Clear Channel Warns Deal Might Not Close

The privatization deal for Clear Channel (CCU Quote - Cramer on CCU - Stock Picks) hit another snag Friday after the company cautioned that the deal may not be completed.

In a regulatory filing early Friday, Clear Channel warned that "a closing may not occur" and that it could not provide an expected completion date for the transaction. Shares of the media company, which have been on a roller-coaster ride amid uncertainty the private-equity deal would be finalized, were off 5%.

The news comes a day after private-equity firms Bain Capital and Thomas H. Lee Partners won a temporary restraining order against six banks involved in the financing of the deal after a Texas judge ruled Clear Channel would face irreparable damage if funding was refused.

Among those banks that are at odds over the credit agreement are Citigroup (C Quote - Cramer on C - Stock Picks), Morgan Stanley (MS Quote - Cramer on MS - Stock Picks), Wachovia (WB Quote - Cramer on WB - Stock Picks), Credit Suisse (CS Quote - Cramer on CS - Stock Picks), Deutsche Bank (DB Quote - Cramer on DB - Stock Picks) and the Royal Bank of Scotland (RBS Quote - Cramer on RBS - Stock Picks).

Meanwhile, The Wall Street Journal reported late Thursday that the six banks are lobbying to have the case moved from the Texas district court to a federal court in hopes of finding a friendlier judge.

Despite fears the banks will get out of the financing deal, the private-equity firms insist they will press on. Although Bain and THL have stated they want to own Clear Channel, many suspect both firms will bail out of the deal by blaming the banks and will ask the financiers to pay the $600 million in break-up fees.

Since the initial pact was announced in December 2006, the buyout has been marred by various parties disputing the price, the sale of certain assets and financing arrangements.

Those issues have knocked shares of Clear Channel more than 25% below the $39.20 buyout price as investors cast doubt on the deal. Before this week's developments, completion of the buyout was expected before the end of March.