Clear Channel, lenders reach accord
SAN ANTONIO - Clear Channel Communications Inc. and six banks, including Citigroup Inc., agreed on a temporary order that bars the lenders from reneging on a promise to finance the company's $19.5 billion sale to two buyout firms.
The two sides reached the agreement after Texas state Judge Joe Frazier Brown Jr. in San Antonio set a June 2 trial date for Clear Channel's lawsuit against the banks. Brown earlier yesterday rejected the banks' request to throw out the suit and said he would hear Clear Channel's motion for a temporary injunction.
"We are grateful the court saw through the banks' latest attempt to escape responsibility for the enormous damage they have caused our company," Clear Channel said.
Clear Channel's buyers, Boston-based buyout firms Bain Capital LLC and Thomas H. Lee Partners LP, sued March 26 in New York to prevent the banks from refusing to provide $22.1 billion in financing. San Antonio-based Clear Channel, the largest US radio broadcaster, sued in Texas the same day with CC Media Holdings Inc., the shell company created for the buyout, seeking more than $26 billion in damages.
"We continue to believe the litigation brought by Clear Channel and the sponsors is without merit and we look forward to arguing our case in court," said Tom Johnson, a spokesman for the banks.
Under yesterday's accord, the banks, which also include Deutsche Bank AG and Morgan Stanley, can't terminate their financing commitments before the June trial, and must retain all relevant records and documents. The merger agreement expires June 12.
"We want to complete the deal to buy Clear Channel, and look forward to urgently pressing our case that the banks must not be allowed to interfere," the buyout firms said.
If forced to fund the deal, the banks stand to lose about $3 billion because loan prices have fallen since they agreed to finance it last April. They countersued April 4 in New York seeking to limit their liability to a $600 million termination fee. A hearing in that case is set for Tuesday, with a trial date of May 5.
Earlier yesterday, Lamont Jefferson, a San Antonio-based attorney representing the banks, argued that even though Clear Channel and CC Media have no contractual relationship with the lenders, they seek to benefit from the commitment letter while disregarding its restrictions.
"If they're trying to invoke the contract, then they should be bound by all terms of that contract," he said. "Any argument about the banks' commitment must be litigated in New York."
Clear Channel attorney Ricardo Cedillo countered that because the company wasn't a party to the financing agreement, it isn't bound by the terms. The banks are interfering with Clear Channel's contract with the buyout firms, he said.
