Funding settlement costs Clear Channel

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Clear Channel Communications probably will get sold into private equity, but for a price tag 8% lower than it agreed to a year ago.

PE firms Thomas H. Lee Partners and Bain Capital have settled their legal differences with the six banks financing the deal. That frees them up to pay $36 a share for Clear Channel, down from the $39.20 agreed to in May 2007.

The banks were being accused of trying to back out of the deal in the wake of a credit crunch, prompting THL and Bain to sue. A trial began this week but was abruptly halted when the parties renegotiated the financial commitment, including the lower purchase price.

If the settlement holds, the six banks also will have avoided a lawsuit filed by Clear Channel that sought $26 billion in damages. That trial was to start June 2.

Investors for months have doubted that the $39.20 per-share price tag would hold up, so the stock had been trading significantly lower than that. On Tuesday, shares leapt 4.4% to $34.30 as rumors circled that a deal had been struck.

The new per-share price values Clear Channel, which owns 745 radio stations and syndicates 70 radio programs, at about $18 billion. Clear Channel shareholders must approve of the reduced price before the deal closes.

Clear Channel wouldn't comment Tuesday, though an official announcement is expected today. (partialdiff)
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