Banks Funding CC Deal Seek To Limit Liability
April 7, 2008 at 5:43 AM (PT)
CITIGROUP INC. and five other banks sued CLEAR CHANNEL COMMUNICATIONS and its buyers, BAIN CAPITAL LLC AND THOMAS H. LEE PARTNERS LP, a week after the banks were sued for refusing to fund the $19.5 billion acquisition, reports BLOOMBERG NEWS. The banks stand to lose at least $2.7 billion if forced to fund the deal because loan prices have fallen since they agreed to the transaction last APRIL. They are seeking to limit their liability to $600 million, according to the countersuit filed FRIDAY in NEW YORK state court in MAMHATTAN.
The banks, including CREDIT SUISSE GROUP, MORGAN STANLEY, ROYAL BANK OF SCOTLAND GROUP PLC and WACHOVIA CORP., said they were "engaging in good faith negotiations and the time for performance under the commitment letter" hadn't expired when BAIN and THOMAS H. LEE filed their lawsuit MARCH 26th.
DEUTSCHE BANK AG filed a separate countersuit, said TOM JOHNSON, a spokesman for the banks.
NEW YORK Supreme Court Judge HELEN FREEMAN on THURSDAY granted BAIN and THOMAS H. LEE's request for a MAY 5th trial over claims that the banks reneged on funding the deal.
"This is just another desperate attempt by the banks to avoid being held accountable for the enormity of the harm caused by their unlawful interference with our merger agreement," CLEAR CHANNEL said. "We are confident these tactics won't work."