Clear Channel confirms revised $26bn deal

TH Lee and Bain will settle litigation with lenders over their previously agreed buyout – after the deal’s debt and equity are put in escrow.

Court cases between the private equity firms and lenders involved in the Clear Channel buyout will be settled, as the parties struck a deal worth roughly $1.4 billion (€911 billion) less than originally agreed.

Thomas H Lee Partners and Bain Capital will now pay $36 per share for the company, to be financed by Citigroup, Morgan Stanley, Credit Suisse, RBS, Wachovia and Deutsche Bank.

The revised price, down from the agreed $39.20 per share bid, gives the deal a total value of $17.9 billion, including the assumption of debt. Though the deal's assumed debt component was not disclosed, the previous agreement factored in the assumption of roughly $8 billion in debt.

“We believe this agreement, and the definitive long-term financing package the banks have agreed to provide, offers clarity and confidence to Clear Channel’s customers, employees and partners,” Bain managing director John Connaughton said in a statement.

Scott Sperling, THL co-president echoed Connaughton’s remarks and thanked stakeholders that worked to resolve the stalemate between the banks and the sponsors, each of which blamed the other for the originally agreed deal’s failure to close as planned.

Chad Leat, chairman of Citi’s Alternative Asset Group, said: “The banks are very pleased to have reached a constructive resolution of the matter. We look forward to an expeditious closing of the revised transaction and want to express our appreciation to all those who contributed to the solution.”

Under terms of the revised deal, shareholders will again be offered stub equity in the new company, CC Media Holdings, capped at 30 percent.
The deal is expected to close in the third quarter, pending shareholder approval, but the banks and private equity firms have pushed the deal’s completion deadline to 31 December 2008.

Within the next seven to 10 business days, each party is to put its debt and equity components, via a combination of cash and or letters of credit, into an escrow account managed by the Bank of New York.

Once those deposits are made, the respective parties have agreed to terminate pending litigation, with prejudice, meaning they are not prevented from filing new lawsuits with the same claims.

Goldman Sachs was Clear Channel’s advisor on the transaction, while Akin Gump Strauss Hauer & Feld provided legal advice.