UPDATE 2-Clear Channel shareholders OK $17.9 bln buyout

Thu Jul 24, 2008 7:05pm EDT

(adds quotes from meeting, background, byline)

By Jim Forsyth

SAN ANTONIO, Texas, July 24 (Reuters) - Clear Channel Communications Inc (CCU.N) shareholders on Thursday approved a $17.9 billion takeover by private equity funds Thomas H. Lee Partners THL.UL and Bain Capital, ending a 20-month effort to take the radio and billboard operator private.

Clear Channel said that about 97 percent of the shares voted were cast in favor of the deal. The parties plan to consummate the merger on Wednesday, July 30.

The approval caps high-level negotiations and legal battles in two states, after six banks, which agreed in 2006 to fund the deal, attempted to back out against the headwind of the slumping stock market and dwindling capital markets.

In March, Thomas H. Lee Partners and Bain filed complaints in New York and Texas against the six Wall Street banks -- Citigroup Inc (C.N), Morgan Stanley (MS.N), Credit Suisse Group (CSGN.VX), Royal Bank of Scotland Group Plc (RBS.L), Deutsche Bank AG (DBKGn.DE) and Wachovia Corp WB.N -- to enforce their agreement to fund the buyout.

In May, the bank syndicate, private equity buyers and Clear Channel struck a deal to lower the deal's price and settle litigation between the parties.

The deal approved by shareholders, provided them with $36 a share, down from a $39.20 previously offered.

Central to the dispute was the hit the banks would take in funding the deal, given the deteriorated lending conditions.

Regulators have approved the transaction, and the lenders have placed funding in escrow.

Clear Channel Chief Executive Mark Mays said in an interview after the shareholder meeting that the deal will be good for the estimated 120 million people who listen to Clear Channel radio stations daily.

"From a listener perspective, I don't think they will see anything radical or different. This is really a capital structure change rather than a programming change."

Clear Channel owns some of the highest profile radio personalities in the country, including Rush Limbaugh, who was just signed to a new contract.

To complete the deal, Clear Channel sold its television division and several hundred of its radio stations, but Mays said he doesn't plan on any additional sales under the new ownership.

"The international assets, specifically, are not for sale. All those rumors are untrue. We went through a process, we divested of our television and some radio stations, and now we have what we feel is the core assets that we want to operate the company going forward," Mays said.

Mays said he believes traditional media companies are "truly undervalued."

"The media stocks clearly are still out of favor in the equity markets. When will that be corrected? As soon as the media stocks are able to change the incorrect perception and realize that today's traditional media, radio, the newspaper, or television, still reaches a mass audience and still gives great results to our advertising customers," he said.

Clear Channel Communications will continue to be headquartered in San Antonio, where it was founded in 1972, Mays said. (Writing by Sue Zeidler; editing by Carol Bishopric, Leslie Gevirtz)

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