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Tuesday, March 25, 2008

Clear Channel: Another LBO Bites The Dust

Yet another leveraged buyout bites the dust.

Clear Channel Drops as Journal Says Buyout Nearing Collapse: "Clear Channel Communications Inc. dropped in extended trading after the Wall Street Journal reported its $19.5 billion private-equity buyout is close to falling apart.

The buyout group, led by Thomas H. Lee Partners LP and Bain Capital Partners LLC, hasn't been able reach an agreement on terms with the banks financing the transaction, the newspaper said today, citing people familiar with the matter. The lenders include Citigroup Inc., Morgan Stanley, Deutsche Bank AG, Credit Suisse Group, Royal Bank of Scotland Group and Wachovia Corp.

Clear Channel, the largest U.S. radio broadcaster, dropped 14 percent to $28 after closing at $32.56 in New York Stock Exchange composite trading. Since the buyout was announced in November 2006, the stock has traded below the $39.20-a-share offer price because of investor concerns that the deal won't be completed. Credit-market turmoil has made it harder for buyout firms to obtain financing.

Negotiations are stuck on details regarding the banks' credit agreement, the Wall Street Journal reported, citing the people. While lenders typically agree to finance the transaction when it is announced, the final terms are worked out just before the deal closes, the Journal said.

Clear Channel isn't commenting, spokeswoman Michele Clarke said. Matt Benson, a spokesman for Thomas H. Lee Partners, and Alex Stanton, a spokesman for Bain, didn't immediately return calls seeking comment.

Clear Channel's 5.5 percent notes due in September 2014 rose 2.75 cents, or 4.4 percent, to 65 cents on the dollar to yield 13.9 percent, according to Trace, the bond-price reporting system of the Financial Industry Regulatory Authority."

No wonder the deal couldn't get done. Bondholders weren't willing to bid more the 65 cents the dollar for the fully leveraged entity. That is definately NOT a sign of confidence in ability to pay.

This is obviously not the last leveraged deal that is going to IMPLODE.

Nor is it the first.

Related Posts
LBO's Fail, While the Bounce Continues


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