CC Judge Denies Banks' Request To End Suit
May 8, 2008 at 5:27 AM (PT)
A NEW YORK judge rejected a request by CITIGROUP INC. and five other banks to throw out a lawsuit by CLEAR CHANNEL COMMUNICATIONS INC.'s buyers that accuses the lenders of refusing to fund the $19.5 billion acquisition, reports BLOOMBERG NEWS.
BAIN CAPITAL LLC and THOMAS H. LEE PARTNERS LP, the BOSTON-based buyout firms purchasing CLEAR CHANNEL, SUED CREDIT SUISSE GROUP, MORGAN STANLEY, ROYAL BANK OF SCOTLAND GROUP PLC, WACHOVIA CORP., DEUTSCHE BANK AG and CITIGROUP on MARCH 26th in NEW YORK state court. The banks later countersued.
It is ordered that the action shall continue, the parties shall appear for trial.
NEW YORK State Supreme Court Judge HELEN FREEDMAN YESTERDAY ordered a trial to go forward on whether the banks had breached their contract with the private equity firms. She dismissed BAIN and THOMAS H. LEE's claim that the banks had acted in bad faith or had "lied" when they said they wanted to complete the transaction.
"It is ordered that the action shall continue, " FREEDMAN said in a 17-page decision, "the parties shall appear for trial."
The judge rejected the banks' argument they couldn't be sued for failing to finance the deal. She cited an expert for the buyout firms who testified the buyers will lose the opportunity to acquire CLEAR CHANNEL, because "leveraged financing of the magnitude necessary to complete this transaction is not available today."