Clear Channel Outdoor Holdings Inc agreed to settle a shareholder lawsuit seeking to rescind an allegedly improper loan that the billboard advertising company made to its ailing parent Clear Channel Communications Inc .
The loan "so significantly" depleted Clear Channel Outdoor's cash reserves that the company was forced to borrow $2 billion to fund a special dividend, according to the lawsuit filed in Delaware's Chancery Court in March last year.
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Clear Channel Communications Inc and its owners, private equity firms Bain Capital LLC and Thomas H Lee Partners LLC, were also named as defendants.
As part of the agreement entered into on March 28, Clear Channel Outdoor will demand payment of $200 million under the revolving promissory note from its parent company, and pay a special dividend of the same amount from the proceeds of the repayment. Clear Channel Holdings Inc ��� the outdoor company's direct parent and a subsidiary of Clear Channel Communications ��� would receive 89 percent of such a dividend, to be paid out the day the note is repaid.
Clear Channel Communications, which owns 89 percent of Clear Channel Outdoor, was bought by Bain and Thomas H Lee in 2008 for about $18 billion.
Clear Channel Outdoor's shares were flat at $7.38 in mid-day trading on the New York Stock Exchange on Wednesday.
(Reporting by Sayantani Ghosh and Sruthi Ramakrishnan in Bangalore; Editing by Joyjeet Das)