By Megan Davies
NEW YORK (Reuters) - Thomas H. Lee Partners is not ruling out raising its $19 billion buyout offer for radio station operator Clear Channel Communications Inc. (CCU.N: Quote, Profile, Research, Stock Buzz), its co-president said on Tuesday, adding that an upcoming shareholder vote on the deal was too close to call.
Scott Sperling, co-president of private equity firm Thomas H. Lee THL.UL was "evaluating the situation pretty carefully," though he stressed that he was prepared to lose the deal and was "constrained by the realities of the numbers" with the radio industry slowing more than he anticipated when inking the offer.
Sperling, speaking at the Reuters Hedge Funds and Private Equity Summit, said a majority of Clear Channel shareholders support the $37.60-a-share offer tabled by T.H. Lee and buyout firm Bain Capital, but that the April 19 vote, which needs support from two-thirds of all Clear Channel's shares -- rather than just the shares cast -- to win, is a difficult hurdle.
There has been opposition from some shareholders and proxy advisory firms to the deal, who argue that the deal price undervalues the company. Highfields Capital Management, which owns roughly 5 percent of Clear Channel, said in March it would vote against the deal. Another major shareholder, Fidelity Management & Research Co., plans to vote against the deal, a source familiar with the matter said previously.
Analysts at Bear Stearns have argued in research reports that Clear Channel could pursue a "Plan B" which could generate a higher share price than the $37.60 on offer. This could include selling assets such as its outdoor advertising division and paying out a dividend, the analysts have argued.
Sperling said he, and the majority of shareholders he'd heard from who supported the deal, were doubtful that the stock would go up if it gets defeated. Clear Channel's shares closed up 27 cents at $35.82 on the New York Stock Exchange.
He cited in part a difference of opinion about how people viewed prospects for Clear Channel's radio operations.
Sperling thought the Lee and Bain consortium was paying an "incredibly premium price" for Clear Channel but conceded that there were "obviously ... people out there that don't think so." Continued...
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