Clear Channel has now sued in a Texas state court to try to hold American Securities Capital Partners (ASCP) to its 452.1 million bucks deal to buy 187 radio stations. ASCP has fired back with its own lawsuit filed in a New York state court, so look for lots of legal wrangling ahead. The San Antonio-Express News reports that Jeff Warshaw is also named as a defendant in the Clear Channel lawsuit for trying to negotiate the price down by 102 million. As you would expect, Warshaw isn’t commenting, except to confirm to RBR that "I’m still a consultant to American Securities Capital Partners." RBR first reported in July that Warshaw, who already heads Connoisseur Media, would step in after ASCP parted ways with Dean Goodman and changed the name of the acquiring company from GoodRadio.TV to Frequency License LLC. ASCP has never formally designated Warshaw as the President or CEO of its radio-company-to-be and now, of course, the legal action calls into question whether ASCP will actually become a radio owner.
RBR observation: With this deal now in doubt, the first and third largest deals of the Clear Channel’s divestiture of 488 smaller market stations are both on the fence. And we would note that #2, the 139 million bucks sale of 52 stations to GAP Broadcasting, has not yet gotten to the closing table. ASCP put 20,344,500 in escrow for its pending purchase, so look for Clear Channel to battle in court for that cash if it can’t come to terms with the would be buyer.
Mark and Randall Mays could have avoided all of this divestiture drama, of course, if they had accepted a preemptive bid from former Clear Channel Radio CEO Randy Michaels for the entire block of stations. You may have read elsewhere that he and Oak Hill Capital Partners offered around 800 million. We have it on good authority, though, that the actual bid was over 900 million, but that the Mayses held out for 1.1 billion. When all is said and done, will Clear Channel now even come close to that mark?