Clear Channel agrees to revised $17.9 billion deal

Clear Channel Communications Inc. settled litigation and signed an amended agreement to be acquired by an investor group for $17.9 billion, ending months of wrangling with banks reticent to fund the deal.

The deal price of $36 a share is 8.2% below the $39.20-a-share accord Clear Channel reached in May 2007 with Bain Capital Partners and Thomas H. Lee Partners.

In a statement late on Tuesday, the San Antonio, Texas media company (CCU: 34.30, +1.43, +4.4%) said it, the buyout firms and a group of banks settled litigation filed in New York and Texas.

Clear Channel's board has approved the revised terms and urged holders to vote for the deal.

Clear Channel shares closed on Tuesday at $34.30. In the past year, they traded as high as $38.58.

The deal effort's been a long slog for CCU, which said back in October 2006 that it would assess strategic alternatives. Less than a month later, the company agreed to a deal with Thomas H. Lee and Bain at $37.60.

In April 2007, the sides agreed to lift the deal price to $39, and a month later they pushed it to $39.20 and added in the alternative for holders to take some stock in the new company. In September, Clear Channel's holders approved the deal at $39.20.

But earlier this year, the private-equity firms and the banks disputed some details of the credit agreement.

Clear Channel and the buyout firms then sued the banks, demanding that they live up to their commitment to finance the deal.

The banks have now definitively agreed to provide long-term financing to Clear Channel, the company's statement on Tuesday said.

The banks in the group are Citigroup (C: 23.03, -0.61, -2.6%) , Credit Suisse (CS: 54.21, -0.30, -0.5%) , Deutsche Bank (DB: 117.67, -1.65, -1.4%) , Morgan Stanley (MS: 46.61, -1.04, -2.2%) , Royal Bank of Scotland (UK:RBS: news, chart, profile) and Wachovia (WB: 27.79, -0.43, -1.5%) .

The new agreement is a cash deal, Clear Channel said. But as it had planned, holders may elect to swap their shares for Class A stock in the new company, CC Media Holdings, up to as much as a total 30% stake.

Highfields Capital Management of Boston, the company's largest holder, said it's going to vote its 7.7% stake in favor of the deal. Highfields also will retain as much as $400 million of equity in the new company.

Clear Channel said it's preparing new proxy materials and will set a record date for the vote on the deal. The firms hope to close the deal in the third quarter.

Robert Daniel is MarketWatch's Middle East bureau chief, based in Tel Aviv.