Don Jeffrey and Phil Milford

Bloomberg

Thursday, March 27, 2008

Bain Capital LLC and Thomas H. Lee Partners LP sued a group of banks led by Citigroup Inc. to force them to honor an agreement to finance the buyout firms’ $19.5 billion acquisition of Clear Channel Communications Inc.

Bain and Thomas H. Lee filed complaints in New York state court in Manhattan today, claiming the banks breached their funding commitments. Clear Channel joined the private-equity firms in a suit filed in Texas state court in San Antonio, where the company is based, alleging the banks interfered with the takeover by refusing to provide loans.

The banks “competed energetically in 2006 for the opportunity to provide more than $22 billion in financing,” Lee and Bain, both based in Boston, said in one of the New York lawsuits. “The banks have balked at their obligations due to a simple case of lenders’ remorse.”

Citigroup, Deutsche Bank AG, Credit Suisse Group, Morgan Stanley, Royal Bank of Scotland Group and Wachovia Corp. stand to lose at least $2.7 billion because loan prices have tumbled since they agreed to finance the transaction last April. Clear Channel’s stock has traded below Bain and Thomas H. Lee’s $39.20-a-share offer as credit-market turmoil raised investor concern that the deal wouldn’t be completed.



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