OREANDA-NEWS. Fitch Ratings has affirmed the Issuer Default Rating (IDR) of iHeartCommunications, Inc. (iHeart) at 'CCC' and the IDR of Clear Channel Worldwide Holdings, Inc. (CCWW) at 'B'. CCWW is an indirect, wholly-owned subsidiary of Clear Channel Outdoor Holdings, Inc. (CCOH) and iHeart's 89% owned outdoor advertising subsidiary. iHeart's Rating Outlook remains Negative, while CCWW's remains Stable.

Approximately \$20.7 billion of debt outstanding as of Sept. 30, 2014, including \$4.9 billion issued by CCWW is affected by Fitch's action. A complete list of rating actions follows at the end of this release.

KEY RATING DRIVERS
--The ratings reflect iHeart's highly leveraged capital structure. Fitch estimates current total and secured leverage of 11.7x and 7.2x, respectively as of the LTM period ended Sept. 30, 2014. Total leverage exceeds levels at the leveraged buyout, as a weak operating profile has limited EBITDA growth and free cash flow (FCF) generation. EBITDA has not returned to pre-downturn levels.
--The ratings and Negative Outlook reflect the limited tolerance for further erosion of iHeart's operating profile and precarious liquidity position.
--Fitch recognizes that the company completed a series of capital market transactions which have extended a material amount of its secured maturities to 2019 and beyond providing much needed financial flexibility.
--Fitch expects iHeart's FCF to be negative over the next two years reflecting the interest burden associated with the company's capital structure and operating profile.
--2016 Maturities totalling approximately \$1.2 billion elevate the refinancing risk attributable to iHeart's credit profile.

Overall Fitch's ratings reflect the company's highly leveraged capital structure, tenuous liquidity position with significant scheduled maturities in 2016 and Fitch's expectation that the company's considerable and growing interest burden will hinder near-term FCF generation. Additionally the company's operating profile is subject to ongoing technological threats and secular pressures in radio broadcasting and exposure to cyclical advertising revenue. The ratings are supported by the company's leading position in both the outdoor and radio industries, as well as the positive fundamentals and digital opportunities in the outdoor advertising space.

iHeart is strongly positioned within a secularly challenged radio sector. Fitch believe that iHeart's scale, dominant market presence, especially in desirable DMAs, and established content and strong on-air personality roster shields iHeart in the short-term from recent declines experienced by other radio broadcasters. iHeart is shifting towards a media centric and multi-distribution platform strategy to address the on-going fragmentation in the radio space. However, its limited financial flexibility may deter or delay these efforts and jeopardize operations in the digital era.

Fitch does not expect a material amount of improvement of iHeart's credit profile or absolute debt reduction over the next several years, given the expected negative FCF. Fitch estimates current total and secured leverage of 11.7x and 7.2x, respectively as of the LTM period ended Sept. 30, 2014. The company's FCF deficit amounted to approximately \$261.2 million during the LTM period ended Sept. 30, 2014. Fitch anticipates that the company will report similar FCF deficits during the current rating horizon further pressuring the company's liquidity position.

Scheduled maturities during 2016 total approximately \$1.2 billion and pose significant refinancing risk within iHeart's credit profile. Fitch expects iHeart will continue to explore asset sales (including monetization of repurchased and outstanding notes) and debt-funded dividends from Clear Channel Worldwide Holdings, Inc. (CCWH) to support iHeart's liquidity. Fitch estimates that CCWH could issue approximately \$400 million-\$450 million in order to fund a dividend to its equity holders. Fitch's estimates are based on CCWH's consolidated leverage ratio of 6.4x as of Sept. 30, 2014 and maximizing CCWH's 7.0x incurrence limitation. Net proceeds to iHeart would be approximately \$356 million-\$401 million.

iHeart's previous announcement that its subsidiaries entered into an agreement to sell 411 of broadcast communication tower sites and related assets for up to \$400 million to Vertical Bridge is in line with Fitch's expectation that the company will consider asset sales to support its liquidity position. Fitch recognizes that the towers are non-core assets within iHeart's business model and believes that the transaction does not affect iHeart's operational profile materially.

As of Sept. 30, 2014, iHeart had approximately \$318 million of cash, excluding \$204 million of cash held at CCOH. Backup liquidity consists of an undrawn \$535 million ABL facility (subject to an undisclosed borrowing base) that matures in December 2017 and is subject to springing maturities.

Security and Guarantees
The bank debt and PGNs are secured by the capital stock of iHeart, iHeart's non-broadcasting assets (non-principal property), and a second priority lien on the broadcasting receivables that securitize the ABL facility.

The bank debt and secured notes are guaranteed on a senior basis by iHeartMedia Capital I, Inc. (holding company of iHeart), and by iHeart's wholly owned domestic subsidiaries. The senior guarantee notes due 2021 benefit from a guarantee from the same entities, although it is contractually subordinated to the secured debt guarantees. There is no guarantee from Clear Channel Outdoor Holdings, Inc (CCOH) or its subsidiaries. The legacy notes and the new 10% notes receive no guarantees.

Recovery Ratings
iHeart's Recovery Ratings reflect Fitch's expectation that the enterprise value of the company will be maximized in a restructuring scenario (going concern), rather than a liquidation. Fitch employs a 6x distressed enterprise value multiple reflecting the value of the company's radio broadcasting licenses in top U.S. markets. Fitch assumes going concern EBITDA at \$860 million and that iHeart has maximized the debt-funded dividends from CCOH and used the proceeds to repay bank debt. Additionally, Fitch assumes that iHeart would receive 89% of the value of a sale of CCOH after the CCOH creditors had been repaid. Fitch estimates the adjusted distressed enterprise valuation in restructuring to be approximately \$7 billion.

The 'CCC/RR4' rating for the bank debt and secured notes reflect Fitch's estimate for a recovery range of 31%-50%. Fitch expects no recovery for the senior unsecured legacy notes, the new 10% senior notes, and senior guarantee notes due to their position below the secured debt in the capital structure, and they are assigned 'RR6'. However, Fitch rates the senior guaranteed notes 'CC' given the subordinated guarantee.

CCOH's Recovery Ratings also reflect Fitch's expectation that enterprise value would be maximized as a going concern. Fitch stresses outdoor EBITDA by 15%, and applies a 7x valuation multiple. Fitch estimates the enterprise value would be \$4 billion. This indicates 100% recovery for the unsecured senior notes. However, Fitch notches the debt up only two notches from the IDR given the unsecured nature of the debt. In Fitch's analysis, the subordinated notes recover in the 31% to 50% 'RR4' range, leading to no notching from the IDR.

RATING SENSITIVITIES

Negative: An inability to extend maturities would result in a downgrade. This inability may derive from a prolonged consolidated cash burn, whether driven by cyclical or secular pressures, reducing iHeart's ability to fund debt service and near-term maturities. Additionally, cyclical or secular pressures on operating results that further weaken credit metrics could result in negative rating pressure. Lastly, indications that a DDE is probable in the near term would also drive a downgrade.

Positive: The current Rating Outlook is Negative. As a result, Fitch's sensitivities do not currently anticipate a rating upgrade.

As of Sept. 30, 2014, iHeart had approximately \$20.7 billion in consolidated debt. Debt held at iHeart was \$15.8 billion and consisted of:

--\$7.2 billion secured term loans (\$931 million in 2016 and \$6.3 billion in 2019);
--\$5.3 billion secured PGNs, maturing 2019-2022;
--\$1.7 billion in senior unsecured 12% cash pay / 2% PIK notes maturing in February 2021;
--\$850 million senior unsecured 10% notes due 2018;
--\$725 million senior unsecured legacy notes, with maturities of 2016-2027.

Debt held at Clear Channel Worldwide Holdings, Inc. (CCWH) was \$4.9 billion and consisted of:

--\$2.7 billion in senior unsecured 6.5% notes due in 2022;
--\$2.2 billion in subordinated 7.625% notes due 2020.

Fitch has affirmed the following ratings:

iHeartCommunications, Inc.
--Long-term IDR at 'CCC';
--Senior secured term loans at 'CCC/RR4';
--Senior secured priority guarantee notes at 'CCC/RR4';
--Senior unsecured guarantee notes due 2021 at 'CC/RR6';
--Senior unsecured legacy notes at 'C/RR6'.

The Rating Outlook for iHeart is Negative.

Clear Channel Worldwide Holdings, Inc.
--Long-term IDR at 'B';
--Senior unsecured notes at 'BB-/RR2';
--Senior subordinated notes at 'B/RR4'.

The Rating Outlook for Clear Channel Worldwide Holdings, Inc. is Stable.