Clear Channel Sees Some Recovery
Investors in Clear Channel Communications saw a bit of green in after hours trading today. The news that brought investors back into the equity was that the private equity groups that proposed the buyout are now suing the lenders that had agreed to back the deal.
It has been alleged that the banks began to balk at financing the deal when debt markets took a turn for the worse. Bain Capital Partners and Thomas H. Lee Partners stated in their suit that the lenders tried to change the terms of the deal. The two private equity firms are seeking the courts help to force the lenders to agree to the terms of the deal. Clear Channel themselves has also joined in the litigation.
Named in the suit are CITI, Morgan Stanley, Credit Suisse, Royal Bank of Scotland, Deutsche Bank, and Wachovia.
A Citigroup spokeswoman said the suits were without merit and they would contest them vigorously.
“The Bank Group presented the Sponsors (THL and Bain) with credit agreements fully consistent and compliant with the Commitment Letter,” the spokeswoman wrote. “The Bank Group has been and remains prepared to honor the obligations as set forth in that Letter.”
The lending institutions noted that they stood to lose billions on the deal. Whether it was the markets or something else that made the deal get cold feet will likely come out during the proceedings in the near future.
The news that the buyout firms were still pursuing the deal sent CCU up $2.00 to close at $29.00 in after hours trading Wednesday.
One thing is certain, CCU is now embroiled in a litigation battle, and it could be some time before the issue plays out. This effectively may cause Clear Channel to trade in a channel for some time.
Thanks Homer
Position - No Position Clear Channel, banking with CITI, unrelated business with Morgan Stanley
March 27th, 2008 at 8:32 am duke Says:
Maybe we should put together a group and sue for 20% of the money and 20% of their stations? We can use it for public works. Polka music, kids channels, minority interests, etc
March 27th, 2008 at 6:42 pm kevin Says:
Tyler, I’m getting very jittery. And anything that I thought would happen after DOJ appoval has not happened. I am trying to take a long term approach with siri however feel I am missing something with investor sentiment right now. What do you feel is happening here? Credit issues? Questionable business model w a combined company? I’m begining to think after the FCC announcement we may not see a price increase at all. I guess your also wondering when you became my shrink.(ha ha)