April 3 Clear Channel Outdoor Holdings Inc agreed to settle a shareholder lawsuit seeking to rescind an allegedly improper loan that the billboard advertising company made to its ailing parent Clear Channel Communications Inc.
The loan "so significantly" depleted Clear Channel Outdoor's cash reserves that the company was forced to borrow $2 billion to fund a special dividend, according to the lawsuit filed in Delaware's Chancery Court in March last year.
Clear Channel Communications Inc and its owners, private equity firms Bain Capital LLC and Thomas H Lee Partners LLC, were also named as defendants.
As part of the agreement entered into on March 28, Clear Channel Outdoor will demand payment of $200 million under the revolving promissory note from its parent company, and pay a special dividend of the same amount from the proceeds of the repayment. ()
Clear Channel Holdings Inc - the outdoor company's direct parent and a subsidiary of Clear Channel Communications - would receive 89 percent of such a dividend, to be paid out the day the note is repaid.
Clear Channel Communications, which owns 89 percent of Clear Channel Outdoor, was bought by Bain and Thomas H Lee in 2008 for about $18 billion.
Clear Channel Outdoor's shares were flat at $7.38 in mid-day trading on the New York Stock Exchange on Wednesday.