Bank Group: Negotiated Clear Channel Deal In ‘Good Faith’

Mar.31, 2008 in Market Outlook

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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