Clear Channel buyout in limbo

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NEW YORK -- The planned $19 billion buyout of radio giant Clear Channel Communications was in limbo again late Monday with the Wall Street Journal saying talks between the private equity buyers and financing banks were near collapse.

The deal was scheduled to close before a deadline later this week, but the two sides have failed to resolve differences over the terms of the financing arrangement, which was struck last year. PE firms Thomas H. Lee and Bain Capital Partners are believed to be still interested in doing the deal. Spokespeople for Clear Channel and the PE firms couldn't be reached for comment. Thomas H. Lee is also an owner of The Nielsen Company, the parent of The Hollywood Reporter.

The credit markets have deteriorated since the Clear Channel deal was struck 16 months ago, leading the banks to seek modifications to the terms and making the deal another possible victim of the credit crunch that has put buyouts on ice in many industries.

The PE buyers have been locked into a showdown with the financing banks, including Citigroup, Morgan Stanley, Deutsche Bank, Credit Suisse, RBS and Wachovia.

The buyout is worth $39.20 per share, but Clear Channel shares Tuesday closed down 5.5% at $32.56 before losing another 20% in after-hours trading.

Thomas H. Lee managing director Richard Bressler said at an industry conference earlier this month he expected the deal to close shortly.
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