Bank Group Asks NY Court To Dismiss Clear Channel Deal Suit

By Daniel | March 31, 2008

NEW YORK (Dow Jones)–The bank group being sued over its involvement in the sale
of Clear Channel Communications Inc. (CCU) asked a New York court to dismiss part
of the litigation, arguing the law bars Clear Channel’s proposed buyers from
forcing them complete the deal on current terms.

The request Monday to a New York state court is the bank group’s first response
to litigation in which Clear Channel and its proposed private-equity buyers
accuse the banks of reneging on commitments to fund the $19.5 billion deal.

The banks - Citigroup Inc. (C), Deutsche Bank AG (DB), Morgan Stanley (MS),
Credit Suisse Group (CS), Royal Bank of Scotland Group PLC (RBS) and Wachovia
Corp. (WB) - said in their filing New York law doesn’t permit a ruling of
“specific performance” in a contract to lend money.

Specific performance refers to the ability of a seller to force a buyer to
complete a deal agreement.

The bank group said in a statement they’re willing to go back to the negotiating
table with the two private-equity firms, Thomas H. Lee Partners and Bain Capital,
that are slated to buy Clear Channel.

“The Bank Group continues to stand ready to honor the Commitment Letter and reach
a funding agreement on mutually agreeable terms,” it said in a statement Monday.

The banks said they were blindsided by the litigation as they were still
negotiating in “good faith” the final terms under which they were to provide
about $22 billion in financing towards the Clear Channel buyout.

The private-equity firms “took the unproductive step of asking a court to
intercede in our discussions only hours after sending us revised terms to
review,” the banks said in their statement.

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