What’s Clear Channel worth, anyway?
Simple question, but there’s no simple answer. Wachovia Capital Markets bond analysts Bishop Cheen and Davis Hebert have been running the numbers for a series of scenarios to figure out the recovery value of Clear Channel’s debt. They call it “Debt Bingo” because the matrix of scenarios could rival the number of squares on a classic Bingo card. The sort answer, after considering their 16 possible outcomes, is that the analysts figure Clear Channel debt could be valued at about 57 cents on the dollar. Under nearly all of their scenarios (14 out of 16), there is no residual value to the company for unsecured debt, let alone equity holders. Only if the company is able to reduce its secured debt and produce more media cash flow than currently seems likely (say, $1.6 billion instead of $1.3 billion) will the picture improve by the end of 2009. “All roads go through secured debt. If the company can reduce secured debt, post higher earnings and be valued at more normalized 10x EBITDA we belie
