<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
-----------------
SCHEDULE 14D-1/A
Tender Offer Statement Pursuant to Section 14(d)(1)
of the Securities Exchange Act of 1934
(Amendment No. 1)
SCHEDULE 13D
Under the Securities Exchange Act of 1934
(Amendment No. 2)
HEFTEL BROADCASTING CORPORATION
(Name of Subject Company)
CLEAR CHANNEL RADIO, INC.
CLEAR CHANNEL COMMUNICATIONS, INC.
(Bidders)
CLASS A COMMON STOCK, PAR VALUE $.001 PER SHARE
(Title of Class of Securities)
422799106
(CUSIP Number of Class of Securities)
-----------------
L. LOWRY MAYS
CLEAR CHANNEL COMMUNICATIONS, INC.
200 CONCORD PLAZA, SUITE 600
SAN ANTONIO, TEXAS 78216
(210) 822-2828
(Name, Address and Telephone Number of Persons Authorized
to Receive Notices and Communications on Behalf of Bidders)
Copies to:
STEPHEN C. MOUNT
AKIN, GUMP, STRAUSS, HAUER & FELD, L.L.P.
300 CONVENT STREET, SUITE 1500
SAN ANTONIO, TEXAS 78205
(210) 270-0800
CALCULATION OF FILING FEE
===============================================================================
Transaction valuation* Amount of Filing Fee
- -------------------------------------------------------------------------------
$109,747,950 $21,949.59
===============================================================================
*For purposes of calculating fee only. This amount assumes the purchase of
4,771,650 shares of Class A Common Stock of Heftel Broadcasting Corporation, at
$23.00 in cash per share. The amount of the filing fee, calculated in
accordance with Regulation 240.0-11 of the Securities Exchange Act of 1934, as
amended, equals 1/50 of one percentum of the value of the shares to be
purchased.
/x/ Check box if any part of the fee is offset as provided by Rule 0-11(a)(2)
and identify the filing with which the offsetting fee was previously paid.
Identify the previous filing by registration statement number, or the Form
or Schedule and the date of its filing.
Amount Previously Paid: $21,949.59
Form or Registration No.: Combined Schedule 14D-1 and Schedule 13D
(Amendment No.1)
Filing Party: Clear Channel Communications, Inc.
Clear Channel Radio, Inc.
Date Filed: June 7, 1996
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Introduction
This Amendment No. 1 amends and supplements the Tender Offer
Statement on Schedule 14D-1 filed with the Securities and Exchange Commission
(the "Commission") on June 7, 1996 (as may be amended from time to time, the
"Schedule 14D-1") which relates to the offer by Clear Channel Radio, Inc., a
Nevada corporation (the "Purchaser"), to purchase any and all outstanding
shares of Class A Common Stock, par value $.001 per share (the "Shares"), of
Heftel Broadcasting Corporation, a Delaware corporation, at a price of $23.00
per Share, net to the seller in cash, upon the terms and subject to the
conditions set forth in the Offer to Purchase, dated June 7, 1996 (the "Offer
to Purchase"), and in the related Letter of Transmittal (which together
constitute the "Offer"), copies of which are filed as Exhibits (a)(1) and
(a)(2), respectively, to the Schedule 14D-1 and which are incorporated herein
by reference. Purchaser is a wholly-owned subsidiary of Clear Channel
Communications, Inc., a Texas corporation ("Parent"). Capitalized terms used
but not otherwise defined herein shall have the meanings assigned to them
elsewhere in the Schedule 14D-1.
Item 5. Purpose of the Tender Offer and Plans or Proposals of the
Bidder.
Item 5(a)-(e) is hereby amended and supplemented by the addition of
the following paragraphs thereto:
"Tender Offer Agreement. On June 20, 1996, the parties to the Tender
Offer Agreement entered into an amendment ("Amendment No. 2") to the Tender
Offer Agreement which amends certain provisions therein as follows:
(i) Amendment No. 2 amends the provision relating to the Company's
filing with the Commission of a Solicitation/Recommendation Statement on
Schedule 14D-9 (as may be amended from time to time, the "Schedule 14D-9") to
require the Company to file on or before June 21, 1996 such Schedule 14D-9
which shall reflect either the recommendation of the Company's Board of
Directors (the "Board") to accept the Offer or a statement by the Board that it
is not expressing an opinion, and is remaining neutral, with respect to the
Offer. The Company is required to mail copies of such Schedule 14D-9,
excluding exhibits, to its stockholders on or before June 21, 1996.
(ii) Amendment No. 2 adds a provision to the Tender Offer Agreement
which states that the Company will, concurrently with the closing of the Offer,
take all actions necessary to cause persons designated by the Purchaser to
become directors of the Company so that such persons shall constitute at least
a majority of the Board or if the Purchaser so requests, all of the directors
of the Company. In furtherance thereof, the Company will increase the size of
the Board, or use reasonable efforts to secure the resignation of directors, or
both, as is necessary to permit the Purchaser's designees to be elected to the
Board. At such time, the Company also will cause persons designated by the
Purchaser to constitute at least a majority of each committee of the Board or
if the Purchaser so requests, all of the directors on each committee of the
Company's Board. The Company's obligations to appoint designees to the Board
shall be subject to Section 14(f) of the Exchange Act, and Rule 14f-1
promulgated thereunder. Amendment No. 2 states that the Company is required to
promptly take all actions required under such securities law and rule in order
to fulfill the above obligations. The Purchaser is required to supply the
Company with all information which the Company shall reasonably request with
respect to nominees in connection with the filing required by Section 14(f) of
the Exchange Act. As of the date hereof, the Purchaser has not yet determined
the persons who shall be designees to the Board.
(iii) Amendment No. 2 amends the condition in the Tender Offer
Agreement that the Company's representations and warranties therein remain true
and correct in all material respects to provide that the representation and
warranty that the Board has resolved to recommend acceptance of the Offer need
only be true as of June 1, 1996.
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(iv) Amendment No. 2 amends the termination provision of the
Tender Offer Agreement to provide that the Tender Offer Agreement and the Offer
may be terminated by either the Company or the Purchaser at any time prior to
the closing of the Offer, upon written notice, if, among other things, (a) the
Company shall have determined pursuant to duly adopted resolutions of the
Board, to recommend against acceptance of the Offer by reason of receipt of a
Takeover Proposal (as such term is defined in the Tender Offer Agreement); (b)
the Company after receipt of a Takeover Proposal shall not have, within five
days after being so requested by the Purchaser, determined pursuant to duly
adopted resolutions to recommend acceptance of the Offer, or after so
recommending acceptance of the Offer shall have withdrawn or modified or
resolved to modify or withdraw such recommendation; or (c) the Company
recommends, pursuant to duly adopted resolutions, any Takeover Proposal from a
person or entity other than the Purchaser or its affiliates; provided, however,
that the Purchaser shall not terminate the Tender Offer Agreement pursuant to
subsection (a) hereof if as a result of the Company's receipt of a Takeover
Proposal from a third-party, the Company, as required by applicable law as
advised by outside counsel, recommends against acceptance of the Offer, but
within five business days thereafter the Company publicly withdraws its
recommendation against acceptance of the Offer.
The foregoing summary of the Tender Offer Agreement, as amended, does
not purport to be complete and is qualified in its entirety by reference to the
text of Amendment No. 2, which is herein incorporated by reference, a copy of
which is attached hereto and filed as Exhibit 99(c)(13) to the Schedule 14D-1."
"Consent of Stockholders. On June 20, 1996, the Selling Stockholders
executed a consent whereby each Selling Stockholder consented to Amendment No.
2 to the Tender Offer Agreement and acknowledged and agreed that any references
to the Tender Offer Agreement in the Stockholder Purchase Agreement shall mean
the Tender Offer Agreement, as amended by Amendments No. 1 and 2 thereto and
any subsequent amendments.
The foregoing summary of the Consent of Stockholders does not purport
to be complete and is qualified in its entirety by reference to the text of
such Consent of Stockholders, which is herein incorporated by reference, a copy
of which is attached hereto and filed as Exhibit 99(c)(14) to the Schedule
14D-1."
Item 7. Contracts, Arrangements, Understandings or Relationships with
Respect to the Subject Company's Securities.
Item 7 is hereby amended and supplemented as set forth in Item 5
above.
Item 10. Additional Information.
Item 10(a) is hereby amended and supplemented as set forth in Item 5
above.
Item 10(e) is hereby amended and supplemented by the addition of the
following paragraph thereto:
"(e) On June 14, 1996, a purported stockholder class action suit
was filed in the Court of Chancery in the State of Delaware (Levine v. Heftel,
et al., C.A. No. 15066). The Levine action names as defendants the Company,
Parent and certain individual directors and senior executive officers of the
Company (collectively, the "Individual Defendants"). In general, the Levine
action alleges that, among other things, the defendants breached their
fiduciary duties, because the Offer is "grossly unfair" to the stockholders and
is "substantially below true value and is a product of defendants' conflict of
interest." The action also alleges that the Company and Parent failed to
adequately reveal the consideration involved in the Settlement Agreements and
Agreements Not to Compete entered into with Cecil Heftel and Carl Parmer,
despite the fact that such information was disclosed in the Schedule 14D-1 and
Offer to Purchase. Additionally, the action alleges that given the Individual
Defendants' "domination and control" of the Board, they cannot be expected to
act independently, and consequently, in order for such individuals not to
breach their fiduciary duties, a
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recommendation of the transaction from "a truly independent representative of
the public stockholders" or obtaining the majority approval of the public
unaffiliated stockholders of the Company is required. The plaintiff is
seeking, among other things, certification as a class action, preliminary and
permanent injunctive relief, rescissory damages in the event the Offer is
consummated, compensatory damages, and costs, disbursements and legal fees
relating to the action. Parent believes that the Levine action is meritless
and intends to oppose it vigorously.
The foregoing summary of the Levine action does not purport to
be complete and is qualified in its entirety by reference to the text of such
action which is herein incorporated by reference, a copy of which is attached
hereto and filed as Exhibit 99(g) to the Schedule 14D-1."
Item 11. Material to be Filed as Exhibits.
Item 11 is amended to add the following:
99(c)(13) Amendment No. 2 to Tender Offer Agreement, dated June 20,
1996.
99(c)(14) Consent of Stockholders, dated June 20, 1996.
99(g) Class Action Complaint, Jeffrey Levine v. Cecil Heftel, H.
Carl Parmer, Madison Graves, Richard Heftel, John Mason,
Heftel Broadcasting Corporation and Clear Channel
Communications, Inc. (C.A. No. 15066), filed June 14, 1996, in
the Court of Chancery in the State of Delaware.
4
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SIGNATURE
After due inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this statement is true, complete and
correct.
DATED: June 21, 1996
CLEAR CHANNEL COMMUNICATIONS, INC.
By: /s/ Mark P. Mays
--------------------------------
Mark P. Mays,
Senior Vice President/Operations
CLEAR CHANNEL RADIO, INC.
By: /s/ Mark P. Mays
--------------------------------
Mark P. Mays,
Senior Vice President/Operations
5
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INDEX TO EXHIBITS
EXHIBIT
NUMBER DESCRIPTION
- ------- -----------
99(c)(13) Amendment No. 2 to Tender Offer Agreement,
dated June 20, 1996 . . . . . . . . . . . . . . . . . . .
99(c)(14) Consent of Stockholders, dated June 20, 1996 . . . . . .
99(g) Class Action Complaint, Jeffrey Levine v. Cecil Heftel,
H. Carl Parmer, Madison Graves, Richard Heftel, John
Mason, Heftel Broadcasting Corporation and Clear Channel
Communications, Inc. (C.A. No. 15066), filed June 14,
1996, in the Court of Chancery in the State of Delaware. .
6
<PAGE> 1
Exhibit (c)(13)
AMENDMENT NO. 2 TO TENDER OFFER AGREEMENT
THE TENDER OFFER AGREEMENT dated June 1, 1996 (the "Agreement"), by and
between CLEAR CHANNEL RADIO, INC., a Nevada corporation, and HEFTEL
BROADCASTING CORPORATION, a Delaware corporation as heretofore amended by that
certain Amendment No. 1 to Tender Offer Agreement dated June 6, 1996
("Amendment No. 1"), is hereby amended as follows:
1. The second and third sentences of Section 1.4 are deleted in their
entirety and replaced by the following new sentences:
"The Company shall, on or before June 21, 1996, file with the Commission
a Solicitation/Recommendation Statement on Schedule 14D-9 (as amended
from time to time, the "Schedule 14D-9") which shall reflect either the
recommendation of the Company's Board of Directors to accept the Offer
or a statement by the Company's Board of Directors that it is not
expressing an opinion, and is remaining neutral, with respect to the
Offer." The Company shall mail copies of such Schedule 14D-9 (excluding
exhibits) to its stockholders on or before June 21, 1996.
2. Article 1 is amended by adding the following new Section 1.7:
"1.7 Directors. The Company will, concurrently with the Closing, take
all actions necessary to cause persons designated by Parent to become
directors of the Company so that such persons shall constitute at least
a majority of the Board of Directors of the Company or if Parent so
requests, all of the directors of the Company. In furtherance thereof,
the Company will increase the size of its Board of Directors, or use its
reasonable efforts to secure the resignation of directors, or both, as
necessary to permit Parent's designees to be elected to the Company's
Board of Directors. The Company also will, concurrently with the
Closing, cause persons designated by Parent to constitute at least a
majority of each committee of the Company's Board of Directors or if
Parent so requests, all of the directors on each committee of the
Company's Board of Directors. The Company's obligations to appoint
designees to its Board of Directors shall be subject to Section
<PAGE> 2
14(f) of the Exchange Act and Rule 14f-1 promulgated thereunder. The
Company shall promptly take all actions required pursuant to such
section and rule in order to fulfill its obligations under this Section
1.7. Parent will supply the Company with all information which the
Company shall reasonably request with respect to nominees to the
Company's Board of Directors in order for the Company to make the filing
required by Section 14(f) of the Exchange Act.
3. Section 7.4 is amended by adding the following at the end of the
first sentence thereof immediately after the word "date":
"and except the representation and warranty contained in Section 3.5
need only be true as of June 1, 1996"
4. Section 8.1(d) is deleted in its entirety and replaced by the
following new Section 8.1(d):
"(d) By either the Company or Parent if (i) the Company shall have
determined, pursuant to duly adopted resolutions of its Board of
Directors, to recommend against acceptance of the Offer by reason of
receipt of a Takeover Proposal, (ii) after receipt of a Takeover
Proposal the Company shall not have, within five days after being so
requested by Parent, determined pursuant to duly adopted resolutions to
recommend acceptance of the Offer, or after so recommending acceptance
of the Offer shall have withdrawn or modified or resolved to modify or
withdraw such recommendation or (iii) the Company recommends, pursuant
to duly adopted resolutions, any Takeover Proposal from a person or
entity other than Parent or its affiliates; provided, however, that
Parent shall not terminate this Agreement pursuant to clause (i) of this
subsection if as a result of the Company's receipt of a Takeover
Proposal from a third-party the Company, as required by applicable law
as advised by outside counsel, recommends against acceptance of the
Offer but within five business days thereafter the Company publicly
withdraws its recommendation against acceptance of the Offer;"
5. Except as amended hereby or by Amendment No. 1, the Agreement is
not changed and is in full force and effect.
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IN WITNESS WHEREOF, each of the parties hereto has caused this
Amendment No. 2 to be executed on June 20, 1996 by its officer thereunto duly
authorized.
CLEAR CHANNEL RADIO, INC.
By: /s/ Randall T. Mays
---------------------------
Name: Randall T. Mays
-------------------------
Title: Vice President
------------------------
HEFTEL BROADCASTING
CORPORATION
By: /s/ Carl Parmer
---------------------------
Name: Carl Parmer
-------------------------
Title: President and Co-Chief
Executive Officer
------------------------
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Exhibit (c)(14)
CONSENT OF STOCKHOLDERS
("CONSENT")
Reference is hereby made to the Stockholder Purchase Agreement, dated
June 1, 1996, among Clear Channel Radio, Inc. ("Clear Channel") and the
undersigned (the "Agreement"). The undersigned hereby consent to Amendment No.
2 to the Tender Offer Agreement, dated June 1, 1996, between Clear Channel
Radio, Inc. and Heftel Broadcasting Corporation, as amended (the "Offer
Agreement") and hereby acknowledge the term "Tender Offer Agreement" as used in
the Agreement shall mean the Offer Agreement as heretofore and hereafter
amended. A copy of Amendment No. 2 is attached hereto.
In WITNESS WHEREOF, the undersigned have executed this Consent as of
June 20, 1996.
/s/ Catharine Rolph
- -----------------------------------
Catharine Rolph
/s/ Margaret A.H. Wilson
- -----------------------------------
Margaret A.H. Wilson, individually
and as custodian for each of Nalani
Wilson, Ryan Wilson and Deven
Wilson, under the Hawaii Uniform
Transfers to Minors Act
/s/ Susan Heftel-Liquido
- -----------------------------------
Susan Heftel-Liquido, as trustee
of the Susan Heftel-Liquido Trust
u/t/d 2/1/93 and as custodian for
each of Francisco Liquido, Tiara
Liquido, Carlo Liquido and Fernando
Liquido under Hawaii Uniform Transfers
to Minors Act
/s/ Christopher Lee Heftel
- -----------------------------------
Christopher Lee Heftel, individually
and as custodian for each of Logan
Heftel, Brannon Heftel and Hayden
Heftel under the Tennessee Uniform
Transfers to Minors Act
/s/ Terry Heftel
- -----------------------------------
Terry Heftel, individually and as
custodian for each of Jonathan Heftel,
Jeffrey Welch and Jeremy Heftel under
the Utah Uniform Transfers to Minors Act
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/s/ Richard Heftel
- -----------------------------------
Richard Heftel, as trustee of the
Richard Heftel Living Trust dated
January 9, 1996, and as custodian
for each of Kawika Heftel, Christian
Heftel and Brittany Heftel, under
the California Uniform Transfers to
Minors Act
/s/ Cecil Heftel
- -----------------------------------
Cecil Heftel
/s/ Michelle Lopez Hendrick
- -----------------------------------
Michelle Lopez Hendrick
/s/ Michael Donohoe
- -----------------------------------
Michael Donohoe
/s/ James Donohoe
- -----------------------------------
James Donohoe
/s/ Lani Donohoe
- -----------------------------------
Lani Donohoe, as custodian for Josh
Donohoe, under the California
Uniform Transfers to Minors Act
/s/ Carl Parmer
- -----------------------------------
Carl Parmer
2
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EXHIBIT 99(g)
IN THE COURT OF CHANCERY OF THE STATE OF DELAWARE
IN AND FOR NEW CASTLE COUNTY
JEFFREY LEVINE, |
|
Plaintiff, |
|
v. |
| C.A. No. 15066
|
CECIL HEFTEL, H. CARL PARMER, MADISON |
GRAVES, RICHARD HEFTEL, JOHN MASON, |
HEFTEL BROADCASTING CORPORATION and |
CLEAR CHANNEL COMMUNICATIONS, INC. |
|
Defendants. |
CLASS ACTION COMPLAINT
Plaintiff, by his attorneys, for his Complaint alleges upon
information and belief, except as to the allegations contained in paragraph 2,
which plaintiff alleges upon knowledge, as follows:
NATURE OF ACTION
1. Plaintiff brings this class action on behalf of himself and
all other shareholders of defendant Heftel Broadcasting Corp. ("Heftel" or the
"Company") similarly situated (the "Class") to enjoin defendants from
effectuating a coercive $23.00 per share tender offer for their equity
interests in the Company by Clear Channel Communications, Inc. ("Clear
Channel"). Clear Channel already owns 21% of the Company's shares outstanding.
The tender offer is manifestly unfair as it is substantially below the fair
market value of Heftel in light of the Company's exceptional growth prospects,
and is below current trading levels of the Company's common shares, which
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was as high as $27.375 just two days after the announcement. Further, Heftel
and Clear Channel failed to disclose, when jointly making the tender offer
proposal, that defendants Cecil Heftel and H. Carl Parmer, who principally
control a management group which controls approximately 40% of Heftel, in
exchange for their agreement to tender their shares, are to receive from Clear
Channel extremely lucrative additional consideration solely for themselves
amounting to $25.7 million or more than 10% of the total cash consideration to
be paid by Clear Channel to effectuate the tender offer.
PARTIES
2. Plaintiff Jeffrey Levine, at all times relevant hereto, owned
shares of Heftel common stock.
3. Defendant Heftel is a Delaware corporation with its principal
executive offices located at 6767 West Tropicana Avenue, Las Vegas, Nevada
89103. Heftel is a Spanish language radio broadcasting company that owns
radio stations in large metropolitan U.S. cities. As of February 1, 1996, the
Company had 10.92 million shares of common stock outstanding. For the fiscal
year ended September 30, 1995, the Company reported net income of $3.7 million,
an increase of 740% over the prior fiscal year, on revenues of $88.2 million,
an increase of 248% over the prior fiscal year.
4. Clear Channel is a Nevada corporation that owns, operates and
manages approximately 35 radio stations and nine television stations. In
fiscal 1995, the Company's net revenues were $283.4 million, and its net
income was $22 million.
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5. At all relevant times herein, defendant Cecil Heftel ("Cecil
Heftel") was Chairman of Heftel's Board of Directors ("Board"), Co-Chief
Executive Officer and a Director of the Company. Defendant Cecil Heftel
controls approximately 3.7 million shares of Heftel Class B common stock, which
gives him 69% of all shareholder voting power in the Company. As discussed
below, as part of Clear Channel's tender offer, Cecil Heftel will receive, in
addition to $23 per share for his common stock, $14.3 million in additional
cash consideration.
6. At all relevant times herein, defendant H. Carl Parmer
("Parmer") has been Co-Chief Executive Officer, President, Director of the
Company, as well as member of the Board's Audit Committee. Parmer owns 413,026
shares of Heftel Class B common stock and 168,044 shares of Heftel Class A
common stock, which gives him approximately 10% of the shareholder voting
power in the Company. As part of Clear Channel's tender offer, Parmer will
receive, in addition to $23 per share for his common stock, $11.4 million in
additional cash consideration.
7. At all relevant times herein, Defendant Madison Graves
("Graves") has been a Director of the Company and a member of the Board's
Audit and Compensation Committee.
8. At all relevant times herein, Defendant Richard Heftel
("Richard Heftel") has been a Director of the Company, and is the son of Cecil
Heftel. Richard Heftel currently owns 559,118 shares of Heftel Class B common
stock and has agreed to tender those shares to Clear Channel for $23 per share.
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9. At all relevant times herein, Defendant John Mason ("Mason")
has been a Director of the Company and a member of the Company's Audit and
Compensation Committee.
10. By virtue of their positions as directors and/or senior
executive officers of Heftel and their exercise of control over its business
and corporate affairs, defendants Cecil Heftel, Parmer, Graves, Richard Heftel
and Mason (collectively the "Individual Defendants" or the "Management Group"),
at all relevant times, had and have the power to control and influence, and did
control and influence, and cause Heftel to agree to and to engage in the
transaction complained of herein. Each Individual Defendant owes Heftel and
its public stockholders fiduciary obligations and is required to: use his
ability to control and manage Heftel in a fair, just and equitable manner;
maximize shareholder value; act in furtherance of the best interests of Heftel
and its public stockholders; govern Heftel in such a manner as to heed the
expressed views of its public shareholders; refrain from abusing his positions
of control; provide full disclosure to the public shareholders; and not favor
his own or any other party's interests at the expense of Heftel and its public
shareholders.
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CLASS ACTION ALLEGATIONS
11. Plaintiff brings this action pursuant to Rule 23 of the Rules
of the Court of Chancery, for declaratory, injunctive and other relief on his
own behalf and as a class action, on behalf of all public stockholders of
Heftel (except defendants herein and any person, firm, trust, corporation or
other entity related to or affiliated with any of the defendants) and their
successors in interest, who are being deprived of their equity interest in
Heftel and the opportunity to maximize the value of the their Heftel shares by
the wrongful acts of the defendants described herein.
12. This action is properly maintainable as a class action for the
following reasons:
(a) The class of stockholders for whose benefit this
action is brought is so numerous that joinder of all class members is
impracticable. As of February 1, 1996, Heftel has approximately 10.92
million shares of common stock duly issued and outstanding, which
traded on the NASDAQ National Market, and were owned by thousands of
shareholders. Members of the Class are scattered throughout the United
States.
(b) There are questions of law and fact that are
common to the members of the Class including, inter alia, the
following:
(i) whether the defendants have engaged in conduct
constituting unfair dealing to the detriment of the public
stockholders of Heftel;
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(ii) whether the tender offer by Clear Channel is
unfair to the public stockholders of Heftel because it does
not constitute a fair price for the shares of the Company; and
(iii) whether defendants Cecil Heftel and Parmer
have breached their fiduciary and common law duties owed by
them to plaintiff and the other members of the Class by
tendering their shares to Clear Channel in exchange for
exceptionally lucrative buy-out packages not available to
other Heftel shareholders.
(c) The claims of plaintiff are typical of the claims of
the other members of the Class, and plaintiff has no interests that
are adverse or antagonistic to the interests of the Class.
(d) Plaintiff is committed to the vigorous prosection of
this action and has retained competent counsel experienced in
litigation of this nature. Accordingly, plaintiff is an adequate
representative of the Class and will fairly and adequately protect the
interests of the Class.
(e) The prosecution of separate actions by individual
members of the Class would create a risk of inconsistent or varying
adjudications with respect to individual members of the Class, and
that would establish incompatible standards of conduct for the party
opposing the Class.
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<PAGE> 7
(f) Defendants have acted, and are about to act, on
grounds generally applicable to the Class, thereby making appropriate
final injunctive or corresponding declaratory relief with respect to
the Class as a whole.
CLAIM FOR RELIEF
13. Heftel is a company that has experienced substantial revenue
and earnings growth during the past few years. Its revenues have grown from
$19.7 million 1992 to $68.2 million in 1995. Its earnings have grown sevenfold
from 1994 to 1995, growing from $0.5 million to $3.7 million.
14. Analysts and investors alike were excited about Heftel's
future prospects because the Company was well- positioned to maximize upon two
macro-trends in telecommunications: the sweeping telecommunications bill that
Congress passed in February that removed ownership restrictions of radio
stations, and the explosive growth of the Spanish- language radio market.
Indeed, on June 3, 1996, analyst Rita Zanella from Gruntal & Co. touted
Heftel's prospects and stated that "[t]here's tremendous growth in the
Hispanic market."
15. Investor enthusiasm was also fueled in part by the optimistic
statements being made by Heftel's management. For instance, on January 25,
1996, in announcing First Quarter 1996 fiscal results, defendant Parmer stated
that "[t]he Company's outlook for the balance of the year is encouraging given
KLVE's dominance of the entire Los Angeles market."
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<PAGE> 8
16. Heftel shareholders were predictably outraged when, on June 3,
1996, Heftel and Clear Channel jointly announced that Clear Channel would
commence a tender offer for all the shares of Heftel not beneficially owned by
Clear Channel for $23 per share. Concurrently, the Management Group announced
it agreed to sell its shares, which represents 40% of the shares outstanding,
to Clear Channel at the tender price. The Management Group's agreement to
tender their shares, their effective voting control of the Company, together
with Clear Channel's already 21% interest in the Company-- which will rise to
61% with management's shares--renders this transaction a "fait accompli." The
transaction is coercive to the minority shareholders in that persons failing to
tender will be left with, at most, no effective vote and diminished liquidity.
17. Heftel and Clear Channel failed adequately to reveal publicly
at the time the tender offer was announced that defendants Cecil Heftel and
Parmer, who together controlled 79% of shareholder voting power, were to
receive lucrative buy-out packages, in the form of purported "settlement
agreements" and "covenants not to compete," that provided for cash payments of
approximately $25.7 million. Such facts were only set forth in Clear Channel's
Schedule 14D-1 filed in connection with the tender offer.
18. The Clear Channel tender offer is at an inadequate price for
the Heftel minority shareholders and is proceeding only because defendants
Cecil Heftel and Parmer have negotiated an exceptionally lucrative private
deal to the exclusion and detriment of Heftel shareholders for an additional
11% cash payment above the total cash proceeds of the entire transaction. If
that $25.7 million were part of the offer to all
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Heftel shareholders, it would equal an additional $2.35 per share in the tender
offer price.
19. Given Cecil Heftel's and the Management Group's domination and
control of Heftel, the Heftel Board cannot be expected to act independently and
advocate and/or protect the best interests of Heftel's public shareholders.
20. In view of the Management Group's control of Heftel, it is
unfair and in violation of defendants' fiduciary duties to consummate the
transaction without first obtaining a recommendation by a truly independent
representative of the public stockholders or obtaining the majority approval of
the public unaffiliated stockholders of the Company. Indeed, the Five Member
Board of Directors ("Five Member Board of Directors") is comprised of three
members who are tendering their shares to Clear Channel and defendant Mason (a
remaining director). who may not be independent because of existing conflicts
due to his acting as counsel to the Company and certain of As Individual
Defendants. Thus, the minority shareholder will not receive any effective
representation at the Board level in connection with this transaction and
especially in the formulation of a recommendation by the Board as to whether
shareholders should tender their shares.
21. By virtue of the acts and conduct alleged herein, the
defendants are carrying out a preconceived plan whereby Clear Channel will
acquire the public shares of Heftel pursuant to a price that is grossly
inadequate and intrinsically unfair to Heftel public shareholders, is
substantially below true value and is a product of defendants'
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conflicts of interest. As a result, the public common stockholders of Heftel
will be wrongfully deprived of their valuable investment in the Company and
will receive, in return for their investment, a grossly inadequate
consideration.
22. Defendants Cecil Heftel and Parmer are breaching their
fiduciary duties to Heftel's stockholders by negotiating and obtaining special
benefits in the transaction not available to other Heftel shareholders.
23. Unless enjoined by this Court, defendants will continue to
breach fiduciary duties owed to plaintiff and the other members of the Class,
and will succeed in consummating an unfair transaction by virtue of the unfair
dealing complained of herein, all to the irreparable harm of the Class.
24. Plaintiff and the other members of the Class have no adequate
remedy at law.
WHEREFORE, plaintiff demands judgment and relief in his favor and in
favor of the Class and against defendants, as follows:
A. Declaring that this action be certified as a proper class
action and certifying plaintiff as a class representative;
B. Declaring that the defendants and each of them have committed
a gross abuse of trust and have breached their fiduciary duties to plaintiff
and other members of the class;
C. Preliminarily and permanently enjoining defendants and their
counsel, agents, employees and all persons acting under, in concert with, or
for them, from
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proceeding with, consummating or closing the proposed transaction which will
irreparably harm plaintiff and the Class;
D. In the event the tender offer is consummated, rescinding it
and setting it aside and/or granting rescissory damages;
E. Awarding compensatory damages in an amount to be determined
upon the proof submitted to the Court;
F. Awarding the costs and disbursements of this action;
G. Awarding plaintiff counsel fees; and
H. Awarding such other and further relief which the Court may
deem just and proper.
ROSENTHAL, MONHAIT, GROSS & GODDESS, P.A.
By: /s/ Norman M. Monhait
-----------------------------------------
Suite 1401, Mellon
Bank Center P. O. Box 1070
Wilmington, DE 19899-1070 (302)
656-4433 Attorneys for Plaintiff
OF COUNSEL:
BERNSTEIN LITOWITZ BERGER
& GROSSMANN LLP
Vincent R. Cappucci, Esq.
1285 Avenue of the Americas
New York, New York 10019
(212) 554-1400
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