Clear Channel, Buyers Sue Banks Over Soured Deal

Equity firms claim lenders backtracked on financing takeover of broadcast giant
By Nick McMaster,  Newser Staff
Posted Mar 26, 2008 6:02 PM CDT
Clear Channel Communications Inc. headquarters are seen in San Antonio in this Aug. 8, 2006, file photo.    (AP Photo/Eric Gay, file)
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(Newser) – The two private-equity firms set to buy Clear Channel sued the group of banks they had engaged to fund the deal, the Wall Street Journal reports. Joined by Clear Channel, Bain Capital and Thomas H. Lee Partners accused the consortium—including Citigroup, Deutsche Bank, and Wachovia—of breaching contract by attempting to back out of the deal amid the tanking credit market.

In particular, the equity firms take issue with a proposed 11th-hour change of a six-year financing package to a three-year bridge-financing loan. Through this and other measures, the banks "pretended to negotiate the final documentation in good faith," but put loopholes in the agreement intended to reduce their financial commitment, the lawsuits charge.