• by Erik Sass  @eriksass1, March 15, 2007

Clear Channel Communications is delaying a shareholder meeting to vote on a proposed buyout by private-equity investors Thomas H. Lee Partners and Bain Capital Partners from March 21 to April 19. The main reason is to have more time to lobby long-standing institutional shareholders that own big chunks of stock and wield voting power.

The proposed $19 billion buyout intended to take the company private, thus freeing it from Wall Street pressure to produce short-term results. Ironically, the plan has run afoul of investors, who believe they can do better by sticking with the company.

Clear Channel, which owns the nation's largest network of radio stations and a key outdoor ad business, explained its decision in a statement: "The move will allow shareholders who have purchased shares since the original record date and who currently have economic stakes in the company to participate in the vote."

Big shareholders claim the $37.60 price was too low, despite the fact that it represents roughly a 28% premium over the average share price in the past few months. According to a recent note by Bank of America radio analyst Jonathan Jacoby, major stakeholders could push the company to pursue other means of increasing share value: "Our prior analysis failed to capture what we perceive as a greater willingness on the part of institutional investors to take many of the steps that private-equity consortia do to "squeeze" value out of companies."

In a letter to shareholders presenting its case, Clear Channel acknowledged the other strategies proposed to increase share value: "During their review, the disinterested directors considered a full range of alternatives other than the sale of the Company, including a sale or spin-off of Clear Channel Outdoor, a recapitalization, share repurchase and special dividend, as well as remaining as an independent company."

However, there are reports that big shareholders like Fidelity Management are still opposed to the deal. Jacoby noted: "We still believe that the most likely scenario is one in which the private-equity bid is rejected, and CCU remains a public company."