CLEAR CHANNEL TO SPIN OFF 362 RADIO STATIONS $820M divestiture is in line with a contested $19.5B deal to take the broadcaster private. Reuters Broadcaster Clear Channel Communications Inc. said Wednesday it agreed to sell 362 radio stations for $820 million as it divests assets in accordance with its embattled $19.5 billion plan to go private.
Clear Channel, the largest U.S. radio station operator, did not name any of the buyers of the radio stations.
In November, the company said it planned to sell its television group as well as 448 of its 1,150 radio stations when it agreed to a takeover offer of $36.70 a share from Thomas H. Lee and Bain Capital.
That offer, facing opposition from a small number of influential shareholders, was raised last month to $19.5 billion, or $39 a share, but the new bid has continued to face resistance from those shareholders.
On Tuesday, influential proxy advisory service ISS recommended Clear Channel shareholders vote against the higher bid, leading some analysts to predict the buyout would get voted down.
David Bank, an analyst with RBC Capital Markets, said on Tuesday that it would now be very difficult to get shareholder approval, although he thought the bidders were unlikely to pull the vote, despite a reduced chance of success.
A source familiar with the situation said on Wednesday that Clear Channel, which competes with Citadel Broadcasting Corp. and Cumulus Media Inc., would still go ahead with the vote.
The Clear Channel deal faces a particularly tough hurdle because under Texas law, two-thirds of the company's shares must approve the transaction, not just two-thirds of the votes cast. That means shareholders who fail to vote are counted as voting against the deal.
A source close to Fidelity Management & Research Co. said last month it would not change previous plans to oppose the deal. Another source familiar with the matter said Highfields Capital Management LP would not change its plans to oppose the deal.
Sale proceeds
Clear Channel said Wednesday it expects to receive $1.875 billion in proceeds from all divestitures announced to date, including the sale of other radio stations and its TV division.
Analysts said the latest update would have little impact on a key shareholder vote on the buyout offer, set for May 8.
"We don't believe that this continuation of divestiture announcements should have much impact on the vote coming up," said Jim Boyle, analyst with CL King & Associates.
Clear Channel, based in San Antonio, Texas, said on Wednesday these and future divestitures were not contingent upon the completion of the separate merger proposal for the company.
Clear Channel said it would continue to pursue the divestiture of 86 radio stations in 16 markets.
Clear Channel said it planned to utilize its capital-loss carry forward to offset capital gains on the radio transactions. A portion of the gain would be considered an ordinary gain, not capital gains, and would be taxed as ordinary income. |