The biggest leveraged buyouts are now becoming the biggest busts, for obvious macroeconomic reasons.
In music, that includes EMI Group, a company now hanging by a financial thread and desperately seeking another infusion. It also includes Clear Channel Communications, an LBO potentially skirting towards a covenant violation – or worse.
On Tuesday, Standard & Poor’s lowered its rating on Clear Channel to ‘CCC’, from ‘B-” previously, based on continued issues related to terrestrial radio. “Cyclical pressure has compounded negative secular trends at Clear Channel’s radio segment,” the group noted. “The negative rating outlook reflects the potential for a financial covenant violation in late 2009.” The rating of “CCC” is considered quite negative, and pushes the stock further into junk bond status.
The debt load in question is more than $20 billion, a huge sack for private equity owners Bain Capital and Thomas H Lee Partners. Separately, unit Clear Channel Outdoor Holdings has been attempting to issue a bond offering reaching $3 billion, though the effort appears mostly unsuccessful.