Clear Channel shareholders OK buyout - Private Sale

[Glen Livingstone]

Clear Channel shareholders OK buyout

By ELIZABETH WHITE, AP Business Writer

September 25, 2007 ... 4:30 pm pst


SAN ANTONIO - It took just about three weeks for the nation's biggest radio station operator, Clear Channel Communications Inc., to accept a buyout offer after announcing last fall that it was considering "strategic alternatives." It took another 10 months for shareholders to finally approve the deal.


On Tuesday they gave the OK to a $19.5 billion buyout offer from a private equity group led by Thomas H. Lee Partners LP and Bain Capital Partners LLC.

The offer was first announced in November but was sweetened after some large shareholders signaled they would oppose earlier offers.

The latest offer was $39.20 per share in cash or stock in what would be a privately owned company. Current shareholders could end up with as much as 30 percent of the new company.

"We are pleased with the outcome of today's vote," CEO Mark Mays said in a statement. "We look forward to completing this transaction with T.H. Lee and Bain as quickly as possible."

Of the shares voted, about 98 percent were in favor of the buyout of the San Antonio-based company in a preliminary tabulation, Clear Channel said. The company said more than 73 percent of the total shares outstanding and entitled to vote at the meeting were in favor the deal.

Two-thirds of shareholders had to approve the buyout, and those who didn't vote were counted as voting against it. Previous offers of $37.60 and $39 per share were deemed too low by some and weren't expected to pass.

The buyers will also assume $8 billion in debt.

"Given all the controversy and debate that surrounded this merger over last six months it's perhaps a bit surprising" that so many were in favor, said Stanford Group analyst Frederick Moran. "But given the sweetener to the deal and the ongoing participation option, it all points in the direction of a positive completion to the Clear Channel privatization."

Moran said the stock market's shaky summer and the credit crunch also gave shareholders a reason to approve the deal.

Clear Channel, which also has an interest in the outdoor billboard business, has been divesting some of its broadcasting operation. Its 56 television stations were sold in April, and sales deals have been reached on more than 350 of its radio stations. It plans to keep about 675 stations, mostly in larger metro areas.

The offer to allow shareholders to keep part of the newly private company is an unusual concession because private equity buyers pay a premium to get total control and fewer regulatory requirements than those required of public companies.

The company said Tuesday preliminary results showed shareholders of about 67.3 million shares of Clear Channel stock chose to receive shares in the new company. That is more than twice the 30.6 million shares — or 30 percent of the outstanding capital stock of the new company — that were allowed in the buyout agreement. Because of that, shareholders will get shares in the new company on a prorated basis, the company said.

"The biggest indicator to me that it was a good buy was that shareholders could have opted for cash or stock, and (many) people still chose to go with stock," said Rick Munarriz, a senior analyst for The Motley Fool.

Those who choose shares in the new company will be issued shares expected to trade over-the-counter, but the shares will not be listed on any major exchange, according to company filings made last month with the Securities and Exchange Commission.

The deal is expected to close around the end of the year pending antitrust clearances and Federal Communications Commission approval.

Clear Channel shares rose 29 cents to $37.05 Tuesday.


2007 - AP