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The lender group for the buyout of Clear Channel Communications Inc. by affiliates of Bain Capital LLC and Thomas H. Lee Partners LP could fund the $21 billion of debt for the deal any day. Citigroup Inc. and Deutsche Bank AG, the leads for the syndication with Wachovia Bank, Credit Suisse Group, Morgan Stanley and Royal Bank of Scotland Group plc made an offer to commit to funding through binding arbitration April 22 that the sponsors rejected. The banks also argued in a summary judgment hearing in New York Supreme Court that the suit was brought as they were attempting to negotiate the credit agreement for a commitment that does not terminate until June 12. The trial in New York should begin this week.
The sponsors argue in rejecting arbitration and throughout the legal skirmishing that the banks have demanded restrictions on uses of loan facilities and company cash for debt refinancing that are unworkable and fall outside the funding precedents covered by the commitment letter. A separate case in Texas state court over tortious interference of the merger agreement is set for trial June 2. The Texas jury trial may never be heard, but its potential for billions in damages is key leverage for Clear Channel and the sponsors. Any adverse outcome in the New York litigation might persuade the banks to fund the deal. But the recent standoff on arbitration underscores that the two sides have not moved closer on credit agreement terms since March -- or, based on court arguments of the sponsors, since at least December. -- Scott Stuart See the latest coverage on Clear Channel Communications: Claims against Clear Channel dismissed Breaking: Clear Channel banks offer to arbitrate Dealwatch: Clear Channel
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