Clear Channel Says Buyout May Not Close ... And Delays Dividend
March 28, 2008 at 3:09 PM (PT)
According to REUTERS, CLEAR CHANNEL COMMUNICATIONS said on TODAY (3/28) its pending acquisition by several private equity firms may not close, even though the firms are ready to consummate the deal.
In a filing with the Securities and Exchange Commission, CLEAR CHANNEL said it has agreed with THOMAS H. LEE PARTNERS LP and BAIN CAPITAL PARTNERS LLC that all closing conditions had been satisfied.
But the private equity firms said they couldn't close the deal on time -- originally expected by MARCH 31st -- due to the failure of banks to provide the required financing.
The company is unable, however, to estimate a closing date at this time and cautions the markets that a closing may not occur.
While the parties met on THURSDAY, six banks led by CITIGROUP, which were to provide more than $22 billion of financing for the buyout, did not attend, CLEAR CHANNEL said in the filing.
"The company continues to be ready, willing and able to consummate the merger under the merger agreement, which remains in effect," CLEAR CHANNEL said in the filing. "The company is unable, however, to estimate a closing date at this time and cautions the markets that a closing may not occur," it added.
CLEAR CHANNEL agreed last MAY at the height of the private equity boom to be acquired by the firms for $39.20 per share. Since then, banks have grown much less willing to incur losses on leveraged loans. The banking group faced losses of about $3 billion to $4 billion on CLEAR CHANNEL, a person familiar with the situation told REUTERS on WEDNESDAY.
The original agreement calls for a break-up fee of either $500 million or $600 million -- depending on the reason for a deal failure -- to be paid by the buyers under certain conditions.
Last FRIDAY afternoon, CLEAR CHANNEL's Board of Directors announced that it will defer the first-quarter dividend payable to shareholders. (Usually, dividends were declared to shareholders on the last day of a quarter, with payment on or before the 15th of the following month.) Equity partners BAIN CAPITAL and THOMAS H. LEE requested that CLEAR CHANNEL defer the payment date in light of the delayed closing of its LBO, to which the Board agreed.
CC Extends Tender Offer Deadline With Merger Up In Air
CLEAR CHANNEL has extended the expiration date and consent payment deadline for the tender offer for its outstanding 7.65% Senior Notes due 2010 and AMFM OPERATING INC.'s 8% Senior Notes due 2008 from 8a YESTERDAY to 8a APRIL 4th.
The tender offer is conditioned on completion of the merger/buyout presently tied up in court over lenders' refusal to fund the deal. In its extension announcement, CLEAR CHANNEL reiterated its intention to complete the tender offers and consent solicitations upon consummation of the Merger.
Clear Channel's Stock
With all this news, it'll be another bumpy ride for CCU on WALL STREET. Follow the stock here.