San Diego, March 09, 2012 (Shareholders Foundation) -- An investor in NYSE:CCO shares filed a lawsuit in State Court against directors of Clear Channel Outdoor Holdings, Inc. over an allegedly improper $656 million loan given from Clear Channel Outdoor Holdings, Inc. to Clear Channel Communications.
Clear Channel Communications Inc, and its owners private equity firms Bain Capital LLC and Thomas H Lee Partners LLC hold a majority interest in Clear Channel Outdoors Holdings. In fact, Clear Channel Communications, which was bought in 2008 by Bain Capital LLC and Thomas H Lee Partners LLC for $18billion, owns about 89% of Clear Channel Outdoors Holdings and four members of Clear Channel Outdoor Holdings’ board are employed by the two private equity firms.

The plaintiff claims that the board of directors of Clear Channel Outdoors Holdings Inc breached their fiduciary duties by agreeing that Clear Channel Outdoors Holdings loaned Channel Communications $654million at incredibly favorable terms to the detriment of public shareholders of Clear Channel Outdoors Holdings.

The plaintiff says that no rational third-party would have ever agreed to lend money on such terms and the loan has so significantly depleted Clear Channel Holdings’ cash reserves that it was forced to borrow $2 billion to fund a special dividend.

The plaintiff says that not only could Clear Channel Outdoors Holdings Inc earn twice as much interest on the loan if it charged Clear Channel Communications a commercially reasonably interest rate, but Clear Channel Outdoors Holdings faces a severe risk that the unsecured loan will never be paid back because Clear Channel Communications has been drowning under a massive debt load since its 2008 leveraged buyout.

On February 27, 2012, Clear Channel Outdoor Holdings, Inc. (NYSE: CCO) announced that its indirect, wholly-owned subsidiary, Clear Channel Worldwide Holdings Inc. will offer $250,000,000 aggregate principal amount of Series A Senior Subordinated Notes due 2020 and $1,000,000,000 aggregate principal amount of Series B Senior Subordinated Notes due 2020 in a private offering that is exempt from registration under the Securities Act of 1933.
Then on February 29, 2012, Clear Channel Outdoor Holdings, Inc. (NYSE: CCO) announced the pricing of the $275 million aggregate principal amount of 7.625% Series A Senior Subordinated Notes due 2020 and $1,925 million aggregate principal amount of 7.625% Series B Senior Subordinated Notes due 2020 offered by its indirect, wholly-owned subsidiary, Clear Channel Worldwide Holdings, Inc.
Clear Channel Outdoor Holdings also announced that its board of directors declared a special cash dividend of $2,167 million (or approximately $6.08 per share, based on shares outstanding at the close of business on February 28, 2012), which will be paid on March 15, 2012 to Class A and Class B stockholders of record at the close of business on March 12, 2012, subject only to the closing of the offering of the Notes.

Shares of Clear Channel Outdoor Holdings, Inc. (NYSE:CCO) are currently trading at far less then in 2008, respectively in 2007, when NYSE:CCO stocks traded as high as almost $27, respectively almost $30 per share.