Report: Clear Channel Deal Short-Circuits

Shares of Clear Channel CCU plunged more than 20% in late trading Tuesday following a report that a deal to take the company private was unraveling.

The Wall Street Journal said the $19 billion deal between San Antonio-based Clear Channel and private-equity firms Bain Capital Partners and Thomas H. Lee was "near collapse" because of a dispute with banks over terms of the credit pact to finance the acquisition. The story cited unnamed sources close to the matter.

Clear Channel, which slid 5.5% during Tuesday's regular session, was falling 20.5% to $25.90 in after-market trading.

Among those banks that are at odds over the credit agreement are Citigroup C, Morgan Stanley MS, Wachovia WB, Credit Suisse CS, Deutsche Bank DB and the Royal Bank of Scotland RBS.

The deal has already seen a roller-coaster ride since it was signed in December 2006, with various parties disputing the price, the sale of certain assets and financing arrangements.

Two weeks ago, Thomas H. Lee managing director Richard Bressler had told reporters he was confident a deal "is going to get done." Shareholders have disagreed with that sentiment, as Clear Channel is trading 34% below the $39.20 price that the deal values shares at.

For Bain Capital, this could potentially be the second privatization deal to go bust in a week. On Thursday, an affiliate of the firm said it terminated its merger agreement with China-based Huawei Technologies to acquire networking company 3Com COMS. The sides were unable to renegotiate a deal that would clear regulatory hurdles.