Clear Channel Shares Surge Over Possible Buyout

May 12, 2008 3:27 p.m. EST

New York, NY (AHN) - Clear Channel Communications Inc. surged on reports that private equity firms are close to settling on a proposal to finance the radio and media company's buyout.

Clear Channel added as much as 12 percent over news that Citigroup Inc. and five other banks may agree on a proposal to fund the broadcaster's $19.5 billion or $36 a share acquisition by Thomas H. Lee Partners and Bain Capital.

San Antonio-based Clear Channel surged by $3.67 to $33.67 just after noon in New York Stock Exchange composite trading on Monday.

The largest U.S. broadcaster stocks had ranged between a 52-week high of $38.58 last June to a low of $25.90 in March as investors have been keen on having the proposal come through.

Meanwhile, judges in New York and Texas on Monday adjourned the expected start of the proceedings in the cases without explanation.

"The way the case was developing it was likely the banks would face a Texas jury," Jake Newman, an analyst at CreditSights, a fixed-income research firm in New York, told Bloomberg News.

He added, "They may decide it could cost more to fight in court than fund the deal."

New York Judge Helen E. Freedman decided to hear the six lenders last week, following a series of courtroom setbacks.

The lenders have been arguing that they shouldn't be forced by courts to meet their lending commitments as it is not mentioned in the New York law.

"I'd be surprised if the case wouldn't settle," Greg Borri, a lawyer in New York who has frequently appeared before Freedman, told Bloomberg.

"This could drag on for years. With such high stakes, the parties would attempt to rationally resolve this matter without the judicial system's involvement."

The reports suggest that the other private equity firms in the New York lawsuit include Credit Suisse Group, Morgan Stanley, Royal Bank of Scotland Group PLC, Wachovia Corp. and Deutsche Bank AG.