Clear Channel in settlement talks, trial delayed

By Megan Davies and Leslie Gevirtz

NEW YORK (Reuters) - Talks are underway to settle a dispute over financing the $20 billion leveraged buyout of U.S. radio operator Clear Channel Communications Inc (CCU.N: Quote, Profile, Research, Stock Buzz), the company said in a statement on Monday.

A trial over the case was delayed by a day in New York and hearings were postponed in Texas as the discussions went on.

Clear Channel struck the deal to be bought by private equity firms Thomas H. Lee Partners THL.UL and Bain Capital at the peak of the private equity boom last year. The market has changed drastically since then, with the cost of financing leveraged loans skyrocketing.

The deal descended into litigation this year when THL and Bain filed complaints in New York and Texas against six Wall Street banks -- Citigroup Inc (C.N: Quote, Profile, Research, Stock Buzz), Morgan Stanley (MS.N: Quote, Profile, Research, Stock Buzz), Credit Suisse Group (CSGN.VX: Quote, Profile, Research, Stock Buzz), Royal Bank of Scotland Group Plc (RBS.L: Quote, Profile, Research, Stock Buzz), Deutsche Bank AG (DBKGn.DE: Quote, Profile, Research, Stock Buzz) and Wachovia Corp (WB.N: Quote, Profile, Research, Stock Buzz) -- to enforce their agreement to fund the buyout.

San Antonio-based Clear Channel joined them in the Texas suit, but was not a plaintiff in the New York case.

The Wall Street Journal said a settlement looked imminent, with the banks agreeing to fund the buyout at $36 a share -- significantly lower than the $39.20 called for in the deal.

The parties in the dispute declined to comment on the journal report.

New York State Supreme Court Judge Helen Freedman took the bench just before 10 a.m. and told a packed courtroom that the case would be adjourned until Tuesday morning, although gave no reason for the delay.