Clear Channel hit by sale doubts

Clear Channel is the largest US radio station group

Shares in US radio group Clear Channel Communications have fallen 21% in after hours trading on speculation that its $19.5bn (£9.7bn) sale will collapse.

Private equity firms Thomas Lee and Bain Capital agreed to buy Clear Channel last year, but reports say their bank backers want to pull out.

Analysts said the credit squeeze meant Thomas Lee and Bain Capital would struggle to borrow the required funds.

Clear Channel, Thomas Less and Bain Capital have all declined to comment.

Credit crunch casualty?

Clear Channel's share price is now at $25.70, well below the $39.20 a share that the private equity groups had agreed to offer.

"If the deal fell apart, it would be seen as a casualty of the credit crunch as well as the secular and cyclical challenges of the radio industry," said David Bank, analyst with RBC.

Analysts estimate that the private equity groups will have to pay Clear Channel up to $500m to walk away from the deal.

The banks who initially agreed to help fund the takeover are said to be Citigroup, Morgan Stanley, Deutsche Bank, Credit Suisse, Wachovia and Royal Bank of Scotland.

In addition to its radio operations, Clear Channel has an advertising unit.