The Company intends to use the anticipated net proceeds of approximately $220 million from this transaction to improve its liquidity position and increase financial flexibility, subject to any limitations set forth in its debt agreements. Pro forma for the sale of the Company’s investment in Clear Media and the draw down on the revolving credit facility of $150 million that occurred on March 25, 2020, the amount of first lien debt as of December 31, 2019 would have been reduced to $2,666 million and the first lien net leverage ratio (FLLR) would have been 4.9x as of December 31, 2019, well below the FLLR requirement of 7.6x under the terms of the Company’s senior secured cash flow credit facilities.  See “Non-GAAP Financial Measures” below.

Credit Suisse is serving as financial advisor and Kirkland & Ellis is serving as legal advisor to the Company for the Clear Media transaction.

* Figures based on the foreign exchange rates of USD/HKD = 7.75482.

Financial and Liquidity Update

In light of the rapidly-evolving impact of COVID-19, the Company is implementing and evaluating actions to strengthen its financial position and support the continuity of its platform and operations.

The Company believes the anticipated net proceeds from the sale of Clear Media combined with the cash on hand, including the $150 million recently drawn from the Revolving Credit Facility, and the initiatives the Company is actively pursuing will improve its liquidity position and provide the Company with additional financial flexibility during the economic downturn.  These initiatives include but are not limited to:

• Identifying opportunities to significantly reduce annual capital expenditures.
• Discretionary growth capex can be largely deferred.
• Maintenance capex can be deferred to the extent possible.
• Exploring deferral options with respect to committed capex.
• Continuing discussions with landlords to align fixed site lease expenses with revenue during the economic downturn.
• Beginning to achieve success in both Europe and the U.S.
• Reducing employee compensation expense.
• Temporary salary reductions including 30% reductions for both the Company’s Worldwide CEO, William Eccleshare and Americas CEO, Scott Wells;
• Furloughs based on market conditions, hiring freezes and variable compensation reductions.
• Aggressively cutting discretionary spending.

However, given the quickly evolving economic environment, continuing downward pressure we are currently seeing in Europe and beginning to see in the U.S., and the uncertainty around how long the economic downturn and its impact on our business will last, the Company is withdrawing its guidance for 2020, previously provided on February 27, 2020. As a reminder, the Company’s next material debt maturity is 2024 when the Company’s $1.9 billion in 9.25% Senior Notes are due.