Clear Channel Sale Is Gaining Momentum

Strong momentum was building last night for a final plan to clinch the $19.4 billion sale of Clear Channel Communications Inc. to a duo of private-equity firms, people familiar with the matter said.

Major shareholders Highfields Capital Management and Fidelity Investments were expected to be on board with a new buyout proposal brought forward last week, these people said. This proposal would sweeten the offer for the San Antonio media-and-entertainment company by 20 cents a share, to $39.20. The deal also offers current shareholders a chance to own as much as 30% of the newly constituted Clear Channel, which would be majority-owned by Bain Capital and Thomas H. Lee Partners.

The shareholders’ support for the plan clears the way for a deal that has endured months of contention among shareholders, the company’s management and the private-equity firms, which had originally hoped to strike a deal at $37.60 per share late last year.

A newly amended agreement could be struck in the next few days, these people said, though final approval must still be struck among the private-equity firms and Clear Channel’s board. It is still possible the deal could fall apart at the final moment, especially given the contentious nature of the proceedings. And there is the issue of whether Institutional Shareholder Services, which advises a number of big shareholders, would reverse its rejection of the transaction last on the table.

But the addition of Highfields and Fidelity gives a deal far greater chance of shareholder approval than previously thought.

The company has twice delayed its privatization vote, first in an effort to rally support for the privatization at $37.60, and then to give shareholders time to consider the improved bid of $39. Clear Channel shares rose nine cents to $37.90 yesterday in 4 p.m. New York Stock Exchange composite trading.

The regulatory issues behind the stock-issue plan would delay a final Clear Channel vote still more months, perhaps until August, these people said.

– By Dennis K. Berman and Sarah McBride

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