A Texas judge on Friday denied a request by six major banks that sought the dismissal of a suit by Clear Channel Communications Inc. charging the banks with reneging on a deal to finance a $19.5 billion buyout of the media giant.
State District Judge Joe Frazier Brown set a June 2 trial date for the case and the two sides agreed to a temporary injunction blocking the banks from ending their financing commitments before the trial. The buyout offer was set to expire 10 days later.
"We are grateful the court saw through the banks' latest attempt to escape responsibility for the enormous damage they have caused our company," San Antonio-based Clear Channel said in a statement. "We look forward to taking this case to a Texas jury on June 2."
In its suit, Clear Channel and a holding company established by its private equity buyers accuse Citigroup Inc., Morgan Stanley, Credit Suisse Group, Wachovia Corp., Deutsche Bank and the Royal Bank of Scotland of tortious interference. Clear Channel is seeking $26 billion in damages.
"We continue to believe the litigation brought by Clear Channel and the sponsors is without merit, and we look forward to arguing our case in court," the banks told the San Antonio Express-News.
Equity buyers, led by Bain Capital and Thomas H. Lee LLC, agreed last year to pay $39.20 per share for Clear Channel, far more than Friday's closing stock price of $29.45. The banks agreed to provide financing but the current market price would saddle them with an immediate loss of almost $2.7 billion.
The buyers have filed a separate suit in New York against the banks alleging breach of contract and fraud.
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