Wedbush Morgan Upgrades Clear Channel Outdoor (CCO) to Buy

June 2, 2009 4:26 PM EDT

Wedbush Morgan upgrades Clear Channel Outdoor (NYSE: CCO) from Hold to Buy. Price target increased from $4 to $6.

Wedbush analyst says, "CCO announced this morning that it was looking to refinance the $2.5bn note outstanding to its parent company Clear Channel Communications. Among the options being considered is an offering of new senior or senior subordinated notes, with the proceeds used to repay the intercompany note. CCO positives would include removing refunding risk and having a capital structure more independent of Clear Channel, at cost of higher interest. Intercompany note is not due until August 2010, so that failure to complete the contemplated refinancing would create no immediate liquidity risk, but other companies have been pursuing refinancings of maturities that far out as credit markets thaw. We estimate the incremental interest on the $2.5bn could be ~600bps, or ~$150m per year...The release gave no indication on timing or the likelihood of an actual transaction occurring. We note that other companies have successfully rolled over maturities recently, e.g., Lamar (Nasdaq: LAMR)."

Clear Channel Outdoor Holdings, Inc., an outdoor advertising company, owns and operates advertising display faces worldwide.

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