Judge orders banks to fund $19 billion Clear Channel buyout

Mar.27, 2008 in Market Outlook

Judge orders banks to fund Clear Channel buyout

By Steve Goldstein, MarketWatch

Last Update: 4:49 AM ET Mar 27, 2008

LONDON (MarketWatch) — A Texas judge ordered banks to fund the proposed $19
billion buyout of Clear Channel Communications by two private-equity firms, the
San Antonio radio broadcaster said in a statement on Thursday.

District Court Judge John D. Gabriel of Bexar County, Texas, granted a temporary
restraining order against the banks, Clear Channel (CCU) said.

“He found in favor of Clear Channel’s claim that irreparable harm would result if
the banks were not immediately enjoined from tortiously interfering with the
merger agreement,” the company said.

“Accordingly, Judge Gabriel ordered that the banks, among other things, must not
‘interfere with or thwart consummation of the merger agreement’ by refusing to
fund the merger transaction, insisting on terms that are inconsistent with the
commitment letter, or refusing to act in good faith in the drafting of definitive
loan documents,” the company added.

Clear Channel has agreed to be purchased by Thomas H. Lee Partners and Bain
Capital.

But lenders including Citigroup (C), Morgan Stanley (MS), Deutsche Bank (DB),
Credit Suisse (CS), Royal Bank of Scotland (UK:RBS) and Wachovia (WB) have
declined to provide the financing that they once said they would issue.

“It seems clear that lenders’ remorse set in when credit markets worsened,” Bain
and Thomas H. Lee said in a statement Wednesday. “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.”

A spokesman for the consortium of banks wasn’t immediately available to comment.

Shares of Clear Channel Communications dropped 17% to $26.92 on Wednesday on
concerns the deal wouldn’t go through. The offer for Clear Channel is valued at
$39.20 a share.

Did you like this? If so, please bookmark it,