Judge clears way for Clear Channel

Orders restraining order to banks

By DADE HAYES

The Clear Channel saga, which has added a showbiz twist to Wall Street’s historic fortnight of turbulence, took another turn Thursday when a judge ordered a group of major investment banks to fund the $20 billion buyout.

Private Equity firms Thomas L. Lee and Bain Capital have been working since November 2006 on a deal to take the radio and billboard giant private. Shareholders have objected, saying the $39.20 share price undervalues Clear Channel, and earlier this week, lenders balked at the terms given the stock’s weakness of late and the dreary credit market.

THL and Bain then sued in New York and Texas, with Clear Channel joining the Texas suit, which sought $26 billion in damages over the alleged interference of Citigroup, Morgan Stanley, Credit Suisse Group, Royal Bank of Scotland, Deutsche Bank and Wachovia.

In the Texas case, Presiding District Court Judge John D. Gabriel sided with the plaintiffs on Wednesday night. He ordered the banks not to “interfere with or thwart consummation of the merger agreement” and said such conduct would cause “irreparable harm.”

That preliminary injunction allows the dealmaking gears to keep grinding, even as the sides prep for a trial set to start April 8.

One of the suits, filed in New York, alleges breach of contract and fraud.

The group of banks “has been and remains prepared to honor the obligations” stipulated in the deal, Citigroup said in a group statement.

Clear Channel said in a statement, “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.”

The company’s stock, which has been exceptionally volatile in recent sessions, rallied 10% to close at $29.60. Its recent weakness has been a source of anxiety for the banks given the credit climate and the original valuation.