Highfields Capital, private equity group come to terms in Clear Channel acquisition

By Lisa Kerner

Charlotte, N.C., May 30 - Highfields Capital Management LP executed a voting agreement with a private equity group comprised of Bain Capital Partners, LLC and Thomas H. Lee Partners, LP regarding the group's acquisition of Clear Channel Communications, Inc.

Under the agreement, Highfields Capital will vote all of its Clear Channel shares in favor of the proposed transaction. Highfields Capital Management advises investment funds that beneficially own 5% of Clear Channel's common stock, according to a company news release.

The private equity group agreed that Clear Channel's post-closing certificate of incorporation will include provisions assuring public shareholders who elect to receive stock in the surviving entity equal treatment in all dividends and other distributions as well as representation on the board of directors of the surviving entity. In addition, affiliate transactions between Clear Channel and the private equity group, or their affiliates, will be prohibited unless approved by either the public shareholders of Clear Channel or the independent directors who will represent them.

"These agreements with THL Partners and Bain Capital are the result of a process we began on May 3, 2007, with a term sheet that outlined a transaction to give public shareholders a continued opportunity to share in Clear Channel's future, while preserving the all-cash option that was contemplated by the original merger agreement," Highfields Capital senior managing director Jonathon S. Jacobson said in the release.

"Their willingness to recognize the interests of Highfields and other like-minded, long-term investors allows public shareholders and the private equity group alike to pursue a transaction that benefits all parties."

On May 18, Clear Channel's board approved a second amendment to its agreement with the group, giving shareholders a $0.20 boost per share, to $39.20 cash, plus an additional consideration if the deal closes prior to Dec. 31. The amendment also offers the company's unaffiliated shareholders the opportunity to exchange Clear Channel common stock on a one-for-one basis for shares of class A common stock in the new corporation, up to a total of 30.6 million shares valued at $1.2 billion.

Under the amended merger agreement, no shareholder will be allocated more than 9.9% of the outstanding capital stock of the new corporation immediately following the closing of the merger, a prior news release stated.

Clear Channel is a media and entertainment company based in San Antonio, Texas.

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