Clear Channel’s proposed $19bn buy-out remained on shaky ground Tuesday as private equity firms and banks remained at loggerheads over terms of the deal’s financing.

Neither side had been in contact for the past few days, according to a person familiar with the matter, suggesting a stalemate.

Another insider said Bain Capital and Thomas H. Lee, the private equity sponsors, remained committed to the deal and were waiting for the banks to fulfil their funding commitments.

People close to the banks – Citigroup, Morgan Stanley, Deutsche Bank, Credit Suisse, RBS and Wachovia – insist they are also still on board even though they would be likely to suffer losses on the Clear Channel loans.

At issue between the banks and the private equity firms is who would be responsible for a break-up fee of roughly $500m should the deal collapse. Both sides declined to comment.

Clear Channel, the largest US radio station operator, has become a test of banks’ willingness to fund highly leveraged private equity deals agreed when credit was readily available and inexpensive.

It announced the transaction to go private 16 months ago. The deal has been overshadowed by doubts as credit markets have faltered. Investors have also pointed to the poor prospects for the radio market.

Shares in Clear Channel, which also owns outdoor billboards, closed Tuesday at $32.56, down $1.89 or 5.5 per cent and well below the $39.20 offer price, which suggested that many investors were betting against its completion.

The company declined to comment.

People close to the situation said the banks wanted a strict interpretation of the covenants built into the financing agreement to reduce their risks. However, the buy-out funds were pushing for a more liberal reading of the commitments.