Fitch Expects to Downgrade Clear Channel IDR to 'B'; Stable Outlook

Business Wire, Sept 25, 2007

NEW YORK -- In line with previous guidance, Fitch Ratings expects to downgrade Clear Channel Communications Inc.'s (Clear Channel) Issuer Default Rating (IDR) to 'B' from 'BB-'. The Rating Outlook is expected to be Stable. Existing ratings remain on Rating Watch Negative pending the closing of the transaction and review of final documentation.

The expected rating action reflects today's announcement by the company that shareholder's have approved the acquisition of the company by a group led by Thomas H. Lee Partners, L.P. and Bain Capital Partners, LLC.

Given the information currently available, including current valuation and financing commitments, Fitch believes that the IDR will be 'B'. Fitch expects pro forma leverage and interest coverage to approximate 9.0 times (x) and 1.5x, respectively, after taking into account estimated proceeds from planned asset sales. The stability of the company's traditional Outdoor business, the strong un-levered free cash flow dynamics of its radio business, and growth prospects from digital initiatives support the expected rating and Outlook. Operating concerns include continued pressured industry trends in traditional radio broadcasting.

The company has stated that at least a majority in principal amount of the 7.65% senior notes due 2010 and the 8% AMFM senior notes due 2008 will be redeemed. Publicly disclosed information to this point is not adequate for Fitch to estimate where the remaining $5 billion of existing unsecured bonds will fall within the capital structure. Subject to standard carve-outs, existing bonds have a Limitation on Mortgages covenant that restricts liens upon the equity or debt of a subsidiary, as well as liens upon any Principal Property (as defined in the Indenture) in the United States. The Indenture does not appear to limit subsidiary guarantees.

Depending on the placement of the existing bonds, Fitch expects the secured debt to be rated with 0 to 1 notches up from the IDR and the new unsecured debt to be rated 1 to 2 notches below the IDR. Any debt structurally subordinate to the new unsecured debt would be notched down accordingly.

Fitch's rating definitions and the terms of use of such ratings are available on the agency's public site, www.fitchratings.com. Published ratings, criteria and methodologies are available from this site, at all times. Fitch's code of conduct, confidentiality, conflicts of interest, affiliate firewall, compliance and other relevant policies and procedures are also available from the 'Code of Conduct' section of this site.