we attempt to retain customers or which may
cause us to lose customers to our competitors who offer lower rates that
we are unable or unwilling to match;
- unfavorable fluctuations in operating costs which we may be unwilling or
unable to pass through to our customers;
- technological changes and innovations that we are unable to adopt or are
late in adopting that offer more attractive advertising or entertainment
alternatives than what we currently offer, which may lead to a loss of
advertising customers or ticket sales, or to lower advertising rates or
ticket prices;
- unfavorable changes in labor conditions which may require us to spend
more to retain and attract key employees; and
- changes in governmental regulations and policies and actions of federal
regulatory bodies which could restrict the advertising media which we
employ or restrict some or all of our customers that operate in regulated
areas from using certain advertising media, or from advertising at all,
or which may restrict the operation of live entertainment events.
NEW TECHNOLOGIES MAY AFFECT OUR BROADCASTING OPERATIONS
The FCC has introduced new technologies to the broadcasting 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. The FCC has also established a timetable for
the implementation of digital television broadcasting in the U.S. We are unable
to predict the effect such technologies will have on our broadcasting
operations, but the capital expenditures necessary to implement such
technologies could be substantial and other companies employing such
technologies could compete with our businesses.
OUR LIVE ENTERTAINMENT BUSINESS IS HIGHLY SENSITIVE TO PUBLIC TASTES AND
DEPENDENT ON OUR ABILITY TO SECURE POPULAR ARTISTS, LIVE ENTERTAINMENT EVENTS
AND VENUES
Our ability to generate revenues through our live entertainment operations
is highly sensitive to rapidly changing public tastes and dependent on the
availability of popular performers and events. Since we rely on unrelated
parties to create and perform live entertainment content, any lack of
availability of popular musical artists, touring Broadway shows, specialized
motor sports talent and other performers could limit our ability to generate
revenues. In addition, we require access to venues to generate revenues from
live entertainment events. We operate a number of our live entertainment venues
under leasing or booking agreements. Our
S-9
long-term success in the live entertainment business will depend in part on our
ability to renew these agreements when they expire or end. As many of these
agreements are with third parties over which we have little or no control, we
may be unable to renew these agreements on acceptable terms or at all, and may
be unable to obtain favorable agreements with new venues. Our ability to renew
these agreements or obtain new agreements on favorable terms depends on a number
of other factors, many of which are also beyond our control, such as national
and local business conditions. If the cost of renewing these agreements is too
high or the terms of any new agreement with a new venue are unacceptable or
incompatible with our existing operations, we may decide to forego these
opportunities. In addition, our competitors may offer more favorable terms than
we do in order to obtain agreements for new venues.
WE MAY BE ADVERSELY AFFECTED BY A GENERAL DETERIORATION IN ECONOMIC CONDITIONS
The risks associated with our businesses become more acute in periods of a
slowing economy or recession, which may be accompanied by a decrease in
advertising and in attendance at live entertainment events. A decline in the
level of business activity of our advertisers or a decline in attendance at live
entertainment events could have an adverse effect on our revenues and profit
margins. During the recent economic slowdown in the United States, many
advertisers reduced their advertising expenditures. The impact of slowdowns on
our business is difficult to predict, but they may result in reductions in
purchases of advertising and attendance at live entertainment events. If the
current economic slowdown continues or worsens, our results of operations may be
adversely affected.
WE MAY BE ADVERSELY AFFECTED BY THE OCCURRENCE OF EXTRAORDINARY EVENTS
The occurrence of extraordinary events, such as the September 11, 2001
terrorist attacks on the World Trade Center in New York City and the Pentagon
outside of Washington, D.C., may substantially decrease the use of and demand
for advertising and the attendance at live entertainment events, which may
decrease our revenues. The September 11, 2001 terrorist attacks, for example,
caused a nationwide disruption of commercial and leisure activities. As a result
of the expanded news coverage following the attacks and subsequent military
actions, we experienced a loss in advertising revenues and increased incremental
operating expenses. We also experienced lower attendance levels at live
entertainment events. The occurrence of future terrorist attacks, military
actions by the United States, outbreaks of severe acute respiratory syndrome, or
"SARS", or similar events cannot be predicted, and their occurrence can be
expected to further negatively affect the economy generally and specifically the
markets for advertising and live entertainment both in the United States and
abroad.
THERE IS NO ACTIVE TRADING MARKET FOR THE NOTES; CERTAIN BENEFICIAL OWNERS MAY
BE UNABLE TO TRANSFER THEIR BENEFICIAL INTEREST IN THE NOTES
The notes will not be listed on any securities exchange. There is no active
public market for the notes and it is unlikely that an active trading market
will develop, or if one develops, that it will be maintained. Consequently, it
is possible that an investment in the notes may have little or no liquidity. In
addition, the notes will be issued in the form of one or more global securities
that will be deposited with the Depository Trust Company. See "Description of
the Notes -- Global Securities" and "-- Book Entry System" on page S-15. The
owners of beneficial interests in the global securities will not be entitled to
have notes registered in their names, will not receive or be entitled to receive
physical delivery of notes in definitive form and will not be considered the
owners or holders thereof under the Indenture. The laws of some states require
that certain persons take physical delivery in definitive form of securities
which they own. Consequently, the ability of certain persons to transfer their
beneficial interests in the global securities may be limited in states where
these special delivery requirements apply.
S-10
BUSINESS
We are a diversified media company with three reportable business segments:
radio broadcasting, outdoor advertising and live entertainment. We were
incorporated in Texas in 1974. As of December 31, 2002, we owned 1,184 domestic
radio stations and a leading national radio network. In addition, at December
31, 2002, we had equity interests in various domestic and international radio
broadcasting companies. At December 31, 2002, we also owned or operated 144,097
domestic outdoor advertising display faces and 571,942 international outdoor
advertising display faces. In addition, we operate as promoters, producers and
venue operators for live entertainment events. As of December 31, 2002, we owned
or operated 76 live entertainment venues domestically and 26 live entertainment
venues internationally, which excludes 25 domestic venues and three
international venues where we either own a non-controlling interest or have
booking, promotions or consulting agreements. As of December 31, 2002, we also
owned or programmed 34 television stations, owned a media representation firm
and represented professional athletes, all of which are within the category
"other". Our principal executive offices are located at 200 East Basse Road, San
Antonio, Texas 78209, and our telephone number is 210-822-2828.
A brief description of each of our primary lines of business follows.
RADIO BROADCASTING
Radio Stations
As of December 31, 2002, we owned 372 AM and 812 FM domestic radio
stations, of which 485 radio stations were in the top 100 markets, according to
the Arbitron fall 2002 ranking of U.S. markets. In addition, we currently own
equity interests in various domestic and international radio broadcasting
companies, which we account for under the equity method of accounting. Our radio
stations employ various formats for their programming. A station's format can be
important in determining the size and characteristics of its listening audience.
Advertisers often tailor their advertisements to appeal to selected population
or demographic segments.
Radio Networks
As of December 31, 2002, we owned a national radio network, which has a
total audience of over 180 million weekly listeners. The network syndicates talk
programming including such talent as Rush Limbaugh, Bob and Tom, John Boy and
Billy, Glen Beck and Jim Rome, and music programming including such talent as
Rick Dees and Casey Kasem. We also operated several news and agricultural radio
networks serving Georgia, Ohio, Oklahoma, Texas, Iowa, Kentucky, Virginia,
Alabama, Tennessee, Florida and Pennsylvania.
OUTDOOR ADVERTISING
As of December 31, 2002, we owned or operated a total of 716,039
advertising display faces. We currently provide outdoor advertising services in
over 52 domestic markets and over 65 foreign countries. Our display faces
include billboards of various sizes, wallscapes, transit displays and street
furniture displays. Additionally, we currently own equity interests in various
outdoor advertising companies, which we account for under the equity method of
accounting.
LIVE ENTERTAINMENT
During 2002, we promoted or produced over 29,000 events, including music
concerts, theatrical shows and specialized sporting events. We reached more than
66 million people through all of these activities during 2002. As of December
31, 2002, we owned or operated a total of 76 domestic venues and 26
international venues. Additionally, we currently own equity interests in various
live entertainment companies, which we account for under the equity method of
accounting.
S-11
OTHER
Television
As of December 31, 2002, we owned, programmed or sold airtime for 34
television stations. Our television stations are affiliated with various
television networks, including ABC, CBS, NBC, FOX, UPN, PAX and WB. Television
revenue is generated primarily from the sale of local and national advertising,
as well as from fees received from the affiliate television networks.
Advertising rates depend primarily on the quantitative and qualitative
characteristics of the audience we can deliver to the advertiser. Our sales
personnel sell local advertising, while national sales representatives sell
national advertising.
Media Representation
We own the Katz Media Group, a full-service media representation firm that
sells national spot advertising time for clients in the radio and television
industries throughout the United States. Katz Media represents over 2,500 radio
stations and 350 television stations.
Sports Representation
We operate in the sports representation business. Our full-service sports
marketing and management operations specialize in the representation of
professional athletes, integrated event management and marketing consulting
services. Among our clients are many professional athletes, including Michael
Jordan (basketball), Kobe Bryant (basketball), Roger Clemens (baseball), Greg
Norman (golf), Andre Agassi (tennis), Jerry Rice (football) and David Beckham
(soccer).
S-12
RATIO OF EARNINGS TO FIXED CHARGES
The ratio of earnings to fixed charges has been computed by dividing
earnings before income taxes (which excludes the cumulative and transition
effects of accounting changes) and fixed charges by fixed charges. "Fixed
charges" consist of interest on debt and that portion of rental expense deemed
to be representative of interest.
NINE MONTHS
ENDED
YEAR ENDED DECEMBER 31, SEPTEMBER 30,
-------------------------------- -------------
2002 2001 2000 1999 1998 2002 2003
---- ---- ---- ---- ---- ----- -----
Ratio of earnings to fixed charges............. 2.62 * 2.20 2.04 1.83 2.64 3.98
---------------
* For the year ended December 31, 2001, fixed charges exceeded earnings before
income taxes and fixed charges by $1.3 billion.
USE OF PROCEEDS
Our net proceeds from this offering are estimated to be approximately
$249.1 million after deducting the underwriting discount and our estimated
offering expenses. We will use these net proceeds to repay borrowings
outstanding under our reducing revolving credit facility. As of November 4,
2003, a total of $1.1 billion in borrowings was outstanding under our reducing
revolving credit facility. Such borrowings were incurred in connection with the
redemption of other indebtedness, acquisitions of media related properties, and
for general corporate purposes. The effective interest rate on the reducing
revolving credit facility is based on LIBOR plus 0.4% (1.52% as of November 4,
2003). Borrowings under the reducing revolving credit facility must be paid in
full by June 30, 2005. Upon repayment of such borrowings, the amounts repaid
will become immediately available to us for re-borrowing under the reducing
revolving credit facility. Following the repayment of the reducing revolving
credit facility with the proceeds of this offering, approximately $249.1 million
will be available for borrowing under the facility. We expect that a portion of
the $249.1 million available for borrowing under the credit facility following
the application of the net proceeds of this offering will be used to finance
acquisitions, refinance debt or for general corporate purposes.
S-13
DESCRIPTION OF THE NOTES
The notes offered by this prospectus supplement are "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 notes offered by this prospectus supplement will be issued under the
indenture, dated as of October 1, 1997, as supplemented by supplemental
indentures from time to time (collectively, the "Indenture"), between Clear
Channel 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 on radio broadcasting, television broadcasting,
outdoor advertising or live entertainment properties; 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. Any reference to the "notes"
contained in this prospectus supplement refers to our 3.125% notes due 2007
unless the context indicates otherwise.
GENERAL
The notes offered by this prospectus supplement will be issued in an
initial aggregate principal amount of $250,000,000, will bear interest from
November 14, 2003, will mature, at par, on February 1, 2007 and will be offered
and sold in denominations of $1,000 and any integral multiple thereof.
Interest will be payable semi-annually on February 1 and August 1,
commencing August 1, 2004, to the persons in whose names the notes are
registered at the close of business on January 15 or July 15, as the case may
be, next preceding such interest payment date.
The notes are not subject to the provisions of any optional or mandatory
sinking fund. We may, without the consent of the holders, increase such
principal amounts of the notes in the future, on the same terms and conditions
and with the same CUSIP numbers as the notes being offered hereby; provided,
however, that no additional notes may be issued unless such additional notes are
fungible with the notes offered hereby for U.S. federal income tax purposes. The
notes will be our senior unsecured general obligations, and rank on a parity
with all of our other unsecured and unsubordinated indebtedness from time to
time outstanding.
Principal of and interest on the notes will be payable and transfers of the
notes will be registrable at our office or agency in the Borough of Manhattan,
The City of New York, and transfers of the 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 hereto as shown on the security register. No
service charge will be made for any registration of transfer or exchange of
notes, except for any tax or other governmental charge that may be imposed in
connection therewith. Interest on the notes will be computed on the basis of a
360-day year comprised of twelve, 30-day months.
S-14
OPTIONAL REDEMPTION
The notes will not be subject to redemption.
GLOBAL SECURITIES
The 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 Depository 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 notes in definitive form, a global security may 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 notes will be registered in the name of Cede & Co., the
nominee of the depositary. Accordingly, beneficial interests in the notes will
be shown on, and transfers thereof will be effected only through, records
maintained by the depositary and its participants.
The depositary has advised us and the underwriter 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 underwriter, 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 Participants and Indirect Participants are on file
with the SEC.
The depositary advises that its established procedures provide that:
- upon our issuance of the notes, the depositary will credit the accounts
of Direct Participants and Indirect Participants designated by the
underwriter with the principal amounts of the notes purchased by the
underwriter, 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 notes registered in their names, will not receive or be
entitled to receive physical delivery of notes in definitive form and will not
be considered the owners or holders thereof under the Indenture.
S-15
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.
Principal and interest payments on the notes registered in the name of the
depositary's nominee will be made in immediately available funds to the
depositary's nominee as the registered owner of the global securities. Under the
terms of the notes, we and the debt trustee will treat the persons in whose
names the notes are registered as the owners of those notes for the purpose of
receiving payment of principal and interest on those 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 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 Participants
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
Participants 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, but disbursement of
those payments to the owners of beneficial interests in the global securities
shall be the responsibility of the depositary and Direct Participants and
Indirect Participants.
Notes represented by a global security will be exchangeable for 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 notes to be represented by a global security and notify the debt
trustee thereof. Any notes that are exchangeable pursuant to the preceding
sentence are exchangeable for notes issuable in authorized denominations and
registered in such names as the depositary shall direct. Subject to the
foregoing, a global security is not exchangeable, except for a global security
or global securities of the same aggregate denominations to be registered in the
name of the depositary or its nominee.
SAME-DAY SETTLEMENT AND PAYMENT
Settlement for the notes will be made by the underwriter 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 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 notes until
maturity, and secondary market trading activity in the notes will therefore be
required by the depositary to settle in immediately available funds. No
assurance can be given as to the effect, if any, of settlement in immediately
available funds on trading activity in the notes.
GOVERNING LAW
The Indenture and the notes will be governed by and construed in accordance
with the laws of the State of New York.
S-16
CERTAIN U.S. FEDERAL INCOME TAX CONSEQUENCES
The following summary describes certain material United States federal
income tax consequences of the acquisition, ownership and disposition of the
notes, by beneficial owners of the notes. This summary is based on the Internal
Revenue Code of 1986, as amended (the "Code"), and Treasury regulations, rulings
and judicial decisions as of the date hereof, all of which are subject to
change, possibly on a retroactive basis. The discussion applies only to
beneficial owners that acquire the notes in this offering at the initial
offering price and who will hold the notes as capital assets within the meaning
of Section 1221 of the Code. This summary is for general information only and
does not address all aspects of United States federal income taxation that may
be relevant to holders of the notes in light of their particular circumstances
or to holders subject to special rules (such as broker-dealers, banks or other
financial institutions, insurance companies, partnerships, tax-exempt
organizations, persons that have a functional currency other than the U.S.
dollar and persons who hold the notes as part of a hedging or conversion
transaction). This summary does not address the effects of any state, local or
non-U.S. tax laws. Prospective holders should consult their tax advisors as to
the particular tax consequences to them of acquiring, holding or disposing of
the notes.
For purposes of the following discussion, a "U.S. holder" means a
beneficial owner of a note that is for U.S. federal income tax purposes:
- an individual citizen or resident of the United States;
- a corporation (or other entity treated as a corporation for U.S. federal
income tax purposes) created or organized in or under the laws of the
United States, any State or the District of Columbia;
- an estate the income of which is subject to U.S. federal income taxation
regardless of its source; or
- a trust, if (a) a court within the United States is able to exercise
primary supervision over administration of the trust and one or more
United States persons have authority to control all substantial decisions
of the trust or (b) it has a valid election in effect under applicable
U.S. Treasury regulations to be treated as a U.S. person.
For purposes of the following discussion, a "non-U.S. holder" means a
beneficial owner of a note other than a U.S. holder.
U.S. HOLDERS
Payments of Interest. Interest paid with respect to the notes will
generally be taxable to a U.S. holder as ordinary income at the time accrued or
received, in accordance with such U.S. holder's method of accounting for U.S.
federal income tax purposes.
Disposition of Notes. Upon the sale, exchange, redemption, retirement or
other disposition of a note, a U.S. holder generally will recognize taxable gain
or loss equal to the difference between the amount realized on the sale,
exchange, redemption, retirement or other disposition (except to the extent of
accrued but unpaid interest not previously included in income, which will be
taxable as ordinary income) and such holder's adjusted tax basis in the note.
Any such gain or loss will be capital gain or loss, and will be long-term
capital gain or loss if a U.S. holder has held the note for more than one year.
NON-U.S. HOLDERS
Payments of Interest. In general, a 30% United States federal withholding
tax will not apply to any payment of interest on a note to a non-U.S. holder if
the interest qualifies for the so-called "portfolio interest exemption." This
will be the case provided that the holder:
- does not actually or constructively own 10% or more of the total combined
voting power of all classes of our stock that are entitled to vote within
the meaning of section 871(h)(3) of the Code;
- is not a controlled foreign corporation that is related to us through
stock ownership within the meaning of section 864(d)(4) of the Code; and
S-17
- either (a) provides its name and address, and certifies, under penalties
of perjury, that it is not a United States person, which certification
may be made on an IRS W-8BEN or successor form, or (b) holds its notes
through various foreign intermediaries and satisfies the certification
requirements of applicable Treasury regulations.
Special certification and other rules apply to certain non-U.S. holders that are
entities rather than individuals, particularly entities treated as partnerships
for U.S. federal income tax purposes and certain other flow-through entities,
and to non-U.S. holders acting as (or holding notes through) intermediaries.
If a non-U.S. holder cannot satisfy the requirements described above,
payments of interest will be subject to the 30% United States federal
withholding tax, unless the holder provides us with a properly executed (1) IRS
Form W-8BEN, or successor form, claiming an exemption from or reduction in
withholding under the benefit of a tax treaty or (2) IRS Form W-8ECI, or
successor form, stating that interest paid on the note is not subject to
withholding tax because it is effectively connected with its conduct of a trade
or business in the United States.
If a non-U.S. holder is engaged in a trade or business in the United States
and interest on a note is effectively connected with the conduct of that trade
or business, such holder (although exempt from the 30% withholding tax) will be
subject to U.S. federal income tax on that interest on a net income basis in the
same manner as if the holder were a United States person as defined under the
Code. In addition, if the holder is a foreign corporation, it may be subject to
a branch profits tax equal to 30% (or lower applicable treaty rate) of its
earnings and profits for the taxable year, subject to adjustments, that are
effectively connected with its conduct of a trade or business in the United
States. For this purpose, interest will be included in earnings and profits.
Disposition of Notes. The 30% United States federal withholding tax will
not apply to any gain that a non-U.S. holder realizes on the sale, exchange,
redemption, retirement or other disposition of a note.
Any gain realized on the disposition of a note by a non-U.S. holder
generally will not be subject to U.S. federal income tax unless (i) that gain is
effectively connected with the conduct of a trade or business in the United
States by the holder or (ii) the holder is an individual who is present in the
United States for a period or periods aggregating 183 days or more in the
taxable year of that disposition within the meaning of section 871(a)(2) of the
Code and other conditions are met. If (i) applies and the non-U.S. holder is a
corporation, such holder may also be subject to a branch profits tax equal to
30% (or lower applicable treaty rate) as described above.
INFORMATION REPORTING AND BACKUP WITHHOLDING
U.S. Holders. In general, information reporting requirements will apply to
payments of principal and interest made on the notes to, and to the proceeds of
the sale of the notes within the U.S. by, certain non-corporate U.S. holders of
notes, and backup withholding at the applicable rate will apply to these
payments if the U.S. holder (i) fails to provide an accurate taxpayer
identification number in the manner required or (ii) is notified by the Internal
Revenue Service that it has failed to report all interest and dividends required
to be shown on its federal income tax returns.
Non-U.S. Holders. In general, subject to the discussion above under
"Non-U.S. Holders -- Payments of Interest," a non-U.S. holder will not be
subject to backup withholding and information reporting with respect to payments
that we make to the non-U.S. holder, provided that we do not have actual
knowledge that the holder is a United States person and the holder has given us
the statement or provided the certifications described above under "Non-U.S.
Holders -- Payments of Interest."
In addition, subject to the discussion above under "Non-U.S.
Holders -- Disposition of Notes," a non-U.S. holder will not be subject to
backup withholding or information reporting with respect to the proceeds of the
sale or other disposition of a note within the United States or conducted
through certain U.S.-related financial intermediaries if the payor receives the
statements or certifications described above and does not have actual knowledge
that the holder is a United States person, as defined under the Code, or the
holder otherwise establishes an exemption.
S-18
Any amounts withheld under the backup withholding rules will be allowed as
a refund or a credit against a holder's U.S. federal income tax liability,
provided the required information is furnished to the Internal Revenue Service.
INVESTORS SHOULD CONSULT THEIR TAX ADVISORS CONCERNING THE APPLICABILITY OF
THE ABOVE TAX CONSEQUENCES TO THEIR PARTICULAR SITUATIONS, INCLUDING THE
NECESSITY OF SATISFYING VARIOUS CERTIFICATION REQUIREMENTS, AND CONCERNING THE
APPLICABILITY OF OTHER TAXES, SUCH AS ESTATE TAXES AND STATE AND LOCAL TAXES.
S-19
UNDERWRITING
We have entered into an underwriting agreement with the Banc of America
Securities LLC, as underwriter, in which it has agreed to purchase from us
$250,000,000 aggregate principal amount of the notes.
The obligation of the underwriter to purchase the notes is subject to the
terms and conditions set forth in the underwriting agreement. The underwriting
agreement requires the underwriter to purchase all the notes offered by this
prospectus supplement, if any of such notes are purchased.
We have agreed to indemnify the underwriter against certain liabilities,
including certain liabilities under the Securities Act, or to contribute to
payments the underwriter may be required to make in respect of these
liabilities.
It is expected that delivery of the notes will be made against payment for
the notes on or about the date specified in the last paragraph of the cover page
of this prospectus supplement, which will be the sixth business day following
the date of pricing of the notes (such settlement cycle being referred to herein
as "T+6"). Under Rule 15c6-1 of the SEC under the Securities Exchange Act of
1934, as amended, trades in the secondary market generally are required to
settle in three business days, unless the parties to any trade expressly agree
otherwise. Accordingly purchasers who wish to trade the notes on the date of
pricing or the next two succeeding business days will be required, by virtue of
the fact that the notes initially will settle in T+6, to specify an alternate
settlement cycle at the time of any trade to prevent a failed settlement.
Purchasers of the notes who wish to trade the notes on the date of pricing or
the next two succeeding business days should consult their own advisor.
COMMISSION AND DISCOUNTS
The underwriter has advised us that it proposes to offer some of the notes
directly to the public at the public offering prices stated on the cover of this
prospectus supplement. After the initial public offering, the underwriter may
change the offering price and other selling terms.
We currently estimate the expenses of this offering, excluding the
underwriting discount, to us to be $300,000.
NO TRADING MARKET
The notes are a new issue of securities with no established trading market.
The notes will not be listed on any securities exchange or on any automated
dealer quotation system. The underwriter may make a market in the notes after
completion of the offering, but will not be obligated to do so and may
discontinue any market-making activities at any time without notice. No
assurance can be given as to the liquidity of the trading market for the notes
or that an active public market for the notes will develop. If an active public
trading market for the notes does not develop, the market price and liquidity of
the notes may be adversely affected.
PRICE STABILIZATION AND SHORT POSITIONS
In connection with this offering, the underwriter may purchase and sell
notes 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 underwriter of a greater principal
amount of notes than it is 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 notes while the
offering is in progress.
These activities by the underwriter may stabilize, maintain or otherwise
affect the market price of the notes. As a result, the price of the notes may be
higher than the price that otherwise might exist in the open market. In
addition, neither the underwriter nor we make any representation that the
underwriter will engage in the transactions discussed above. In addition, such
transactions, once commenced, may be discontinued by the underwriter at any
time. These transactions may be effected in the over-the-counter market or
otherwise.
S-20
CERTAIN RELATIONSHIPS AND ARRANGEMENTS
The underwriter and its 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 for which they have received and will receive
customary compensation. The underwriter has been an advisor to us in connection
with an acquisition, for which it received certain fees.
More than 10% of the net proceeds of this offering will be used to repay
indebtedness outstanding under our reducing revolving credit facility.
Affiliates of the underwriter are lenders under our credit facilities, including
our reducing revolving credit facility, and are affiliated with members of the
National Association of Securities Dealers, Inc. who will participate in this
offering. Accordingly, this offering is being made in compliance with NASD Rule
2710(c)(8). See "Use of Proceeds."
WHERE YOU CAN FIND MORE 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 room at 450 Fifth Street, NW,
Washington, DC 20549. Please call the SEC at 1-800-SEC-0330 for further
information on the public reference room. 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. You can also find more information
about us at our Internet website located at http://www.clearchannel.com. Our
annual report on Form 10-K, our quarterly reports on Form 10-Q, our current
reports on Form 8-K, and any amendments to those reports are available free of
charge on our Internet website as soon as reasonably practicable after we
electronically file such material with the SEC. Except for such reports that may
be specifically incorporated by reference in the accompanying prospectus,
information contained on our website does not constitute part of such prospectus
or this prospectus supplement.
EXPERTS
The consolidated financial statements of Clear Channel at December 31, 2002
and 2001, and for each of the three years in the period ended December 31, 2002,
and the financial statement schedule appearing in Clear Channel's Annual Report
on Form 10-K for the year ended December 31, 2002, have been audited by Ernst &
Young LLP, independent auditors, as set forth in their reports thereon included
therein and incorporated herein by reference. Such consolidated financial
statements referred to above are incorporated herein by reference in reliance
upon such reports given upon the authority of such firm as experts in accounting
and auditing.
LEGAL OPINIONS
The validity of the notes offered hereby will be passed upon for Clear
Channel by our special counsel, Akin, Gump, Strauss, Hauer & Feld, L.L.P. (a
registered limited liability partnership including professional corporations),
Dallas, Texas, and for the underwriter by Cravath, Swaine & Moore LLP, 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 November 4, 2003, owned 96,800 shares of common stock
(including presently exercisable nonqualified options to acquire 80,500 shares).
S-21
Filed pursuant to Rule 424(b)(3)
Registration Nos. 333-76942,
333-76942-01, 333-76942-02,
PROSPECTUS 333-76942-03
$3,000,000,000
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 $3.0 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
- senior debt securities
- subordinated debt securities
- junior subordinated debt securities
- Class A and Class B preferred stock
- warrants
- stock purchase contracts
- stock purchase units
- guarantees
The common stock is traded on the New York Stock Exchange under the symbol
"CCU." Any common stock sold pursuant to a prospectus supplement will be listed
on such exchange, subject to official notice of issuance.
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 7.
The date of this prospectus is April 4, 2002.
TABLE OF CONTENTS
PAGE
----
About This Prospectus....................................... 3
Clear Channel Communications, Inc........................... 3
Recent Developments......................................... 5
The Clear Channel Trusts.................................... 5
Ratio of Earnings to Combined Fixed Charges and Preferred
Stock Dividends........................................... 6
Use of Proceeds............................................. 6
Holding Company Structure................................... 7
General Description of Securities and Risk Factors.......... 7
Description of Senior and Subordinated Debt Securities...... 7
Description of Junior Subordinated Debt Securities.......... 18
Description of Preferred Stock.............................. 27
Description of Common Stock................................. 27
Description of Warrants..................................... 29
Description of Stock Purchase Contracts and Stock Purchase
Units..................................................... 31
Description of Preferred Securities......................... 32
Description of Guarantees................................... 34
ERISA Matters............................................... 37
Plan of Distribution........................................ 37
Legal Opinions.............................................. 39
Experts..................................................... 39
Where You Can Find More Information......................... 39
2
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.
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 $3.0 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 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 Communications, Inc. is a diversified media company with
three reportable business segments: radio broadcasting, outdoor advertising and
live entertainment. As of December 31, 2001, Clear Channel owned, programmed, or
sold airtime for 1,240 domestic radio stations, which includes those stations
that are operated pursuant to a local marketing agreement or joint sales
agreement (FCC licenses not owned by Clear Channel) and owned a leading national
radio network. In addition, at December 31, 2001, Clear Channel had equity
interests in various domestic and international radio broadcasting companies.
Clear Channel was also one of the world's largest outdoor advertising companies
based on total advertising display inventory of 156,623 domestic display faces
and 573,416 international display faces. In addition, Clear Channel was one of
the world's largest diversified promoters, producers and venue operators for
live entertainment events. As of December 31, 2001, Clear Channel owned or
operated 104 live entertainment venues domestically and 31 live entertainment
venues internationally, which includes 36 domestic venues and three
international venues where Clear Channel either owns a non-controlling interest
or has booking, promotions or consulting agreements. Clear Channel also owns or
programs 19 television stations, owns a media representation firm and represents
professional athletes. Clear Channel was incorporated in Texas in 1974. Clear
Channel's principal executive offices are located at 200 East Basse Road, San
Antonio, Texas 78209 (telephone: 210-822-2828).
3
Clear Channel's radio broadcasting segment includes both radio stations for
which Clear Channel is the licensee and for which it programs or sells air time
under local marketing agreements or joint sales agreements. Clear Channel's
radio broadcasting segment also operates radio networks and produces syndicated
programming. Clear Channel's outdoor advertising segment includes advertising
display faces which it owns or operates under lease management agreements. Clear
Channel's live entertainment segment operates domestic and international
entertainment venues which it owns or operates under lease management
agreements. Clear Channel's live entertainment segment also produces live music
events, Broadway and touring Broadway shows, family entertainment shows and
specialized sports and motor sports events.
4
RECENT DEVELOPMENTS
ACKERLEY MERGER
On October 5, 2001, Clear Channel entered into a merger agreement to
acquire The Ackerley Group, Inc. by merging one of its wholly-owned subsidiaries
with and into Ackerley. Clear Channel structured the merger as a tax-free,
stock-for-stock transaction. Each share of Ackerley common stock will convert
into 0.35 of a share of Clear Channel's common stock. Based on the number of
shares outstanding as of December 31, 2001 and assuming that no additional
shares of Ackerley common stock are issued before the completion of the merger,
Clear Channel will issue approximately 11.9 million shares of its common stock
in the merger to the stockholders of Ackerley. Either company can terminate the
merger agreement if the merger is not completed by October 5, 2002.
Ackerley holds a diversified group of outdoor, broadcasting and interactive
media assets. Ackerley operates an outdoor media company with significant
positions in Massachusetts, Washington and Oregon. Ackerley owns, or operates
under management agreements, 18 television stations. Ackerley's radio
broadcasting segment includes five stations in Seattle, Washington (four of
which are owned and one for which Ackerley sells airtime).
In addition, Clear Channel will indirectly assume, or be obligated to
refinance Ackerley's long-term debt in connection with the Ackerley merger,
which as of December 31, 2001 was approximately $290.6 million.
Clear Channel will not complete the Ackerley merger before the filing of
this prospectus, if at all. Numerous conditions must be satisfied before the
completion of the merger, including the receipt of regulatory approvals and the
approval of the Ackerley stockholders.
The description of the proposed merger with Ackerley 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
registration statement on Form S-4 filed with the SEC on November 29, 2001.
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 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.
5
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 East Basse Road, San Antonio, Texas 78209, 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.
YEARS ENDED DECEMBER 31,
--------------------------------
2001 2000 1999 1998 1997
---- ---- ---- ---- ----
* 2.20 2.04 1.83 2.32
* For the year ended December 31, 2001, fixed charges exceeded earnings before
income taxes and fixed charges by $1.3 billion.
The ratio of earnings to combined fixed charges and preferred stock
dividends was computed on a total enterprise basis. Earnings represent income
from continuing operations before income taxes less equity in undistributed net
income (loss) of unconsolidated affiliates plus fixed charges. Fixed charges
represent interest, amortization of debt discount and expense, and the estimated
interest portion of rental charges. Clear Channel has no preferred stock
outstanding 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.
6
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, ADDITIONAL RISK FACTORS RELATING TO CLEAR CHANNEL'S BUSINESS MAY BE
SET FORTH IN A PROSPECTUS SUPPLEMENT OR INCLUDED IN CLEAR CHANNEL'S MOST RECENT
ANNUAL REPORT ON FORM 10-K OR OTHER DOCUMENT THAT IS INCORPORATED BY REFERENCE
INTO THIS DOCUMENT.
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 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. Both indentures are governed by New York law. 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
7
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;
- 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 included in this document;
- 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
8
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.
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;
9
- not receive or be entitled to receive physical delivery of any debt
security of that series in definitive form; and
- 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.
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
10
- 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 (defined
below).
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;
- 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.
11
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
- 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.
12
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;
- 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;
13
- 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 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
facilities.
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.
14
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, 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 the cost to Clear
Channel or any Restricted Subsidiary of the property covered by the
Mortgage; and
15
- 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 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
16
- 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 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.
17
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 junior
subordinated indenture is governed by New York law. 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 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
18
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;
- 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 included in this
document;
- 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,
19
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.
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.
20
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 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
21
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 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.
22
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.
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
23
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 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.
24
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
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 facilities.
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;
25
- 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, 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 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
26
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
1,500,000,000 shares of common stock. As of March 8, 2002, 599,518,802 shares of
common stock were outstanding. Common shareholders are entitled to one vote per
share on all matters submitted to a vote of shareholders. In addition common
stockholders may 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.
27
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.
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 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; 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
28
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.
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;
- 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
29
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 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.
30
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 issued by
a Clear Channel Trust 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
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
Clear Channel Trust 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 Clear Channel Trust 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.
31
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;
- 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 included in this document; 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
32
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 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.
33
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.
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
34
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 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
35
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 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.
36
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;
- 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.
37
In connection with the sale of securities offered by this prospectus,
underwriters, dealers or agents may be deemed to have received compensation from
Clear Channel or the Clear Channel Trusts in the form of underwriting discounts
or commissions and may also receive commissions from purchasers of the offered
securities for whom they may act as agent. Underwriters may sell the securities
offered by this prospectus to or through dealers, and such dealers may receive
compensation in the form of discounts, concessions or commissions from the
underwriters or commissions from the purchasers for whom they may act as agent.
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
38
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 March 8, 2002, owned
approximately 83,300 shares of common stock, including presently exercisable
options to acquire approximately 67,000 shares. Vernon E. Jordan, Jr., of
counsel to Akin, Gump, Strauss, Hauer & Feld, L.L.P., is also a director of
Clear Channel and as of March 8, 2002, held options exercisable to acquire
90,300 shares of common stock.
EXPERTS
The consolidated financial statements of Clear Channel at December 31, 2001
and 2000, and for each of the three years in the period ended December 31, 2001,
and the financial statement schedule appearing in Clear Channel's Annual Report
on Form 10-K for the year ended December 31, 2001, have been audited by Ernst &
Young LLP, independent auditors, as set forth in their reports thereon included
therein and incorporated herein by reference which, as to the year 1999, are
based in part on the report of KPMG LLP, independent auditors. Such consolidated
financial statements referred to above are incorporated herein by reference in
reliance upon such reports given on the authority of such firms as experts in
accounting and auditing.
The consolidated financial statements of AMFM Inc. and Subsidiaries
(formerly Chancellor Media Corporation) as of December 31, 1999 and 1998 and for
each of the three years in the period ended December 31, 1999 incorporated into
this document by reference to the Current Report on Form 8-K of Clear Channel
Communications, Inc., dated June 14, 2000, 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.
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, and at the Regional Office of the SEC in Chicago, Illinois. 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.
39
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, 2001
filed on March 20, 2002 (File No. 001-09645).
2. Current Report on Form 8-K filed January 18, 2002 (File No. 001-09645).
3. Current Report on Form 8-K filed September 6, 2000 (File No. 001-09645)
relating to the condensed consolidated financial statements of AMFM Inc. and
Subsidiaries (pgs. 2-12 of said Form 8-K).
4. Current Report on Form 8-K filed June 14, 2000 (File No. 001-09645)
relating to the consolidated financial statements of AMFM Inc. and Subsidiaries
and the report of PricewaterhouseCoopers LLP dated March 13, 2000 (pgs. 2-48 of
said Form 8-K).
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.
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 East Basse Road, San Antonio, Texas 78209, telephone: (210) 822-2828.
40
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
$250,000,000
(CLEAR CHANNEL LOGO)
CLEAR CHANNEL COMMUNICATIONS, INC.
3.125% SENIOR NOTES DUE 2007
-----------------------------------
PROSPECTUS SUPPLEMENT
NOVEMBER 5, 2003
------------------------------------
BANC OF AMERICA SECURITIES LLC
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------