| |||||||||||
| |||||||||||
 The potential damage to the banks involved in the financing of the Clear Channel Communications Inc. leveraged buyout continues to build as hedge funds get involved.
A story in the NY Post claims that: According to people familiar with the matter, big shareholders of Clear Channel, including hedge fund Highfields Capital, are threatening to pull their trading business from Citigroup and Deutsche Bank if they don't proceed with their financing of the buyout. Highfields Capital Management is Clear Channel's largest outside shareholder with a 7.7% stake, followed by UBS, which holds a 5.8% stake, and Fidelity Management & Research Co. with a 2.7% share, according to regulatory filings within the past year. This would not be the first time Highfields is making noise at Clear Channel. When the Clear Channel board agreed to a $37.60 per share deal from Bain Capital LLC and Thomas H. Lee Partners LP in November 2006, Highfields had criticized the price point. Now, should the deal collapse, the stock would likely go with it. If true, the threat adds to the headaches of the banks, which already face lawsuits from the Bain Capital and Thomas H. Lee Partners in New York, and a lawsuit from the equity sponsors and Clear Channel in Texas. The banks claim they had proposed terms consistent with the debt commitments and stand ready to fund on those terms. But Citigroup Inc., Deutsche Bank Securities Inc., Credit Suisse Securities LLC, Morgan Stanley, Wachovia Bank and Royal Bank of Scotland Group plc face losses of roughly $500 million apiece if they fund the buyout. The sponsors charge that the banks tried to restrict Clear Channel's options to refinance notes that begin to come due in 2011, which would lead to a liquidity crisis and, likely, a restructuring. A court date of May 5 has been set for proceeding to begin in New York. - George White and Michael Rudnick See story from the New York Post CategoriesPrivate capital video
Categories
Blog roll
Archives
| |||||||||||
|
|
|
|
|
