Thursday, March 27, 2008

Clear Channel says wins ruling on $20 billion buyout


NEW YORK (Reuters) -
Clear Channel Communications Inc said
on Thursday it had won a ruling from a Texas judge that may
advance its efforts to force banks to finance a $20 billion
buyout of the U.S. radio operator.

Six banks led by Citigroup Inc were to provide more than
$22 billion of financing for the buyout by Bain Capital
Partners LLC
and Thomas H Lee Partners LP.

But the private equity firms filed lawsuits in New York and
Texas on Wednesday, accusing the banks of backing out of their
commitments after capital markets deteriorated. Clear Channel
joined in the Texas lawsuit.

In a statement, Clear Channel said Judge John Gabriel of
the Bexar County district court in Texas found on Wednesday
night that the company would suffer irreparable harm if the
banks refused to fund the merger.

It said the judge issued a temporary order directing the
banks not to interfere with the merger by refusing to fund it
or demanding new terms.

San Antonio-based Clear Channel did not answer calls
seeking comment. A spokeswoman for Citigroup, which has been
speaking on behalf of the bank group, did not immediately
return a call for comment.

Other banks in the lending group are Credit Suisse Group,
Deutsche Bank AG, Morgan Stanley, Royal Bank of Scotland Group
Plc
and Wachovia Corp.

Clear Channel had agreed last May at the height of the
private equity boom to be acquired by the private equity firms
for $39.20 per share. Since then, banks have become much less
willing to make leveraged loans, many of which have lost value
because investors have stopped buying them.

The banking group faced losses of about $3 billion to $4
billion on Clear Channel loans, according to a person familiar
with the situation, who requested anonymity because he was not
authorized to speak.

Clear Channel shares fell $5.69, or 17.5 percent, to $26.87
on Wednesday, after reports that the buyout was in trouble.

(Reporting by Jonathan Stempel, editing by Will Waterman)

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