CC, PE Groups, Banks Agree To $36 A Share

It was just about this time a year ago when shareholders shook their heads "no" and sent San Antonio a very clear channeled message that even $37 a share, was not enough to make them want a private-equity consortium led by Bain Capital and Thomas H. Lee Partners to take the world's biggest radio operator, Clear Channel Communications, private. But it has been one crappy year for radio companies and for working stiffs, some of whom have shares of Clear Channel stock, and they may just decide to take what they can get. And it looks like $36 is what Citigroup, Morgan Stanley, Credit Suisse, Royal Bank of Scotland Group, Deutsche Bank and Wachovia, the banks funding the deal, think the deal is worth -- about $17.9 billion in all. Clear Channel's board of directors unanimously approved the amended merger agreement Tuesday evening (May 13). They made no recommendation about the voluntary stock election or the Class A common stock. The new deal, which was outlined by the parties in a statement just after 11 p.m. Tuesday night, is much like the original. Clear Channel says that as an alternative to receiving the $36 per share cash consideration, its shareholders will again be offered the opportunity on a voluntary basis to exchange some or all of their shares of Clear Channel common stock on a one-for-one basis for shares of Class A common stock in CC Media Holdings, the new corporation sponsored by the private equity group to acquire Clear Channel. In limited circumstances, shareholders electing to receive some or all cash consideration, on a pro rata basis, will be issued shares of CC Media Holdings Class A common stock in exchange for some of their shares of Clear Channel stock, up to a cap of $1 per share. The previous deal had until June 15 to close, this one has been given until New Year's Eve to get done.This time around, Clear Channel and the private equity partners have backed the banks into the corner by getting some guarantees for funding the deal. And the myriad of lawsuits filed in New York and Texas that followed the collapse of the $39.20 per share deal will not go away until gobs of cash have been deposited into a whopping escrow account to seal the deal. The latest settlement agreement calls for banks to enter into "fully-negotiated and documented definitive agreements to provide long-term financing to Clear Channel," along with an escrow deal, the broadcaster reports. "The banks, the private equity investors, Clear Channel, certain shareholders, and Bank of New York (serving as escrow agent) have entered into an escrow agreement pursuant to which the private equity investors and the banks have agreed to fund into escrow the total amount of their respective equity and debt obligations, in a combination of cash and/or letters of credit, within ten and seven business days, respectively." The dealmakers reported that "certain shareholders also have agreed to deposit into escrow securities of Clear Channel that these parties have agreed to exchange for Class A common stock of CC Media Holdings." After the funds are deposited and accounted for, "each party to the merger related litigation pending in New York and Texas will file all papers necessary to terminate the litigation, with prejudice,

Brand Marketing

CC, PE Groups, Banks Agree To $36 A Share

Jeffrey Yorke

About

Subscriptions

Events

Publications

WORK SMARTER - LEARN, GROW AND BE INSPIRED.

Subscribe today!

Jeffrey Yorke