Chancellor gets stock reply: $1 bil

One of the Street's biggest equity offerings ever

NEW YORK — Investor interest in radio stocks is skyrocketing, with one billion-dollar radio stock offering all but completed this week and another expected to be announced shortly.

Chancellor Media Corp., the nation’s No. 2 radio broadcaster (behind CBS), sold $898 million of stock late Monday in a deal that is expected to finish up at more than $1 billion once an option for additional stock sales is exercised in the next month by the deal’s underwriters.

Meanwhile, broadcaster Clear Channel Communications is working on plans for another stock offering likely to be just as big. Clear Channel filed documents last week to allow it to sell $1.5 billion in a mix of debt and stock quickly, although Wall Street sources say the deal will likely end up as a $1 billion equity offering.

Both the Chancellor and Clear Channel offerings would rank as among the biggest equity offerings ever seen on Wall Street, and likely to be the biggest in media and entertainment. At a time when most media stocks are trading at all-time highs, the radio offerings highlight how intense investor interest is in the sector, Wall Streeters say.

Chancellor sold 19 million shares at $47.25 to raise a total of $898 million late Monday, $242 million more than the company anticipated when it filed a prospectus for the offering last month. At that time Chancellor said it would sell 16 million shares and the stock was trading at $41.25.

But in a sign of the extraordinary investor interest in the deal, Chancellor stock rose through the institutional investor roadshow conducted by Chancellor execs over the past few weeks.

Chancellor stock continued to rise on Wall Street, closing up 56¢ to $48 Wednesday. Aside from confirming the pricing of the offering, Chancellor declined comment Wednesday citing securities regulations still in effect.

The underwriters have another 30 days to exercise an option to sell another 2.8 million shares. People close to the deal expect the option to be exercised, ensuring the final count will be almost 22 million shares raising roughly $1.03 billion which will be used to reduce Chancellor’s $2.9 billion debt.

Investors were “wowed by the size of the offering,” said Lehman Bros. analyst Tim Wallace, who said its success reflected Chancellor CEO Scott Ginsburg’s ability to accomplish the “grand ideas” he had laid out for his company over the past few years as well as investor enthusiasm for radio.

For its part, Clear Channel’s offering will take advantage both of the popularity of radio on the Street as well as investor interest in the company’s $735 million acquisition of U.K. outdoor advertising concern More Group announced March 5, bankers said.

Clear Channel’s stock has jumped from $42 to a high of $97 over the past year, although it is trading off its highs currently. It closed up 56¢ to $93.43 Wednesday.

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