The price moved back above 30 bucks in yesterday’s trading, but then fell again. Wall Street is clearly nervous about whether or not the buyout by Thomas H. Lee Partners and Bain Capital is heading to the closing table.
Traders went into panic mode after Clear Channel Radio CEO John Hogan ordered sharp cutbacks in spending by stations because Q1 revenues were pacing down, while budgeted expenses were up 4% (1/28/08 RBR #18). Despite assurances by Thomas H. Lee Partners dealmaker Scott Sperling that financing was lined up to fund the 26.7 billion bucks buyout by his firm and Bain Capital, the Street was spooked again when Bain Capital managing director Steve Pagliuca refused to discuss the Clear Channel buyout at another financial conference.
The Wall Street Journal reported that the two private equity firms were now involved in day-to-day operations and helped draft the Hogan email, which is posted on RBR.com. That WSJ report reassured some traders, who took it as evidence that T.H. Lee and Bain are committed to getting the deal to closing. Even so, there is such nervousness on Wall Street that Clear Channel’s stock still closed yesterday more than 10 bucks below the buyout price of 39.20.