Clear Channel Collapse?

Lots of reports out there about how the $19.5 billion Clear Channel buyout is on the verge of collapse. Seems the bankers just won’t pull the trigger. Well, unless you mean the trigger to a gun that would kill the deal – which they apparently are threatening to do.

The result, of course, would be a lawsuit down in Delaware, with CCU, Bain and THL all serving as plaintiffs. After all, the equity sponsors already have their money in the bank – which either represents an honest desire to close the deal, or the very shrewd mimicking of a good faith effort.

We went over this scenario two weeks ago, although it partially assumed that the banks wouldn’t actually bail unless the Bear Stearns shakes became contagious. That obviously hasn’t happened (yet), so this is all about lender inability to accept immediate loss. In other words, we’re at the crux of a very tenuous situation, and I wouldn’t be at all surprised if the deal either closes or fails.

Worth noting, however, that the arb crowd is betting on failure, as the spread has widened considerably in the past 24 hours. Of course, this happened earlier this month, and then immediately narrowed. Traders are so fickle…