Updated Dow Jones is reporting that Thomas H. Lee Partners recently notified limited partners of an imminent capital call, related to its proposed buyout of Clear Channel (CCU). In other words, the “will it or won’t it” parlor game may be nearing its conclusion – and just a scant 16 months after the original agreement was signed.
The article adds that it does not know if similar notifications have been sent to limited partners of Bain Capital, which is partnering with THL on the deal. Well, I’ve spoken to a pair of Bain LPs this morning, and they claim to be hearing little more than crickets. So what gives?
I have no definitive answers, so instead let me throw out a pair of educated theories:
- It’s not too surprising that THL would be the first to ring the bell on CCU. I’ve spoken to sources inside both THL and Bain about this deal repeatedly since the credit crunch hit, and the THL folks have always expressed more optimism than have the Bain folks. Not more desire, mind you, but more optimism.
- Dow Jones notes the following: “Capital calls… are standard operating procedure within 30 days of an anticipated closing.” Well, only sort of. That’s a standard amount of time if you’re an individual investor in a buyout fund (i.e., a high-net-worth individual), but institutional investors (i.e., endowments, pension funds, etc.) typically get ten days or less. So that makes me think that the Dow Jones leaker was an individual. That doesn’t disqualify the story’s veracity — but helps explain the disconnect.
Finally, let me stress: Don’t read too much into any of this, one way or the other. The CCU buyout is not closing this week or next, and there is still the outstanding issue of litigation with CCU, Providence Equity Partners and Wachovia — which is officially all separate from the bigger buyout, but we’ve seen MACs triggered for less.
As someone in the know told me today: “I wouldn’t trust this deal to be done until a press release is sent out… Just because people are preparing for the end doesn’t mean it’s coming, and doesn’t mean that it’s not. I’m not trying to be ambiguous, but that’s the reality of the situation.”
Update: A Bain limited partner has now written in to say he got a capital call on March 4, which is intended to be used for Clear Channel. He is an individual, not an institution.