Clear Channel, Lenders Strike Deal At $36 A Share
May 14, 2008 at 5:28 AM (PT)
As first reported late last night on ALL ACCESS, the CLEAR CHANNEL buyout settlement has officially been announced, with the company and its buyout backers THOMAS H. LEE PARTNERS and BAIN CAPITAL reaching a deal with lenders CITIGROUP, DEUTSCHE BANK, CREDIT SUISSE, MORGAN STANLEY, ROYAL BANK OF SCOTLAND, and WACHOVIA to complete the deal at $36 per share, valued at $17.9 billion, pending shareholder approval.
The parties to the settlement agreement have agreed to extend the outside date for completion of the merger to DECEMBER 31st, 2008.
This revised agreement is a win for our shareholders because it provides them with substantial value and certainty while avoiding the delay and inherent risks associated with complex litigation
The deal settles lawsuits between the parties in NEW YORK and TEXAS courts and includes an option for shareholders to exchange their shares on a one-for-one basis for Class A common shares in the new company, CC MEDIA HOLDINGS, INC. The lenders have agreed to new definitive agreements to finance the buyout, and all parties will fund into escrow their equity and debt obligations under the new agreements. CLEAR CHANNEL's board has unanimously approved the new deal and recommends that shareholders approve it.
GOLDMAN SACHS served as financial advisor to CLEAR CHANNEL and AKIN GUMP STRAUSS HAUER AND FELD LLP served as legal advisor to the company. HIGHFIELDS CAPITAL MANAGEMENT, holder (in its funds) of 7.7% of CLEAR CHANNEL's stock, has agreed to vote in favor of the revised transaction.
Relief Shows In Bosses' Statements
CLEAR CHANNEL CEO MARK P. MAYS said, "We are very pleased to have reached this accord with our sponsors and the banks funding the transaction. This revised agreement is a win for our shareholders because it provides them with substantial value and certainty while avoiding the delay and inherent risks associated with complex litigation. Our shareholders will receive a significant premium over recent stock price levels and can elect to continue to participate in our future upside. Importantly, this agreement greatly increases the certainty that the merger will close because all debt and equity funds will be deposited in escrow until the transaction closes. CLEAR CHANNEL's business prospects will be enhanced further through an improved capital structure that includes a lower debt load. We appreciate greatly the support of our shareholders as well as the loyalty and hard work of our dedicated employees over these many months. We are eager to begin working with THL and BAIN CAPITAL, the stellar team that will help us to fulfill our considerable promise."
BAIN Managing Dir. JOHN P. CONNAUGHTON said, "We have been extremely pleased by our partnership with the CLEAR CHANNEL management team. 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. We look forward to supporting the continued global market leadership, growth and success of the most innovative company in the radio broadcasting and out-of-home media space."
THL's Co-President SCOTT M. SPERLING said, "We are pleased to arrive at this resolution which enables us to complete the acquisition of Clear Channel. We appreciate that the banks have provided the company with the robust, long-term financing that will allow Clear Channel to achieve its outstanding operational and growth potential. We would like to thank all of the stakeholders who worked to achieve this positive outcome, and we are looking forward to working closely with our investment partners and with the entire CLEAR CHANNEL leadership team to execute on our plans to grow the company to its full potential."
CHAD LEAT, Chairman of the Alternative Asset Group at CITI, 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. We look forward to participating with our partners in CLEAR CHANNEL's continued success."
HIGHFIELDS Sr. Managing Dir. JONATHON S. JACOBSON said, "As the largest shareholder in CLEAR CHANNEL, we saw an opportunity to bring all parties together to remove the risk and uncertainty of litigation and we are glad that a constructive and mutually beneficial business solution could be reached. We fully support this revised transaction." HIGHFIELDS Sr. Managing Dir. RICHARD L. GRUBMAN added, "CLEAR CHANNEL can now accelerate the initiatives it has underway to capitalize on the strength of its assets and drive profitability. We look forward to continuing to play a meaningful role in ensuring the company is positioned to create substantial long-term value."