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Report: Clear Channel deal to proceed at lower price

Clear Channel has confirmed that legal proceedings have been delayed to allow negotiation between the banks and sponsors, who in turn, have reportedly reached an agreement reducing the buyout’s value by $1.4bn.

The battle over the Clear Channel buyout gained new ground today as court proceedings in Texas and New York were postponed to allow the deal’s lenders and sponsors to agree a revised deal.

A compromise between the bank group and sponsors Thomas H Lee Partners and Bain Capital has reportedly been struck that reduces the deal’s total value to roughly $26 billion (€17 billion) from $27.5 billion, including the assumption of some $8 billion in debt.

Citigroup, Morgan Stanley, Credit Suisse, RBS, Wachovia, and Deutsche Bank look set to fund the deal at $36 per share, according to a Wall Street Journal report citing people familiar with the matter.

Both the bank group and the sponsors declined comment.

The sponsors’ previously agreed bid, the third since December 2006, offered shareholders $39.20 per share, as well as a choice between cash and stock (capped at a 30 percent equity stake). Should the reported agreement come to fruition, it would place the bid closer to the original offer of $37.60 per share.

Clear Channel confirmed that the lenders and the buyers were in negotiations, and had thus delayed court proceedings in Texas it initiated to force the deal’s financing.

Earlier today, a New York Supreme Court judge delayed the start of a separate but related trial without giving a reason, the Journal said.

The lenders and sponsors have been publicly sparring over who is at fault for the deal’s failure to close as planned. The deal is being closely watched as an indication of the state of the debt markets and the shifting balance of power between private equity firms and their banks.