Settlement Near in Clear Channel Dispute?
Morgan Stanley and Clear Channel shareholder asked for the matter to be settled.
May 13, 2008
Thomas H. Lee Partners and Bain Capital Partners, and the bank lending group that had committed to finance their $26 billion buyout of Clear Channel Communications, are involved in settlement talks, according to the San Antonio radio station operator.
Citigroup, Credit Suisse, Deutsche Bank, Morgan Stanley, Royal Bank of Scotland and Wachovia and the pair of Boston private equity firms are reported to be re-negotiating the deal’s price tag downward from $39.20 a share to $36 per share for Clear Channel’s stock.
New settlement talks averted court proceedings in New York yesterday between lenders to the buyout and Boston’s THL and Bain Capital.
When Clear Channel issued its statement late Monday affirming that settlement talks were in progress, the company said it would not comment on potential settlement terms, and noted that “no settlement has been reached by the parties and there can be no assurance that any settlement will be reached.”
On Tuesday, Clear Channel’s shares traded at $33.07 per share, or minimally above their close at $32.87 a share on Monday.
The New York Times reported Tuesday that settlement talks began after Clear Channel shareholder Highfields Capital Management and Morgan Stanley asked the matter be settled in order to avoid uncertainties were a trial to take place.
The lender group, which had been slated to provide around $22 billion in debt financing for the deal, has said it was prepared to honor its financing obligations as set forth in the commitment letter.
Clear Channel, a company that employs more than 20,000 workers, reported solid first-quarter results from its outdoor advertising business on Friday. Its revenues amounted to $775.6 million in the first quarter of 2008, a 12% increase over the $690.9 million in sales it reported for the first quarter of 2007.
Managed by chief executive Mark Mays, Clear Channel operates more than 900 radio stations and oversees 800,000 outdoor advertising displays. It filed suit against the lenders earlier this year, claiming breach of contract and alleging the banking syndicate carried out "willful, vicious and unjustified efforts to destroy the merger."
Clear Channel’s complaint had sought to recover more than $26 billion in damages.
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