Investment-blog.net: Stocks, Emerging markets, Bonds, Currencies and Commodities

Clear Channel files suit against banks in buyout deal:report

Mar 26, 2008 Market Outlook

Bain Capital and THL Partners Sue Banks to Demand Completion of Clear Channel
Acquisition

Clear Channel Joins Private Equity Sponsors as Plaintiff in Texas Suit Filed
Against Citigroup, Morgan Stanley, Credit Suisse, RBS, Deutsche Bank and Wachovia

BOSTON, Mar 26, 2008 (BUSINESS WIRE) — Affiliates of Thomas H. Lee Partners,
L.P. (”THL Partners”) and Bain Capital Partners, LLC (”Bain Capital”) today filed
complaints in the Supreme Court of the State of New York and the Texas State
Court in Bexar County, Texas, against Citigroup, Morgan Stanley, Credit Suisse,
The Royal Bank of Scotland, Deutsche Bank and Wachovia to enforce binding
commitments the banks made to provide debt financing for the private equity
firms’ acquisition of Clear Channel Communications, Inc. (”Clear Channel”) (CCU).
Clear Channel itself has joined the private equity sponsors as a plaintiff in the
Texas complaint.

The complaints detail the binding commitments the banks made to provide long-term
financing essential to the completion of the transaction, and the deliberate
actions the banks subsequently took to renege on those commitments — starting
with efforts to shift the costs of the financing to the sponsors and other
shareholders investing in the transaction and culminating with an effort to
derail the transaction by unreasonably insisting on replacing long-term financing
of at least six years with bridge financing of only three years, thereby
preventing the close of the transaction.

In connection with the filing of the complaints, Bain Capital and THL Partners
issued the following joint statement:

“We are disappointed and dismayed that the banks have chosen not to fund the
transaction under the terms of the binding commitments they entered into almost a
year ago. It seems clear that lenders’ remorse set in when credit markets
worsened. Now they are trying to walk away from their commitment letter which
clearly states that they bear all the risk that conditions in the debt markets
might change. The banks are attempting to do so by changing the deal in ways no
responsible purchaser could ever accept — replacing an extended, long-term
financing package of at least 6 years that they’ve been committed to all along
with a short-term 3-year bridge financing.”

“We have invested 18 months of time and effort to own Clear Channel. We want to
do this deal. We are ready to close, have funded the equity portion of the
purchase consideration, maintain our enthusiasm for the investment, and are fully
prepared to fulfill our contractual obligation to complete the deal. But Clear
Channel must have an appropriate capital structure that allows management to
operate the business effectively and seize growth opportunities in the
marketplace. The banks made commitments to enable growth and now they are going
back on those commitments and in the process seeking credit terms that would
place unreasonable and unprecedented operating restrictions on Clear Channel.
These restrictions would hamstring the company’s competitiveness, create unfair
obstacles to refinancing existing debt, and, we believe, install trip wires that
could cause one of America’s leading media companies to go into default.”

“In our long histories, we have only used litigation as a last resort. We regret
the banks have left us no choice but to notify them that they are in breach of
their obligations under their financing commitments. We continue to believe our
investment in Clear Channel will be rewarding for our investors over the long
term, and remain grateful to the company and its management team for their
constructive actions during the process.”

“We are asking the courts to insist that the banks live up to their binding
financing commitments and fund the Clear Channel transaction on terms and
conditions consistent with (i) these binding financing commitments, (ii)
precedent sponsor transactions, and (iii) the clear, documented business
understanding of the parties at the time the binding financing commitments were
signed.”

About Thomas H. Lee Partners, L.P.

Thomas H. Lee Partners, L.P. is one of the oldest and most successful private
equity investment firms in the United States. Since its establishment in 1974,
THL has been the preeminent growth buyout firm, raising approximately $22 billion
of equity capital, investing in more than 100 businesses with an aggregate
purchase price of more than $125 billion, completing over 200 add-on transactions
and generating superior returns for its investors. THL Partners focuses its high
value-added strategy on growth businesses, partnering with the best managers in
an industry to build great companies through strong organic growth and targeted
add-on acquisitions. Notable transactions sponsored by THL include Aramark,
Ceridian, Dunkin’ Brands, Experian, Fidelity National Information Services, Grupo
ONO, HomeSide Lending, Houghton Mifflin, Michael Foods, The Nielsen Company,
Nortek, ProSiebenSat.1, Simmons Bedding Company, Snapple, Univision, Warner
Chilcott, Warner Music Group and West Corporation. For more information please
visit http://www.THL.com.

Did you like this? If so, please bookmark it, about it, and subscribe to the blog RSS feed.

Possibly Related Posts:

• Depression? Oversold? Just the beginning? Close to the end? You will find zero guidance from quality analysts.
• A List of ETFs You Should Know In Stock Market
• Florida pension fund loses a quarter its value
• Good bye to U.S dollar. Say hello to Gold and Amero
• S&P 500 losses nearly $1 trillion more than 2000-02

Did you like this? If so, please bookmark it, about it, and subscribe to the blog RSS feed.