UPDATE 1-Clear Channel sets shareholder vote on buyout

(Adds background, share price, arbitrage spread)

NEW YORK, Aug 13 (Reuters) - Clear Channel Communications Inc. (CCU.N) will hold a shareholder vote on its proposed $19.6 billion buyout by private equity firms on Sept. 25, the radio station operator said on Monday.

The San Antonio-based company had said in May it would put the $39.20-a-share bid from Bain Capital Partners and Thomas H. Lee Partners [THL.UL] to its investors. That deal has a "stub equity" provision that would give shareholders an option to hold a stake of up to 30 percent in Clear Channel following the buyout.

The deal faces a difficult hurdle because, under Texas law, holders of at least two-thirds of a company's shares must approve the transaction. Shareholders who fail to vote are counted as voting against the sale.

Some influential shareholders had initially opposed to the private equity bidders' lower deal that valued Clear Channel at $37.60 a share. However, the higher bid with the option of stub equity persuaded shareholders, including Fidelity and Highfields Capital Management LP, to support the deal, sources previously told Reuters.

Clear Channel said on Monday that shareholders of record as of 5 p.m. Aug. 20 would be entitled to vote at the meeting.

Shares of Clear Channel were up 43 cents at $35.36 on the New York Stock Exchange.

That gives the deal an 11 percent arbitrage spread, which is the percentage difference between a bid for a company and its current share price. A spread of 5 percent or less typically indicates that investors believe a deal is likely to close.

Spreads on leveraged buyouts have widened to more than 10 percent as the credit markets have tightened.

(Reporting by Michele Gershberg and Megan Davies)

((Editing by Lisa Von Ahn; Reuters Messaging: michele.gershberg.reuters.com@reuters.net; E-mail: michele.gershberg@reuters.com; +1-646-223-6185)) Keywords: CLEARCHANNEL VOTE/

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