Banks ask court to dismiss Clear Channel case
Written on April 5, 2008
The banks being sued in the Clear Channel Communications Inc (CCU.N: Quote, Profile, Research) case filed counterclaims against the private equity buyers and the U.S. radio operator on Friday, asking a New York state court to dismiss the case against them.
They also asked for a declaration from the judge that would cap their liability at $600 million, according to a copy of the filing obtained by Reuters.
The $20 billion buyout has been rocked by a dispute between the banks set to finance the deal and the private equity buyers, Thomas H. Lee and Bain Capital.
The buyout firms claim the banks balked at providing financing when the debt markets deteriorated and asked for a change in terms of the buyout that prevented it from being completed. The banks were to have earned more than $400 million in fees.
The private equity firms filed complaints in New York and Texas last week against Citigroup Inc (C.N: Quote, Profile, Research), Morgan Stanley (MS.N: Quote, Profile, Research), Credit Suisse Group (CSGN.VX: Quote, Profile, Research), Royal Bank of Scotland Group Plc (RBS.L: Quote, Profile, Research), Deutsche Bank AG (DBKGn.DE: Quote, Profile, Research) and Wachovia Corp (WB.N: Quote, Profile, Research) to force them to fund a $20 billion buyout of Clear Channel fast cash advance loan. Clear Channel joined them in the Texas suit, but was not a plaintiff named in the New York case.
Justice Helen Freedman said in New York Supreme Court on Thursday that the dispute will go to trial in New York on May 5, or as soon after as can be scheduled.
At Thursday’s hearing, a lawyer for the banks said they intended to bring Clear Channel into the lawsuit brought against them in New York and planned to file an answer to the suit and counter claims on Friday.
The private equity firms are seeking “specific performance” of a commitment letter that details the plans to fund the deal. Specific performance is when one party asks a judge to order another party to stick to a contract.
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