CCO Shareholder Concerned About Fiduciary Issues

Business Wire,  April 7, 2008  

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NEW YORK -- Arnhold and S. Bleichroeder Advisers, LLC and GoodHope Advisers LLC have sent the following letter to the Clear Channel Outdoor Holdings, Inc. Board of Directors:

April 1, 2008











The Board of Directors





Clear Channel Outdoor Holdings, Inc.





200 East Basse Road





San Antonio, TX 78209

Members of the Board:

We are a significant beneficial owner of Clear Channel Outdoor Holdings, Inc. ("CCO") and hold 10.7 million shares of CCO in accounts that we manage for Arnhold and Bleichroeder Advisers, LLC and GoodHope Advisers LLC. We have been a long-term holder of CCO shares.

We are writing to express our concern that CCO management and the controlling shareholder, Clear Channel Communications, Inc. ("CCU"), are disregarding their fiduciary duty to create value on behalf of all shareholders, not just the majority shareholder. Since January, we have made numerous attempts to initiate a dialogue with senior CCO management to discuss our concerns. We have yet to receive a substantive response. Most recently, a call with Randall Mays was scheduled and then postponed. We are trying to be understanding about the lack of response given the turmoil related to the CCU LBO; however, there are issues that must be addressed.

First, we are concerned about the increasing amount of the "due from CCU" asset on the CCO balance sheet and can see no business reason for this increase (other than for the controlling shareholder to take money out of the business without adequately compensating the other shareholders). Further, it is inappropriate for CCO to have large amounts of debt "due to" and "due from" a single entity, particularly on terms that are uneconomic to CCO. As the intercompany note can be repaid, we question why the "due from" asset is not applied to pay down the balance of the intercompany note.

Second, we read with interest the section of the recent NY lawsuit against various banks in which the private equity sponsor stated its intention to extend the intercompany note with CCO post 2010. This arrangement clearly benefits the controlling shareholder and its potential new owners to the detriment of minority shareholders. Better funding alternatives should be available for CCO post the close of the announced LBO, and we question why CCO should pay an above-market interest rate to its controlling shareholder when CCO can refinance.

Lastly, post the close of CCU's LBO, the interest rate paid on the "due from" asset will be a fraction of the economic cost (and the rate that the market would demand). Instead of being used to account for the net activities from daily cash sweeps, the account (promissory note) is now apparently being used as a cheap (below market), longer-term funding source for the parent company. In effect, the promissory note apparently has become a one billion dollar unsecured revolver for CCU. This use is very different from our understanding of the purpose of the account.

We were told during the CCO IPO roadshow that the cash management system and debt arrangements were set up to allow CCO to benefit from the systems in place and CCU's strong balance sheet. With the announcement of the LBO of CCU, the purpose of the arrangements seems to have changed. Now the controlling shareholder appears to be using the arrangements to take money out of CCO (without compensating the other shareholders) and as a cheap source of funding (for which CCO is not being compensated).

We look forward to immediately beginning a dialogue to discuss our concerns. Please call Ren Richmond at 212-698-3180.

Sincerely,

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Colin Morris       <  <  <  <



Ren Richmond
Portfolio Manager  <  <  <  <

Analyst

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