(Recasts with confirmation from Clear Channel, interview with CEO Mark Mays, details of agreement)

By Megan Davies

NEW YORK, May 13 (Reuters) - The dispute over financing the leveraged buyout of U.S. radio operator Clear Channel Communications Inc. (CCU.N: Quote, Profile, Research) ended late Tuesday as the parties reached an agreement to settle the litigation and struck a new deal at a lower price of $17.9 billion.

It brings to an end court battles between the private equity buyers, Clear Channel, and the banks which agreed to finance the deal when lending was more lucrative. It also resuscitates a deal that has been in jeopardy for months.

The new deal will see Thomas H. Lee Partners [THL.UL] and Bain Capital pay $36 a share to buy the radio operator, as opposed to the $39.20, or close to $20 billion, they agreed at the peak of the private equity boom last year.

"It's a great company and the economics of the business are great," Clear Channel Chief Executive Mark Mays told Reuters in an interview. "While you don't like to sue the people that lend you money, sometimes is it necessary. This was an equitable deal for everyone."

The new deal is expected to go to shareholder vote in August or September and close in the third quarter, Mays said.

Clear Channel struck the $39.20 a share deal after much wrangling since announcing it had hired Goldman Sachs to explore strategic options in October 2006.

Bain and THL beat out a rival consortium made up of Providence Equity Partners, Blackstone Group (BX.N: Quote, Profile, Research) and Kohlberg Kravis Roberts and Co [KKR.UL] to buy Clear Channel for $37.60 a share.