Closing table was set, but banks didn’t show


Despite some disagreements with the banks over exactly what the terms of their loans would be, Clear Channel Communications says in an SEC filing that it was set to go to closing on its 26.7 billion bucks buyout last Thursday, as were the would-be buyers, Thomas H. Lee Partners and Bain Capital, but that the banks were a no show. In the same SEC filing, Clear Channel says it can’t estimate a closing date and warns Wall Street that “a closing may not occur.”

Meanwhile, Clear Channel is keeping its bond tenders active in case this stand-off is resolved. The tenders for two bond issues had been set for last Thursday, but have now been extended to this Friday (4/4) – and, of course, they could be extended again and again. Clear Channel’s board of directors has also put on hold any Q1 dividend payment to shareholders. The company said that was requested by TH Lee and Bain because the buyout closing had been delayed. “In support of their continued efforts to close the merger, the Company has agreed to honor that request,” Clear Channel said.

The next action could come a week from tomorrow, April 8th. That’s when a judge in San Antonio is scheduled to hold a hearing on the dispute. He’s already issued a temporary restraining order against the banks telling them they can’t interfere with the closing. In other words, hand over the money. They have not done so and, instead, are trying to get the case moved from the Texas state courts to federal court.

“The Company previously announced that it anticipated that the closing of the Merger would occur on or before March 31, 2008. Representatives of the Company and the Sponsors met on March 27, 2008, at a time previously noticed by the Sponsors to the Company and the Banks for a closing of the merger. At that meeting, each of the Company and the Sponsors confirmed that they were ready, willing and able to consummate the Merger and that each of the Sponsors was prepared to fund their respective equity commitments. The Company and the Sponsors further confirmed that all of the conditions to the closing of the Merger under the merger agreement had been satisfied. The Sponsors informed the Company, however, that they would not be able to consummate the merger at that time due to the failure of the Banks to provide the required financing in accordance with the Banks’ binding commitments. Representatives of the Banks failed to attend the previously noticed meeting. The Company continues to be ready, willing and able to consumate the Merger under the merger agreement, which remains in effect. The Company is unable, however, to estimate a closing date at this time and cautions the markets that a closing may not occur.”

RBR/TVBR observation: We will be very surprised if this is resolved quickly. After 16 months of preparation to take the company private, Clear Channel is now in a state of limbo. Costs have been cut to the bone, a hiring freeze remains in place, employees can’t plan for the future because they don’t know what the future will be. Shareholders, including many of those employees, don’t know what their stock is worth, except at fire sale prices, when dividend payments will be resumed or whether or not they’re going to be cashed out or continue to remain owners of Clear Channel. This may well go into future textbooks for MBA and business law courses, but it is no fun for the folks who are living it.