Clear Channel's Impending Cracks

Clear Channel (NYSE:CCU) reports improved net revenues and improved net operating income from continuing operations. The company or significant parts are being shopped about. $750 million of long term debt will be refinanced in Q4. The company claims they have sufficient bank lines. But working capital and liquidity are worsening dramatically. Using managements selected balance sheet numbers and the $750 million of debt coming due the working capital position has dropped to $333 million. Last year they were at $1,182 million. Also long term debt currently stands at 104% of equity. Last year’s comparable was 80%. Clear Channel is cannibalizing itself with share repurchase financed by debt. If as and when asset sales occur the lenders will be first in line before shareholders realize value. The company is now becoming increasingly forced to reach asset sales agreements, which naturally weakens their hand. In the mean time debt service charges will apply. The clock is ticking much too fast.