Thursday, May 15, 2008
Radio: Clear Channel - Business as usual?
Abhorrence gave way to logic when the parties caught up in the Clear Channel-BainCapital-Thomas H. Lee buyout realized that only the lawyers and vultures would get rich and its stock would eventually slide into spare change territory if this deal continued to get dragged through the courts. Sure, Texas justice might’ve prevailed – but at what cost to Clear Channel? Lately, the Mays family called in enough chits to owe some significant payback.
$39.20 was obscene. $36 is only slightly less obscene.
According to Heidi N. Moore’s Wall Street Journal blog: “At one point, the hatred between the parties was so intense that the emotion was palpable. “The companies and lenders hated each other so intensely that if it were in person, we would have needed an armed guard,” quipped one person close to the situation. And the developments since — with a settlement reached and a new deal well on the way — show the power of what can happen in a negotiation when the people involved decide to step back, tamp down the egos a bit, and take a more clinical look at the problem of the financing. “We had to wipe away the emotional issues and come to a pain-sharing agreement,” said one person involved”.
Forget the propaganda. This deal’s not done. There are strings attached.
This is one of those be-careful-what-you-wish-for situations.
Clear Channel shareholders still have to be sold. The new drop dead date for the deal is December 31, 2008. The stock could do some amazing feats of daring and disaster between now and then.
The banks involved in the deal have a mere 13 days (hear that tick-tick-tick?) to fund the escrow piece of the new privatization sale $36 a share agreement or find themselves at the mercy of New York Judge Helen Freedman’s court.
And don’t underestimate the greed of the investors.
If for some odd chance Clear Channel’s stock remains in its current inflated $36 price, expect its investors, most notably Highfields Capital, to demand it to be goosed back to the $39.20.
If reality sets in and the stock price tumbles, the banks could threaten to turn off the tap and it’ll be back to the fun and games we’ve grown familiar with over the past few months.
Like arbitrageurs, banditos are lurking all over this deal of the damned.
Regardless, those on the losing end in this deal will be the company’s managers whose piece of the action will be trimmed down considerably and, of course, the Clear Channel rank and file. More positions will be deleted or busted down to part-time/no benefits. I'm sure, like Marie Antoinette, the Mays family feels your pain.
“For all of us at Clear Channel, it’s still business as usual,” sayeth CEO Mark Mays, who’s been resurrected from the dead, revived and refreshed and ready for your obsessive-compulsive enjoyment, “As our merger transaction developments move forward, we’ll all continue to stay focused on doing our jobs — and creating value for our customers, serving our communities and growing our businesses.”
Business as usual? That’s what got you into trouble in the first place.