US radio station operator says judge orders banks to fund buyout
Clear Channel Communications said Thursday a judge has barred a group of banks from pulling out of funding for a 19.5-billion-dollar private equity buyout of the big radio station operator.
Clear Channel said a temporary restraining order issued late Wednesday by a Texas judge would allow time for the banks and the purchasers, Bain Capital Partners and Thomas H. Lee Partners, to finalize the buyout.
The US radio and billboard giant joined a lawsuit, filed on Wednesday in Bexar County, Texas, by the two private equity funds seeking to prevent the banks from reneging on their commitment to finance the takeover.
Clear Channel said that Texas District Court Judge John Gabriel “clearly recognized the importance of the banks’ agreement and duty to provide debt financing to the merger.”
Gabriel “found in favor of Clear Channel’s claim that irreparable harm would result if the banks were not immediately enjoined from tortiously interfering with the merger agreement,” Clear Channel said in a statement.
The huge deal for the San Antonio, Texas-based global media and entertainment company has appeared increasingly at risk amid a growing squeeze in credit markets.
The lawsuit filed in Bexar County alleges that the banks are “refusing to execute necessary documents in an overt effort to ‘run out the clock’ and cause (their) merger agreement to collapse.”
The six banks sued are Citigroup, Morgan Stanley, Credit Suisse, Royal Bank of Scotland, Wachovia and Deutsche Bank.
According to Clear Channel, the Texas judge’s orders to the banks included a provision that they must not “interfere with or thwart consummation of the merger agreement” by refusing to fund the transaction, insisting on terms that are inconsistent with their commitment document or refusing to act in good faith in the drafting of definitive loan documents.
“We are pleased that the banks and the purchasers will now be able to move quickly to complete the loan documents and fund the merger,” Clear Channel said.
Under the terms of the merger agreement, the transaction must close by June 12.
The company’s proposed leveraged buyout offer, led by Thomas H Lee Partners and Bain Capital Partners, received Federal Communications Commission (FCC) approval on January 24.
source:smh