Mitt Romney bought Clear Channel the home of Rush Limbaugh when he was at Bain Capital. Lets look at how that deal went to see how Mitt conducts business….soooo successfully
First in order to even buy Clear Channel Mitt had to sue the banks providing Bain Capital the loans to buy Clear Channel
NEWSER) – The two private-equity firms set to buy Clear Channel sued the group of banks they had engaged to fund the deal, the Wall Street Journal reports. Joined by Clear Channel, Bain Capital and Thomas H. Lee Partners accused the consortium—including Citigroup, Deutsche Bank, and Wachovia—of breaching contract by attempting to back out of the deal amid the tanking credit market.
In particular, the equity firms take issue with a proposed 11th-hour change of a six-year financing package to a three-year bridge-financing loan. Through this and other measures, the banks “pretended to negotiate the final documentation in good faith,” but put loopholes in the agreement intended to reduce their financial commitment, the lawsuits charge.
http://www.newser.com/...
In the banks defense they thought Mitt was paying to much for Clear Channel and they were worried about getting paid back.
November 16, 2006, San Antonio – Clear Channel Communications, Inc. (NYSE:CCU), a global leader in the out-of-home advertising industry, today announced the execution of a definitive merger agreement with a group led by Thomas H. Lee Partners, L.P. and Bain Capital Partners, LLC, pursuant to which the group will acquire Clear Channel in a transaction with a total value of approximately $26.7 billion, including the assumption or repayment of approximately $8.0 billion of net debt.
Under the terms of the agreement, Clear Channel shareholders will receive $37.60 in cash for each share of Clear Channel common stock they hold, representing a premium of approximately 25% over Clear Channel’s average closing share price of $29.99 during the 30 trading days ended October 24, 2006,
http://www.thl.com/...
Its no wonder Mitt had to sue the banks paying 25% more than a stock has ever traded after take over rumors has already boosted the stock’s price seems stupid to me.
But it was a Great Deal for stock holders who bought before the deal I suspect Mitt threatened to sue the banks because he and or his friends were insider trading. My question is if the deal goes south does Bain Capital or the banks end up on the hook for the debt ?
Here is how Clear Channel looked recently under Bain’s great Leadership Mitt had since left Bain but still has cash with them.
As a business, Clear Channel is doing quite well. It maderevenue of $1.6 billion in Q2 2011, up from $1.5 billion the year before. It showed an operating profit of $311 million, from stations such as KTU in New York and KIIS FM in Los Angeles. Clear Channel’s problem is that is also had a quarterly interest payments of $359 million — more than its operating profits. That interest is being paid on a staggering $20 billion in debt.
That debt came from the financing of a buyout of Clear Channel back in 2006. At the time, Clear Channel was also a healthy functioning business — it had just $8 billion in debt, and saw net income — real profits after interest payments — of $691 million for the year on growing revenues of $7 billion.
But that just wasn’t good enough for the folks at Bain Capital Partners, the private equity group.Bain and its partners bought Clear Channel at that time, but the buyout loaded the company with roughly $12 billion in more debts — which still isn’t paid off. The debts are so large they threaten the future of the company. About $1 billion in Clear Channel’s debt comes due in 2014, and another $10.4 billion comes due in 2016.
http://www.cbsnews.com/...
Clear Channel went from $8 Billion in debt in 2006 and somehow Bain Capital loaded the company with $12 billion more in debt to buy Clear Channel?
This makes no sense for a bank to give Mitt a loan and reasonably expect to get paid back. This screams preferential treatment and NINJA loan to me ( No Income No Job) given Clear Channel’s revenue stream they had no job or income to justify Bain ever buying ClearChannel.
Even loan sharks would want better guarantees than Mitt could give for that loan and they make clear its your arms, legs and family members who are the guarantees.
As everyone who has reads this article this far already knows Clear Channel was going to file for bankruptcy …there was no other way this article could end.
In early 2010 it was announced that the company was facing bankruptcy due to its “crippling debt.”[18]
Standard & Poor’s has changed its rating outlook on CC Media Holdings, the parent company of Clear Channel Communications, from positive to negative, while keeping the CCC+ rating itself the same. The negative outlook reflects what S&P sees as the potential for trouble for the radio business in general in coming years, due to the rise of Internet radio and other digital alternatives, plus broader economic uncertainty. S&P writes: “While audience levels have remained relatively stable in radio, we believe there is less visibility regarding the industry’s ability to achieve sustainable revenue growth in 2012 and beyond, due to advertising market share loss to alternative traditional and digital media and the lack of ad rate integrity.” Near term debt payments shouldn’t be a problem; however, “The more formidable refinancing risk is in 2014, with $2.9 billion of secured and unsecured debt maturities, and in 2016, with $12.3 billion of secured and unsecured debt maturities.” Most of Clear Channel’s current debt burden was assumed in a highly-leveraged buyout engineered by Bain Capital and Thomas H. Lee Partners in 2007.
http://www.mediapost.com/...
Why did Clear Channel go under?
1) Looking at Clear Channel’s debt one could argue Mitt and Bain never intended to pay back the banks.
2) Of course it did not help that Rush Limbaugh got a $400 million multi year contract.
Talk was never cheap for Rush Limbaugh, but now it is getting a lot more expensive.
The A.M. radio host will be paid about $400 million to continue serving up his daily dose of conservative patter through 2016. His $50 million a year paycheck represents a raise of about $14.4 million a year over his current contract, which was paying him $285 million over eight years and was set to expire in 2009.
http://www.nytimes.com/...
3) Then to make matters worse Rush Clear Channel’s biggest draw lost 33% of his audience as of May 23, 2011 costing Clear Channel ad revenue they counted on. ( I would love to see Rush’s most recent numbers hint) And of course while Mitt has no problem’s down sizing regular American’s Mitt somehow never found the guts to tell Rush that he was not worth $400 million. Regular Americans he can fire, outsource, cut their promised pensions, benefits etc but Mitt lacks the stones to tell Rush No!
The just-released Arbitron report reveals that a lot less people are listening to right-wing talk radio.
With a lull in ratings since November, Rush Limbaugh had a 3.0 share of listeners for his radio time slot, which is a 33% slide from October and from last April, reports Crain’s Business.
Meanwhile, The Sean Hannity Show was reported to be down 28% from its peak numbers in the fall.
http://www.businessinsider.com/...
4) There are rumors on the internet that Bain Capital’s ‘s biggest drain on profit at Clear Channel was caused by a secret all you can eat Big Mac’s deal at McDonalds 24/7 that was offered to Rush when he got his $400 million contract.
( ok I am starting that rumor right now ) :)