CORRESP 1 filename1.htm corresp
 

July 31, 2007
BY EDGAR
Securities and Exchange Commission
Division of Corporation Finance
450 Fifth Street, N.W.
Washington, D.C. 20549
Attention: Michele M. Anderson
     Re:   CC Media Holdings, Inc. (formerly known as BT Triple Crown Holdings III, Inc.)
Amendment No. 3 to Form S-4
Filed July 31, 2007
File No. 333-143349
Dear Ms. Anderson:
     On behalf of our client, CC Media Holdings, Inc. (f/k/a BT Triple Crown Capital Holdings III, Inc.) (“Holdings”), we hereby acknowledge receipt of the comment letter dated July 27, 2007 (the “Comment Letter”) from the staff (the “Staff”) of the Securities and Exchange Commission (the “Commission”) concerning the above captioned Amendment No. 1 to the Registration Statement on Form S-4 (the “S-4”).
     We submit this letter in response to the Comment Letter on behalf of Holdings. For ease of reference, we have reproduced the text of the comments in bold-face type below, followed by Holdings’ responses. Unless otherwise noted, page number references herein refer to the joint proxy statement/prospectus (the “Proxy Statement/Prospectus”) contained in Amendment No. 3 to the S-4 (the “Amended S-4”). Terms used but not defined herein have the meanings set forth in the Proxy Statement/Prospectus.
     Holdings is filing today, by way of EDGAR, the Amended S-4, together with this response letter. Under separate cover, we will send three marked copies of the Amended S-4 and all supplemental information requested by the Staff by courier to you.
 

 

 

Michele M. Anderson
Securities and Exchange Commission
July 31, 2007
Page 2
RESPONSES TO STAFF COMMENTS
Cover page
1.   Revise to clarify that the additional consideration will consist of cash only.
 
    Response: The Proxy Statement/Prospectus has been revised to comply with the Staff’s comment. Please see the cover page of the Proxy Statement/Prospectus.
Summary, page 1
2.   We note your statement, in response to our prior comment 10, that all shares of Class A common stock that you possibly will issue to Highfields Funds are being registered on this Form S-4. Please revise the Summary section to disclose this fact, and to quantify the number of shares that may be issuable to Highfields Funds in the event the shareholder elects to receive only Holdings common stock.
 
    Response: The Proxy Statement/Prospectus has been revised to comply with the Staff’s comment. Please see page 16 of the Proxy Statement/Prospectus.
Material United States Federal Income Tax Consequences, page 7
3.   Revise to state in clear, plain language how shareholders will be taxed rather than vaguely referring to the various consequences “to the extent” that the exchange is treated as a redemption or as a contribution.
 
    Response: The Proxy Statement/Prospectus has been revised to comply with the Staff’s comment. Please see page 7 of the Proxy Statement/Prospectus.
Conditions to the Merger, page 7
4.   Please revise this section to include your response to our prior comment 17.
 
    Response: The Proxy Statement/Prospectus has been revised to comply with the Staff’s comment. Please see page 8 of the Proxy Statement/Prospectus.

 

 

Michele M. Anderson
Securities and Exchange Commission
July 31, 2007
Page 3
Risk Factors, page 17
The incurrence of indebtedness to pay the cash portion of the Merger Consideration... [,]” page 21
5.   Your response to our prior comment 21 indicates that you are not able to determine the specific amount of Clear Channel’s cash flow that will be used to pay principal and interest on the debt. Yet we note that you have disclosed payment obligations on a pro forma basis in the table of contractual obligations appearing on page 46. Please revise the risk factor to provide investors with some form of quantitative information relating to Clear Channel’s future debt repayment obligations.
 
    Response: The Proxy Statement/Prospectus has been revised to comply with the Staff’s comment. Please see page 21 of the Proxy Statement/Prospectus.
Notes to Unaudited Pro Forma Condensed Consolidated Financial Data, page 39
6.   We note your response to our prior comment 26. Please disclose the impact of the other management shareholders exchanging their current holdings for Rollover Shares on the table on page 40. If the impact is not material, disclose this fact.
 
    Response: The Proxy Statement/Prospectus has been revised to comply with the Staff’s comment. Please see pages 40 and 41 of the Proxy Statement/Prospectus.
Contractual Obligations; Indebtedness and Dividend Policy Following the Merger, page 46
7.   State that the amounts shown in the table are in thousands of dollars.
 
    Response: The Proxy Statement/Prospectus has been revised to comply with the Staff’s comment. Please see page 47 of the Proxy Statement/Prospectus.
 
8.   To the extent known, disclose the anticipated consequences of default under the senior secured credit facilities.
 
    Response: The Proxy Statement/Prospectus has been revised to comply with the Staff’s comment. Please see page 49 of the Proxy Statement/Prospectus.

 

 

Michele M. Anderson
Securities and Exchange Commission
July 31, 2007
Page 4
Board of Directors and Management of Holdings, page 49
Compensation Discussion and Analysis, page 53
9.   You state in the introductory paragraph that the company’s executive compensation program as a whole will not be finalized until after the consummation of the merger. Please include a risk factor addressing the uncertainty regarding the philosophy or objectives of Clear Channel’s future compensation programs, as well as the policies or practices for the implementation of those programs.
 
    Response: The Proxy Statement/Prospectus has been revised to comply with the Staff’s comment. Please see page 23 of the Proxy Statement/Prospectus.
Annual Incentive Bonus, page 55
10.   Disclose here that, pursuant Section 5(a) of letter agreements entered into with each of Mark Randall and L. Lowry Mayes, if in any year the surviving company achieves 80% of OIBDAN, each of those executive officers is entitled to receive a minimum bonus of $l million. Also, disclose OIBDAN and given an example of how it is calculated. Also revise to provide more specific information about the “certain performance goals” and the minimum bonuses that the named executive officers will be eligible to receive upon satisfaction of those goals under “Employment Agreements with Named Executive Officers” on page 57.
 
    Response: The Proxy Statement/Prospectus has been revised to comply with the Staff’s comment. Please see pages 58-59 of the Proxy Statement/Prospectus.
Background of the Merger, page 67
11.   After reviewing your response to our prior comment 32, we continue to believe that you should provide Item 4(b) disclosure of the November 16, 2006 Watson Wyatt opinion and file its opinion and consent as exhibits to the Form S-4. The Commission has stated, in the Adopting Release for Form S-4, that “Item [4(b)] requires that if the registrant or the company being acquired has obtained a report, opinion or appraisal from an outside party as to the transaction and refers to such opinion in the prospectus, then the information called for by Item 9(b)(1) of Schedule 13E-3 must be furnished.” Business Combination Transactions; Adoption of Registration Form, Release No. 33-6578 (Apr. 23, 1985) at [*28]. In this regard, it appears that the management arrangements are integrally related to the merger and that the management arrangements have not been modified, to a material extent, since the date of the Watson Wyatt opinion provided

 

 

Michele M. Anderson
Securities and Exchange Commission
July 31, 2007
Page 5
November 16, 2006. Also provide us with any analyses, reports, presentations, or similar materials provided to or prepared by Watson Wyatt in connection with rendering its advice.
Further, it is not clear to us how the analyses set forth on the various Goldman Sachs presentations are “substantially similar” to those described under “Opinion of Clear Channel’s Financial Advisor” in light of the changing valuation ranges in the opinions Goldman Sachs provided to the Clear Channel board on separate occasions. Please revise to provide full Item 4(b) disclosure about each of the Goldman Sachs presentations (beginning with the October 13, 2006 presentation). Your expanded disclosure should summarize any material differences in the information presented over time.
Alternatively, provide a more detailed analysis of why each of the Goldman Sachs presentations and the Watson Wyatt opinion are not material.
Response: Holdings respectfully notes the Staff’s comment. Holdings is sending supplementally to Mr. Swanson copies of materials presented by Watson Wyatt at the meeting of Clear Channel’s special advisory committee on November 13, 2006, which consist of the following: (i) a list of discussion points, (ii) a summary of the management equity reserves and co-investment levels of comparable leveraged buyout transactions, (iii) a calculation of potential change in control payments to certain executive officers prepared jointly by Watson Wyatt and Clear Channel and (iv) an updated calculation delivered on November 16, 2007. Holdings has been informed by Clear Channel and respectfully notes that Watson Wyatt did not deliver any written report or render any formal opinion and that the information presented to the special advisory committee by Watson Wyatt primarily consists of a compilation of financial data and related information relating to third party transactions and information prepared jointly with Clear Channel. Accordingly, Holdings does not believe that this information constitutes a report, opinion or appraisal required to be filed pursuant to Item 4(b) of Form S-4. Additionally, while Holdings respectfully notes the Staff’s comments that the management arrangements have not been modified, to a material extent, since November 16, 2006, they were modified on November 15, 2006, and only the spreadsheet delivered on November 16, 2006 reflects the terms of the new arrangement. Holdings also respectfully advises the Staff that since then the terms of the merger agreement have been amended on two separate occasions. At the same time Watson Wyatt has not updated the information presented to the special advisory committee in November 2006. The information originally provided by Watson Wyatt is no longer reflective of the terms of the transaction currently being presented to Clear Channel shareholders for approval. Holdings also respectfully advises the Staff, as described in the Proxy Statement/Prospectus, that the special committee advisory committee has not made any determination as to the fairness of the terms of the amended merger agreement. Holdings therefore believes that the information compiled by Watson Wyatt prior to execution of the original merger

 

 

Michele M. Anderson
Securities and Exchange Commission
July 31, 2007
Page 6
    agreement would not be material to the investment decision of Clear Channel’s shareholders with respect to the pending transaction.
 
    The Proxy Statement/Prospectus has been revised in response to the Staff’s comment to address the changing indicative values in the financial analyses underlying the opinions Goldman Sachs provided to the Clear Channel board on separate occasions. Please see pages 106-110 of the Proxy Statement/Prospectus. Holdings supplementally advises the Staff that the indicative values described under “Opinion of Clear Channel’s Financial Advisor”, were in each case the highest indicative values in the financial analyses underlying the opinions Goldman Sachs provided to the Clear Channel board on separate occasions. Moreover, each of the various Goldman Sachs presentations, other than the presentation that included the underlying financial analyses for Goldman Sachs’ opinion dated May 17, 2007 which has been described in the Proxy Statement/Prospectus, did not relate to the $39.20 per share merger consideration under the amended merger agreement. Holdings therefore believes that each of the presentations, other than the May 17, 2007 presentation described in the Proxy Statement/Prospectus, would not be material to the investment decisions of Clear Channel’s shareholders because the financial analyses in such presentations were older, included lower indicative values and do not relate to the pending transaction under the amended merger agreement. Therefore, further disclosure of such presentations could be repetitive, lengthy, confusing and misleading to Clear Channel shareholders.
 
12.   We have considered your revisions in response to our prior comment 34. However, we note your disclosure on page 83 that “significant shareholders of Clear Channel had privately or publicly made known their opposition to the merger at $39.00 per share and their lack of interest in shares of capital stock of the surviving corporation following the merger....” Please revise the disclosure on page 84 to clarify whether any of the “substantial majority” of stockholders who expressed a willingness to consider a stock election (during the meetings between May 7, 2007 and May 17, 2007) are the same as any of the significant shareholders of Clear Channel who had expressed their lack of interest in shares of stock of the surviving corporation. Furthermore, if any of the shareholders expressing a willingness to consider a stock election are identical to the shareholders that previously indicated a lack of interest in shares of stock of the surviving corporation, please clarify why they changed their opinions towards a stock election option (assuming they expressed the reasons for the change).
 
    Response: The Proxy Statement/Prospectus has been revised to comply with the Staff’s comment. Please see page 85 of the Proxy Statement/Prospectus.

 

 

Michele M. Anderson
Securities and Exchange Commission
July 31, 2007
Page 7
13.   Revise the new disclosure in the first full paragraph on page 84 to clarify whether the Highfields Funds were one of the “most significant shareholders” or the “majority of the ten shareholders with the largest holdings” that met with the board throughout May 2007. Furthermore, clarify whether the Highfields Funds were part of the “broad group of [Clear Channel’s] shareholders expressing a willingness to consider a stock election.”
 
    Response: The Proxy Statement/Prospectus has been revised to comply with the Staff’s comment. Please see page 85 of the Proxy Statement/Prospectus.
Reasons for the Merger, page 85
14.   We note your revisions in response to our prior comment 37. Clarify what you mean by the statement that the ability to retain an equity interest “is not necessitated by the terms of the merger.” Also revise the related risk factor discussion appearing on page 18 to address the consequences to shareholders as a result of the board’s limited recommendation, whether legal or otherwise.
 
    Response: The Proxy Statement/Prospectus has been revised to comply with the Staff’s comment. Please see pages 18 and 87 of the Proxy Statement/Prospectus.
15.   Despite your revisions in response to prior comment 38, we believe that additional context is needed in a number of the factors that the board considered so that investors can adequately assess this information. For example:
  •   expand the first bullet point on page 86 to briefly address what the board considered with respect to the challenges faced by Clear Channel and explain why the challenges and risks supported its decision to enter into the merger agreement;
 
  •   revise the second bullet point to describe the board’s conclusions regarding Clear Channel’s prospects and the uncertainty associated with the radio industry;
 
  •   revise the third bullet point to briefly explain what the board concluded about each strategic alternative so that it is clear why the alternatives were rejected; and
 
  •   clarify why the board considered “the fact that entities affiliated with the Sponsors would control Holdings” (page 88) to be a potentially negative factor.
Response: The Proxy Statement/Prospectus has been revised to comply with the Staff’s comment. Please see pages 88 and 90 of the Proxy Statement/Prospectus.

 

 

Michele M. Anderson
Securities and Exchange Commission
July 31, 2007
Page 8
16.   We reissue prior comment 14 in part. Please revise the last bullet on page 86 to address how the board considered, if at all, the fact that Goldman Sachs’ fees are contingent. Similarly revise to explain how the board’s decision to rely upon Goldman Sachs’ opinion was impacted, if at all, by the fact that Goldman recently provided or currently provides services to THL Partners, Bain and their affiliates.
 
    Response: The Proxy Statement/Prospectus has been revised to comply with the Staff’s comment. Please see page 89 of the Proxy Statement/Prospectus.
Opinion of Clear Channel’s Financial Advisor, page 101
17.   After reviewing your revisions in response to our prior comment 44, we continue to believe that further revisions are necessary. Please provide more specific disclosure of how Goldman Sachs arrived at each of the valuation ranges cited in the opinion. For example, disclose the method by which Goldman Sachs calculated the weighted average cost of capital (including the cost of debt and the cost of equity), how the final weighted average cost of capital was used to arrive at the discounted cash flow valuation range, and how that estimated cost of capital was used to calculate the valuation ranges under the other analyses. As another example, identify the “selected companies which exhibited similar business characteristics to Clear Channel” (page 105), disclose each company’s one-year forward EBITDA multiples, and quantify and discuss the adjustments Goldman Sachs made to the multiples (page 105). Also, explain how Goldman Sachs determined the amount of proceeds from the sale of the small market radio and TV assets for purposes of the sum-of-the-parts analyses (pages 105 and 106). These are merely examples. The discussion of Goldman Sachs’ opinion should include a sufficiently detailed discussion of the methods used and the figures relied upon to arrive at each of the valuation ranges.
 
    Response: The Proxy Statement/Prospectus has been revised to comply with the Staff’s comment, with the exception of the Staff’s comment to quantify the adjustments that Goldman Sachs made to one-year forward EBITDA multiples of the “selected companies”. Please see pages 106-110 of the Proxy Statement/Prospectus.
    Holdings has been advised that Goldman Sachs made customary financial adjustments to the EBITDA multiples utilizing publicly available quantitative information including research analysts’ estimates of EBITDA and the impact of announced acquisitions and divestitures, where applicable. In light of the customary nature of the adjustments, the public availability of the quantitative information underlying such adjustments and the lengthy disclosure that may result from quantitative disclosure, Holdings respectfully submits that quantitative disclosure would not be central to an investor’s understanding of how Goldman Sachs arrived at the indicative values in its financial analyses.
 
18.   Our prior comment 46 sought Item 1015(b)(4) disclosure of the compensation Goldman Sachs received for all services provided to Clear Channel and its affiliates, as well as otherwise material disclosure in the form of the fees paid for services that Goldman provided to Bain, THL Partners, and their affiliates during the past two years. Please revise to quantify the total fees that Goldman Sachs has received from each of Bain, THL Partners, and their affiliates during the last two years.
 
    Response: The Proxy Statement/Prospectus has been revised to comply with the Staff’s comment.

 

 

Michele M. Anderson
Securities and Exchange Commission
July 31, 2007
Page 9
         Please see page 112 of the Proxy Statement/Prospectus.
Material United States Federal Income Tax Consequences, page 108 & Exhibit 8.1
19.   We note that you have filed a short-form opinion from Ropes & Gray on the material tax consequences of the transaction. Please revise the discussion on pages 108 through 110 to clearly state that the discussion and each of the conclusions are the opinion of Ropes & Gray LLP. Similarly revise the summary on page 7 and the tax risk factor on page 18 to state that those summary discussions are based on counsel’s opinion. Delete any references to what you “believe” regarding the treatment of the transactions as two separate transactions and replace them with counsel’s opinion. Further, ensure that counsel presents its full opinion in this section of the document starting on page 108 and clearly identify upon what counsel is opining.
 
    Response: The Proxy Statement/Prospectus has been revised to comply with the Staff’s comment. Please see pages 7 and 112-116 of the Proxy Statement/Prospectus.
20.   Under “Exchange of Clear Channel Common Stock for a Combination of Holdings Common Stock and Cash,” clearly explain how—when electing to receive a combination of cash and stock—the total cash received by a U.S. holder will be allocated between “Clear Channel Cash” versus “Sponsor Cash.”
 
    Response: The Proxy Statement/Prospectus has been revised to comply with the Staff’s comment. Please see page 114 of the Proxy Statement/Prospectus.
21.   We note the disclosure that, for purposes of the deemed redemption, a U.S. holder “should be treated as recognizing taxable gain or loss....” We similarly note the disclosure in the risk factor on page 18 that U.S. holders “should recognize taxable gain” in the deemed exchange transaction. Please revise to phrase the opinions more definitively. If tax counsel is using the “should” language because uncertainty exists regarding the tax consequences or it is unable to opine on the matter, it should explain why it cannot give a “will” opinion and describe the degree of uncertainty in the opinion.
 
    Response: The Proxy Statement/Prospectus has been revised to comply with the Staff’s comment by deleting the risk factor starting with “Potential risk of greater taxable gain upon recharacterization of the merger” and revising the Section entitled “Material United States Federal Income Tax Consequences.” Please see page 115 of the Proxy Statement/Prospectus.
22.   We note your disclosure on page 110, under the sub-heading “Recharacterization of the Merger by the Internal Revenue Service.” Clearly state counsel’s opinion as to whether the transaction will be treated as a redemption or a contribution. If counsel cannot opine

 

 

Michele M. Anderson
Securities and Exchange Commission
July 31, 2007
Page 10
    on the matter, then you must clearly state that is the case and address why it is not able to opine on this material tax consequence. If counsel states that it cannot opine on this matter, then you should not suggest that the deemed redemption is more likely to occur, as you do under “Exchange of Clear Channel Common Stock for a Combination of Holdings Common Stock and Cash.” Alternatively, counsel may issue a “should” or “more likely than not” opinion with respect to this particular tax consequence, explain the reasons for the doubt and disclose the degree of the uncertainty.
 
    Response: The Proxy Statement/Prospectus has been revised to comply with the Staff’s comment by substantially reworking the disclosure on page 115 to state clearly that the Deemed Redemption and Deemed Exchange will be treated as separate transactions and, while we note that there is a slight possibility that the IRS will take a different position, the disclosure and the opinion conclude that the Deemed Redemption and Deemed Exchange will be treated as separate transactions. See paragraph beginning “Possible Collapse of Deemed Redemption into Deemed Exchange by the Internal Revenue Service.”
 
23.   Please revise to delete the last sentence of the paragraph starting with “Recharacterization of the Merger by the Internal Revenue Service.” It is not appropriate to provide a tax opinion, summarize the tax consequences and then tell shareholders they “are urged to consult” their own tax advisor. Also revise the identical language appearing in the related risk factor.
 
    Response: The Proxy Statement/Prospectus has been revised to comply with the Staff’s comment by deleting the sentence that “Holders are urged to consult their tax advisers regarding such potential risk.”
 
24.   Advise Ropes & Gray to revise the short-form opinion, filed as Exhibit 8.1, to delete the statement that in the opinion of counsel, the discussion under the caption “Material United States Federal Income Tax Consequences” is “accurate in all material respects.” Counsel should clearly state, in the short-form opinion, that the discussion underneath the caption is the opinion of counsel and that it confirms its opinion as set forth in that section of the document. In addition, since the opinion states that counsel has no obligation to update its opinion, then have counsel clarify that the opinion speaks through the date of effectiveness of the registration statement. Counsel can do this through disclosure or by filing another opinion dated the date of effectiveness.
 
    Response: Ropes & Gray has revised the short-form opinion, filed as Exhibit 8.1 to the Amended S-4 to comply with the Staff’s comment and intends to file another opinion dated the effective date.
Representations and Warranties, page 125
25.   Your statement that the representations and warranties were “made to and solely for the benefit of [the parties to the merger agreement]” may continue to imply that the referenced merger agreement does not constitute public disclosure under the federal

 

 

Michele M. Anderson
Securities and Exchange Commission
July 31, 2007
Page 11
securities laws. Please revise to delete this potential implication pursuant to prior comment 50.
Response: The Proxy Statement/Prospectus has been revised to comply with the Staff’s comment by deleting the statement that the representations and warranties were “made to and solely for the benefit of [the parties to the merger agreement].”
Signatures, page II-5
26.   Revise your signature page to comply with our prior comment 54. In the column next to the signature of the individual serving as your Principal Financial Officer, you should revise to disclose that individual’s role as “Principal Financial Officer” (regardless of that person’s formal title).
 
    Response: The Proxy Statement/Prospectus has been revised to comply with the Staff’s comment. Please see page II-5 of the Proxy Statement/Prospectus.
Exhibits
27.   We note your response to our prior comment 56. Since you do not expect to finalize the debt financing arrangements until shortly before closing, and since shareholders should have an opportunity to consider the extent to which financing may not be assured, please file the commitment letters as exhibits to the Form S-4. Alternatively, please provide us with copies of the commitment letters for our review, understanding that we may have further comments upon review of the letters.
 
    Response: Holdings has filed as an exhibit to the Amended S-4 the debt commitment letter referenced above.
* * * *
     As appropriate, please amend your registration statement in response to these comments. You may wish to provide us with marked copies of the amendment to expedite our review. Please furnish a cover letter with your amendment that keys your responses to our comments and provides any requested information. Detailed cover letters greatly facilitate our review. Please understand that we may have additional comments after reviewing your amendment and responses to our comments.
     We direct your attention to Rules 460 and 461 regarding requesting acceleration of a registration statement. Please allow adequate time after the filing of any amendment for

 

 

Michele M. Anderson
Securities and Exchange Commission
July 31, 2007
Page 12
further review before submitting a request for acceleration. Please provide this request at least two business days in advance of the requested effective date.
     You may contact Michael Henderson, Staff Accountant, at (202) 551-3364 or Dean Suehiro, Senior Staff Accountant, at (202) 551-3384 if you have questions regarding comments on the financial statements and related matters. Please contact Derek B. Swanson, Attorney-Adviser, at (202) 551-3366, or me at (202) 551-3810 with any other questions.
Response: Holdings acknowledges the Staff’s response protocol and has filed a pre-effective amendment as well as this response letter by way of EDGAR. In addition, marked copies of the Amended S-4 along with supplemental material will be delivered to the Staff by courier, under separate cover, to the attention of Mr. Derek B. Swanson. Holdings acknowledges that the Staff may have additional comments after reviewing the Amended S-4 and this letter.
Holdings acknowledges the Staff’s protocol with respect to any request to accelerate the effectiveness of the S-4.
Holdings has noted this contact information and wishes to thank these contacts for their assistance and prompt review of the S-4.
 
        We appreciate your assistance in reviewing this response letter. Please direct all questions or comments regarding this filing to me at (415)-315-6344.
         
  Sincerely,
 		  
  /s/ Brian C. Erb    
     
  Brian C. Erb
Ropes & Gray LLP 		  
 
Enclosures
cc:   John P. Connaughton
Bain Capital, LLC

 

 

Michele M. Anderson
Securities and Exchange Commission
July 31, 2007
Page 13
Scott M. Sperling
Thomas H. Lee Partners, L.P.

Andrew W. Levin, Esq.
Hamlet Newsom, Esq.
Clear Channel Communications, Inc.
David C. Chapin, Esq.
Ropes & Gray LLP
C.N. Franklin Reddick, Esq.
David B. Antheil, Esq.
Akin Gump Strauss Hauer & Feld LLP