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Clear Channel Buy-out Closer

Clear Channel Communications Board of Directors approved (Friday, May 18) a private equity buy-out taking the company off the public stock exchange. A shareholder vote originally scheduled for Tuesday (May 22) was cancelled to give the Board more time to sell the plan.

Thomas H. Lee Partners and Bain Capital Partners will pay $39.20 per share, roughly $19.45 billion, plus assume $8 billion in debt. The offer on the table allows current shareholders to hold as much as 30% of the company with the same rights as the majority owners, unusual in the private equity game but very attractive to those shareholders who bought above the current offer or those hoping to benefit from the expected spin-offs. No single shareholder will be allowed more than a 9.9% stake in the outstanding capital. For those enamored with high-finance terms, its called “stub-equity.”

Last November the PE’s offered $37.60 per share plus debt assumption. The Board and shareholders waved it away. Under Texas (US) law, two-thirds of shareholders must approve the transaction. A new vote date has not been scheduled.

Other sweeteners include a cap on the transaction fee, a mere $87 million, and the election of two independent directors.

Clear Channel is America’s largest commercial radio broadcaster and the world’s biggest owner of outdoor ad signs. The company counts among its high-flying investors America’s largest pension fund, the California Public Employees’ Retirement System. – May 19, 2007

Keywords:Clear Channel,private equity

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