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July 25, 2008 6:45 PM

Changing the Channel: Investors Finally Approve Buyout of Radio Giant

Posted by Brian Baxter

Shareholders of San Antonio-based Clear Channel Communications, the largest radio company in the U.S., agreed on Friday to approve a $17.9 billion acquisition by Boston-based private equity firms Bain Capital and Thomas H. Lee Partners.

The vote clears the way for the long-awaited buyout of Clear Channel, which had been hung up in litigation and stalled negotiations for nearly two years.

"I don't want to do anything to jinx this but it does look like it's actually going to close [next week], about 21 months after I first heard about it," says David Chapin, a strategic development partner at Ropes & Gray who headed a 30-lawyer team from the firm advising the private equity buyers. "It feels awfully good and it will feel even better [on July 30] at about 2 o'clock, when I have the last [confirmation] of the last wire transfer and the money is in people’s accounts."

Rounding out the mammoth Ropes & Gray transaction team are: corporate finance/M&A partners Patrick Diaz, Brian Erb, Jay Kim, Alison Bomberg, Steven Rutkovsky, and private equity practice cohead Alfred Rose; tax partners Leo Arnaboldi III and Christopher Leich; tax and benefits partner Loretta Richard;  antitrust partner Mit Spears; and associates Scott Crofton, Michael Lee, Christina Maloney, Sheri Mezoff, William Mone, Nicole Park, Adam Reiss, Daniel Rolde, Jason Serlenga, Arin Silber, Sara Stapleton, Alyson Bagley Stewart, Patricia Teixeira, Tzung-Bor "Chung" Wei, Jeehyun Jesse Yeo, Abigail Baird, Pamela Glazier, Carrie Simons, and Samantha Barrett.

The American Lawyer actually named Chapin one of its Dealmakers of the Year in April 2007 for his work on the belated buyout. "I was wondering whether or not I might have to give [the award] back," jokes Chapin. "But I guess I get to keep it now."

Dow Lohnes communications partner John Logan and Meredith Senter, Jr., a name partner at Washington, D.C. communications boutique Leventhal Senter & Lerman, served as joint Federal Communications Commission counsel to the private equity buyers. (Both the FCC and the Justice Department already have approved the sale.)

Akin Gump Strauss Hauer & Feld corporate finance and M&A partners C.N. Franklin Reddick III, Julie Kaufer, and William Morris, counsel Keith Melman, and associates Zachary Maul and Asma Chandani served as lead counsel to Clear Channel. (Reddick did not respond to a request for comment.) Sidley Austin provided counsel to a special Clear Channel advisory committee.

Financing for the $19 billion offer for Clear Channel, made in November 2006, first began to crumble in early 2007. The acquirers raised their offer to $19.5 billion, but not before several banks financing the deal--Citigroup, Credit Suisse, Deutsche Bank, Morgan Stanley, The Royal Bank of Scotland, and Wachovia--sought to renegotiate terms of the transaction citing adverse economic conditions brought about by the credit crunch.

Cahill Gordon & Reindel finance partners Jonathan Schaffzin, John Tripodoro, and William Miller served as counsel to the banks. (Schaffzin did not respond to a call for comment by the time of this post.)

The radio giant and its private equity partners--operating under the name of the acquisition vehicle, CC Media Holdings--filed suit against the banks in state court in New York and Texas, seeking more than $26 billion in damages. But the legal battle ended this May when both sides agreed to lower the takeover price to $17.9 billion and restructure some of the financing.

"A huge number of people have put in a tremendous effort to get this done, not the least of which the clients and the bankers," Chapin says. "It was a long slog but I hope a happy ending for everybody."

Fingers crossed, of course.

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