Clear Channel's new terms reflect tight credit, ad slump

NEW YORK -- A lot has changed in the year and a half since radio industry leader Clear Channel Communications Inc. struck a deal to go private. Credit markets seized up, radio advertising continued to falter and another radio buyout deal failed.

All that helps explain why Clear Channel didn't mind taking a lower price and slightly higher lending rates to settle a dispute with its lenders late Tuesday, clearing the way for the long-delayed buyout deal to proceed.

The final $36 per-share price was 8 percent below the latest offer of $39.20, and even below the original price of $37.60 that major shareholders had opposed as being too low. Clear Channel struck the original deal to be taken private by the buyout firms Bain Capital Partners and Thomas H. Lee Partners in November 2006.

This time, Clear Channel wasn't taking any chances of the financing falling apart, noting in a late-night announcement Tuesday that the company, its two private equity partners and six lending banks had agreed to "fully-negotiated and documented definitive agreements" for financing.

Analysts gave the deal a far higher likelihood of passing this time. "Trust in bank underwriters will be replaced by escrowed cash," Leland Westerfeld, media analyst at BMO Capital Markets, wrote in a note to investors.

James B. Boyle, an analyst at C.L. King & Associates, gave the deal a 90 percent likelihood of passing. The deal has already received clearance from antitrust authorities and the Federal Communications Commission, and the company that additional regulatory approvals weren't expected to be needed.

Clear Channel owns seven stations in the Tri-State market, including some of the leading performers WTCR-FM and WKEE-FM.