Clear Channel suit dismissal is sought
NEW YORK - Citigroup Inc. and five other banks yesterday asked a New York judge to throw out a lawsuit by Clear Channel Communications Inc.'s buyers accusing them of illegally refusing to fund the $19.5 billion acquisition.
Bain Capital LLC and Thomas H. Lee Partners LP, the Boston-based buyout firms purchasing Clear Channel, sued Credit Suisse Group, Morgan Stanley, Royal Bank of Scotland Group, Wachovia Corp., Deutsche Bank AG, and Citigroup on March 26 in New York state court. The banks later countersued.
Guy Miller Struve, a lawyer for the banks, told New York State Supreme Court Judge Helen Freedman in Manhattan that his clients hadn't breached their contract with the private equity firms because the deal doesn't expire until June 12.
"How can there be a breach of contract when the date for performance hasn't arrived?" Struve said during the hearing.
Freedman said she would issue a ruling later on the banks' request. Freedman, who previously set a May 5 trial date, told lawyers yesterday that, because of an unrelated trial, the Clear Channel case "will probably be extended a few days after that."
Struve argued that under New York State law, contracts to lend money can't be specifically enforced because funding can be sought elsewhere. He argued the private-equity firms couldn't cite any New York cases, except ones involving lending for real estate purposes.
Mark Hansen, a lawyer for the buyers, said his clients deserved a trial, arguing the banks sought to "go to war" to kill the deal after the decline of the markets last year. He quoted from a series of e-mails sent by the banks to each other, some of the 400,000 pages of documents that both sides have turned over during pretrial discovery.
Hansen said one banker involved in the deal wrote another banker in December 2007, "Let's draft the nuclear deal." Hansen argued that was the banks' attempt to scuttle the deal because they didn't like the negotiated terms.
"How is that 'good faith?' " Hansen argued. "How is that anything other than an attempt to blow up the deal? That's the banks' words, not ours."
