SAN ANTONIO - Banks being sued by Clear Channel Communications and the private equity firm that wants to buy the company fired back Monday, asking a New York state court to dismiss the suit and to ignore requests for an expedited hearing.
The equity buyers, led by Bain Capital and Thomas H. Lee LLC, filed suit last week against six banks, claiming they were reneging on their commitment to help fund the $19.5 billion buyout. The banks contend they were still negotiating and anxiously awaiting documents needed to back the loans when they got word through a news release they had been sued in New York and Texas last week.
Clear Channel joined the banks in a separate lawsuit in Texas court. A judge in that case set an April 8 court hearing date and issued a temporary restraining order against the banks barring them from intentionally sinking the deal. The order, issued just hours after the suit was filed, was apparently obtained by going to the judge's home that evening, the banks said in their court filing Monday.
The equity buyers have pushed for an expedited hearing in an effort to meet closing-date requirements, but the banks are fighting that move as well.
"An action for damages by well-heeled private equity firms does not constitute 'circumstances that are sufficiently unusual and extreme to justify the extraordinary privilege' of jumping ahead of earlier-filed actions; they are instead the standard fare of commercial litigation," the banks said.
The banks - Citigroup Inc., Morgan Stanley, Credit Suisse Group, The Royal Bank of Scotland, Deutsche Bank AG and Wachovia Corp. - are separately pressing an effort in Texas to move litigation from Bexar County, where Clear Channel is based, to federal court. The private equity firms said in a statement, "The claim that (the banks) were negotiating in good faith and blind-sided by the litigation is preposterous, and clearly contradicted by the correspondence record."
Bain and THL agreed last year to pay $39.20 per share for Clear Channel, far more than the closing price of $29.22 on Monday. But the buyers insist they are still interested in the deal, which could cost the banks $3 billion to $4 billion in write-downs if it closes. The buyers would face a roughly $500 million breakup fee if they fail to complete the buyout of the radio and billboard giant.