Clear Channel takeover murky
Dealmakers still can't agree on terms
The impasse, first reported late Tuesday afternoon on the Wall Street Journal's website, had helped send the company's stock down more than 5% on the day to a close of $32.56. Volume was triple the average level.
The price, which plummeted below $26 in after-hours trading, is well short of the $39.20 promised to shareholders when the deal was first proposed way back in November 2006.
Thomas H. Lee and Bain Capital are leading the buyout. They are expected to fulfill their obligations to fund and close the deal, but the problem has been the stock's dipping below the price it traded at during better times. That means sponsors could wind up lending more than the value of the company.
Clear Channel risks becoming a poster child for how the entertainment biz, as it is currently structured financially, is hardly the recession-proof crowd-pleaser of generations ago. Clear Channel's privatization move was first planned a year and a half ago, at the high-water mark in terms of easy credit and liquidity. It was a time when studio slate deals and private finance arrangements were closing left and right.
The landscape in recent months has looked a lot different, thanks to the subprime lending crisis, skyrocketing oil prices and the massive writedowns and even dissolutions of financial institutions.
Originally projected to close in 2007, the oft-delayed deal was recently pushed back to a close by the end of the first quarter. With that date less than a week away and volatility becoming the norm with the stock, resolution does not seem likely anytime soon.
