Will Citi's Debt Deal Unstick Clear Channel Talks?
April 10, 2008 at 5:43 AM (PT)
New rumors of a settlement on the $25 billion buyout of CLEAR CHANNEL COMMUNICATIONS by BAIN CAPITAL and THL PARTNERS may have become a daily affair, but so far it does not appear that the parties are moving closer to some compromise, THE DEAL.COM reported. THE NEW YORK TIMES quotes THE DEAL as reporting chatter of a settlement between the banks and the buyout firms resurfaced WEDNESDAY, following reports that CITIGROUP, which is leading the CLEAR CHANNEL lending group, is in talks to sell $12 billion of its $43 billion leveraged debt portfolio to private equity firms APOLLO MANAGEMENT, TPG and BLACKSTONE GROUP.
That prompted speculation that the sale would provide some balance sheet breathing room for CITI to move forward with the CLEAR CHANNEL funding, according to THE DEAL, which said that the two sides were indeed in settlement talks.
The buyout shops are suing the banks that had agreed to finance the deal, claiming the banks balked at providing financing when the debt markets deteriorated and asked for a change in terms of the buyout that prevented it from being completed.
But THE DEAL noted that even if CITI reduces its leveraged loan exposure, that does not mean that it will be more disposed to reload its balance sheet with the $3.5 billion it has promised to the CLEAR CHANNEL buyout.
Furthermore, it noted, the banks have little reason to talk settlement before the upcoming hearings in TEXAS state district court and NEW YORK state supreme court.