Clear Channel trial adjourned
NEW YORK (Reuters) - A New York State judge adjourned the trial over financing of the Clear Channel Communications Inc (CCU.N) buyout on Wednesday, giving the banks involved 14 days to fund the new, lower-priced deal.
"Good morning, everyone. I understand the matter has been resolved ... I think resolutions are always preferable to decisions," Judge Helen Freedman told the attorneys in court.
Lawyers for the private equity firms Thomas H. Lee Partners THL.UL and Bain Capital and a consortium of six banks stipulated that trial was to be stayed, or halted, "to enable the parties to carry out terms of the settlement..."
As part of the settlement, the 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 -- must fund the escrow agreement part of the settlement and have 14 days to do so.
Bruce Kaplan, one of the private equity lawyers, speaking in a relatively empty courtroom, thanked the judge and remarked that were it not for her ability to take the case "from full discovery to trial in 48 days," the agreement might not have occurred as quickly.
The dispute over financing the leveraged buyout of U.S. radio operator Clear Channel ended late Tuesday as the parties reached agreement to settle the litigation and struck a new deal at a lower price of $17.9 billion.
The new deal will see Thomas H. Lee and Bain pay $36 a share for the largest U.S. radio operator, down from the $39.20 a share, or close to $20 billion, they agreed at the peak of the private equity boom last year.
The new agreement is expected to go to a Clear Channel shareholder vote in August or September and close in the third quarter, Clear Channel Chief Executive Mark Mays told Reuters.
The deal, unanimously approved by Clear Channel's board, is backstopped by funds being put into escrow until it closes, giving it a high level of certainty of completion, Mays added.
It also gives investors the option of co-investing in the company, known as "stub equity," by buying up to 30 percent of the outstanding share capital after the restructuring.
Mays said the deal was still a highly leveraged transaction. But he said private equity buyers looked at the long term.
"Radio is a great business, it has a huge audience, a passionate audience," he said.
(Reporting by Leslie Gevirtz; additional reporting by Megan Davies; editing by John Wallace)
