Morgan, Credit Suisse Break Ranks On Clear Channel
March 10, 2008 at 6:57 AM (PT)
Banks struggling to find buyers for $131 billion of unsold loans that financed last year's leveraged buyouts are starting to break ranks and hold individual negotiations with investors, reports BLOOMBERG NEWS. Instead of sticking together in a lending group, or syndicate, ROYAL BANK OF SCOTLAND GROUP PLC to MORGAN STANLEY and CREDIT SUISSE GROUP have each sought buyers for their portion of CLEAR CHANNEL COMMUNICATIONS INC.'s $22 billion buyout financing, said people with knowledge of the situation. They declined to be identified because the talks are private.
Banks are under pressure to sell the loans after prices for debt that paid for last year's record $438 billion of buyouts fell 12% in the past seven months, according to STANDARD & POOR'S. "It's reached a new stage of every man for himself," said FRIDSON VISION CEO MARTIN FRIDSON in an interview. "Banks worked hard until now to hold the line and keep the gentlemen's agreement together."
The banks financing the deal agreed in APRIL to provide $22 billion in debt. Banks will extend about $19.5 billion in bank loans at the LONDON interbank offered rate plus as much as 3.25% points. The premium over Libor has since widened to about 6.65% points, according to S&P, meaning the banks must sell the CLEAR CHANNEL loans at a discount to reflect the wider spreads and current prices. Three-month Libor was 2.94% last week.