A Couples Quarrel: Clear Channel Buyout Finally Closing

I have been quoted as saying and hereby confirm:

So this has nothing to do with options expiration, more likely to do with Citi (C) trying to get last minute concessions out of Bain & Lee which is what they always do even when times are good. This is part of the love/hate relationship that private equity has with the banks.

Notice the assertions in the latest WSJ article (excerpt below, emphasis mine):

People close to three of the five banks funding the deal, which include Citigroup Inc., Royal Bank of Scotland Group PLC, Deutsche Bank AG, Credit Suisse Group and Morgan Stanley, insisted the syndicate was prepared to go ahead with the deal. They blamed the private-equity companies for delaying the close. People close to the private-equity concerns assert it is the banks that are holding out.

This is a couple's quarrel! This is great news! The banks are blaming Bain & Lee and the buyers are blaming the banks - great!!! Now look and see what the fight is all about; the interest on the debt for 3 to 4 days! The banks want Thursday to be the end of the marketing period and the official close date and Clear Channel (CCU)/Bain & Lee want Monday to be considered the end of the marketing period. I don't know for sure if I got this correct as there is a possibility that it is the other way around. In either event, they are fighting over the close date.

Really people, this is the same type of reporting that we got on the Tribune/Zell deal just before it closed where I wrote "I just love the way people just don't get it!"

Only couples quarrel over these kind of details. If they were fighting and breaking up, the noise would be very different. When the fight is whether to get married on Monday or Thursday, the bottom line is they're still getting married. Not to mention of course Lee's executive, Scott Sperling going on CNBC yesterday to refute an earlier report by CNBC's Faber about the CCU acquisition. When Sperling said that the financing commitment was iron clad, he must have been referring to the pre-nuptial agreement!

Hang in there; this is a done deal. There is nothing new that we didn't know about a month or even three months ago. Don't let the party poopers get to you by rehashing the $2.5B loss/markdown that the banks will take on the debt. They have known this for over three months already and would have pulled the plug long ago if they had a legal leg to stand on. In fact according to the latest WSJ article, the banks are ready to go... so why the scare tactics?

I restate that based on published information, Monday 03/24/08 is the end of the 25 day marketing period and should be the close date. As the market is closed on Friday, today could be the last chance to get a piece of the action at a whopping discount.

As an aside, I noticed that Wachovia (WB) is missing from the WSJ list of banks. This doesn't mean anything as the writer of the WSJ article has omitted many details of this deal.

Disclosure: long CCU.

Comments

[J.P. Hannan:]

interesting perspective. you are right, does sound a lot like the TRB deal just before closing.

2008 Mar 21 04:08 PM