Banks To Settle On Clear Channel

A consortium of banks expected to fund the buyout of Clear Channel Communications by private equity groups have reportedly agreed to a deal that would pay $36 per share, clearing the way for a reportedly imminent settlement in the case.

Private equity firms Thomas H. Lee Partners and Bain Capital had sued the banking group led by Citigroup, claiming it breached a contract to fund the buyout.

The case was supposed to be heard in a New York courtroom May 12th, but the Wall Street Journal reported online that the judge in the lawsuit abruptly postponed trial until the following day, presumably in order to give the attorneys time to hammer out a settlement.

A source close to the matter told the WSJ that the banks were close to agreement on the buyout figure, which was originally believed to be worth $39.20 per share.

The acquisition agreement was originally reached in November 2006, calling for Lee and Bain to acquire Clear Channel for $19.4 billion and take on $7.8 billion of debt. The banks agreed to finance the deal to the tune of $22 billion.

However, economic and market conditions since that time apparently caused the banks to revise their commitment letter to fund the buyout in May.

Shares of Clear Channel spiked in the wake of the report, climbing 11 percent to $33.29 in early trading May 12th.

A settlement in the New York case isn’t the end of the dispute, however. Another suit filed in Texas seeks $26 billion in damages, claiming improper interference with the merger by the bank. That case is scheduled to begin in June.