Clear Channel Says Buyout May Not Close
Radio broadcaster Clear Channel Communications said Friday 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 and Bain Capital Partners 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 31 -- due to the failure of banks to provide the required financing.
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.
The U.S. radio operator was granted a temporary restraining order against the banks -- Citigroup, Morgan Stanley , Credit Suisse Group, Royal Bank of Scotland Group, Deutsche Bank and Wachovia-- after a lawsuit alleging they balked at their obligation to fund the deal.
The private equity firms filed the lawsuits in New York and Texas on Wednesday, accusing the banks of backing out of their commitments after capital markets deteriorated. Clear Channel joined in the Texas lawsuit.
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.