For the sale to proceed, shareholders will have to vote to accept the current offer of $36 per share--$3.20 cents less than the previously agreed-upon price of $39.20 per share.
The price was lowered as part of a legal settlement between Clear Channel and its private-equity buyers on one side, and the consortium of banks that promised to fund the deal on the other. Believing the price was too high, the banks had tried to block the deal with the insertion of "poison provisions" at the last minute, according to Clear Channel, which sued them for breach of contract and tortious interference.
At the last minute, the two sides averted a trial with a settlement that lowers the price while locking in funding.
The new price will doubtless be galling to Clear Channel shareholders, who in November 2006 rejected the original offer of $37.60 as too low. Months of haggling raised the offer to $39.20 in May 2007, when shareholders finally voted to accept the deal.
In the meantime, the banks were growing increasingly nervous about the deal, spooked by the weak economy and contracting credit in the wake of the sub-prime mortgage meltdown. Their fears were exacerbated by the recent downturn in the fortunes of radio broadcasters as well.
In late March, the bankers effectively backed out and the deal collapsed, prompting Clear Channel to file lawsuits against the six bank consortium: Citigroup, Credit Suisse, Morgan Stanley, Deutsche Bank, the Royal Bank of Scotland, and Wachovia in New York and Texas.