Hedge Funds Sue Banks Over Clear Channel Buy
May 2, 2008 at 5:36 AM (PT)
Two big CLEAR CHANNEL COMMUNICATIONS shareholders are injecting themselves into the heated dispute between six WALL STREET banks and the private-equity firms that agreed to buy the radio giant for $27 billion, reports THE NEW YORK POST.
Hedge fund PENTWATER CAPITAL MANAGEMENT last night filed suit in TEXAS against the banks, led by CITIGROUP and DEUTSCHE BANK, demanding they pay damages for "tortuously interfering" with the buyout of CLEAR CHANNEL by THL PARTNERS and BAIN CAPITAL. PENTWATER said it owns shares of CLEAR CHANNEL worth more than $100 million.
HIGHFIELDS CAPITAL MANAGEMENT, which owns about 38 million shares of CLEAR CHANNEL, is also expected to file a similar suit shortly. PENTWATER also accuses the banks, which include WACHOVIA, CREDIT SUISSE, ROYAL BANK OF SCOTLAND and MORGAN STANLEY, of "spreading lies and rumors" about the private equity firms' desire to close the deal.
CLEAR CHANNEL, THL and BAIN sued the banks on MARCH 26th, accusing them of failing to provide the $22 billion of debt financing necessary to close the deal. The banks claim they are willing to fund the buyout, but the firms have refused to work out financing terms.
By adding themselves to the suit, the large shareholders hope to put added pressure on the banks to settle their disputes with the private-equity firms and close the deal. A trial on the private-equity firms' suit against the banks in NEW YORK is expected to begin next week.