Texas Court Denies Lenders' Bid To Dismiss Clear Channel Suit
April 11, 2008 at 12:36 PM (PT)
CLEAR CHANNEL and its equity partners' litigious battle with its lenders continues in two different state courts. The latest turn of events: A BEXAR COUNTY, TEXAS court has denied a motion by the lenders in the CLEAR CHANNEL buyout to dismiss the company's suit against them. The FRIDAY ruling allows the suit by CLEAR CHANNEL, THOMAS H. LEE PARTNERS, and BAIN CAPITAL against CITIGROUP, MORGAN STANLEY, CREDIT SUISSE GROUP, ROYAL BANK OF SCOTLAND GROUP PLC, DEUTSCHE BANK AG and WACHOVIA CORP. to proceed in TEXAS.
The WALL STREET JOURNAL also reports that the court will continue to hear other unresolved issues, such as a request for a temporary injunction against the bank group.
"We are grateful the court saw through the banks' latest attempt to escape responsibility for the enormous damage they have caused our company. We look forward to taking this case to a TEXAS jury on JUNE 2nd," CLEAR CHANNEL said in a statement.
A spokesman for the banks said, "We continue to believe the litigation brought by CLEAR CHANNEL and the sponsors is without merit, and we look forward to arguing our case in court."
Meanwhile, In A New York Court...
The banks being sued in the dispute over the $20 billion CLEAR CHANNEL COMMUNICATIONS leveraged buyout, put forward arguments on THURSDAY outlining why the case against them in NEW YORK should be dropped, reports REUTERS. They argue they had not yet agreed a number of financing issues with the private equity firms trying to buy CLEAR CHANNEL when they were sued, which "exemplifies the reason why NEW YORK courts will not specifically enforce a contract to lend money," according to a copy of the filing.
Private equity firms THOMAS H. LEE and BAIN CAPITAL filed complaints in NEW YORK and TEXAS against CITIGROUP INC , MORGAN STANLEY , CREDIT SUISSE GROUP , ROYAL BANK OF SCOTLAND GROUP PLC , DEUTSCHE BANK AG and WACHOVIA CORP to force them to fund a $20 billion buyout of CLEAR CHANNEL. CLEAR CHANNEL joined them in the TEXAS SUIT, but was not a plaintiff named in the NEW YORK case.
The private equity firms are seeking "specific performance" of a commitment letter that details the plans to fund the deal. Specific performance is when one party asks a judge to order another party to stick to a contract.
In a statement, a spokesman for the banks said on THURSDAY that they continued to believe the lawsuits were without merit and believe they should be dismissed. "We were actively negotiating the many important open items in the credit agreements when the sponsors launched this litigation, constraining further discussions, the spokesman said in an email. "The Banks stand by their obligations under the Commitment Letter and now look forward to the opportunity to be heard in court."