Clear Channel’s Accord Over Investor Claims Is Approved

Clear Channel Outdoor Holdings Inc. won approval of a settlement calling for the provider of outdoor-advertising displays to pay a $200 million dividend to resolve a shareholder lawsuit over cash transfers to its former parent company.

San Antonio, Texas-based Clear Channel Outdoor provided a “substantial benefit” to investors by agreeing to pay the dividend to end litigation over loan agreements with Clear Channel Communications Inc., Delaware Chancery Court Judge Leo Strine said today at a hearing in Wilmington. Clear Channel Outdoor was spun off from the radio broadcaster in 2005.

The dividend, which amounts to more than 63 cents per share, “is not a trifle,” Strine said. Public investors stand to get about $22 million of the dividend with the rest going to Clear Channel Communications, the judge said. The broadcaster owns 89 percent of the billboard provider.

A Florida pension fund sued the outdoor-advertising provider last year accusing directors of improperly refusing to renege on agreements requiring them to transfer more than $600 million in cash to Clear Channel Communications. That company is owned by private-equity funds Bain Capital LLC and Thomas H. Lee Partners LP.

Reserves Depleted

The transfers had so depleted Clear Channel Outdoor’s cash reserves that it had to borrow $2 billion to fund a special dividend, the fund’s lawyers alleged in the case.

The Florida pension fund also alleged the cash-transfer amounts to a sweetheart deal and forces the unit and public shareholders to become “an involuntary source of capital” for the private-equity funds that own its former parent.

Strine also approved $6 million in fees for the fund’s lawyers. Those fees will be paid by Clear Channel Communications in addition to the settlement, Stuart Grant, one of the fund’s attorneys, told Strine today.

The case is the City of Pinellas Park Firefighters Pension Board v. Covell, 7315, Delaware Chancery Court (Wilmington).