San Antonio’s Clear Channel Communications Inc. and two private equity companies poised to buy out the radio/television/outdoor advertising company for $26 billion brought out some really big Texas guns on March 26 for a courthouse battle with bankers. On March 26, Clear Channel and CC Media Holdings Inc., an acquisition company for Bain Capital LLC and Thomas H. Lee Partners LP, filed a petition in state court in Bexar County, alleging a group of banks committed to help fund the merger between Clear Channel and CC Media have interfered with the merger contract “most recently, by refusing to execute necessary documents in an overt effort to ‘run out the clock’ and cause Plaintiffs’ Merger Agreement to collapse.” In Clear Channel Communications Inc., et al. v. Citigroup Global Markets Inc., et al. the plaintiffs seek actual damages they estimate could exceed the $26 billion value of the deal, plus unspecified punitive damages. The plaintiffs’ team of lawyers for Clear Channel and CC Media is a who’s who of the Texas trial bar, including Joseph Jamail, a partner in Jamail & Kolius in Houston; David Beck, a partner in Houston’s Beck, Redden & Sechrest; Ricardo Cedillo and Les Strieber III, shareholders in Davis, Cedillo & Mendoza in San Antonio; Robin Gibbs and Kathy Patrick, partners in Gibbs & Bruns in Houston, and Jacks C. Nickens Jr. and Thomas Farrell, partners in Nickens Keeton Lawless Farrell & Flack in Houston. Working fast, the plaintiffs team secured an ex parte temporary restraining order on March 26 from 131st District Judge John Gabriel of Bexar County that prevents the defendants, among other things, from “taking any action that would interfere with or thwart consummation of the Merger Agreement,” from interfering with or thwarting consummation of the agreement by refusing to fund the transaction as agreed in the commitment letter, from violating the agreement or depleting funds available for purposes of the merger. The TRO expires on April 8, the same day Gabriel set a hearing on the plaintiffs’ application for a temporary injunction. The suit names Citigroup Global Markets Inc., Citicorp USA Inc., Citicorp North America Inc., Morgan Stanley Senior Funding Inc., Credit Suisse Securities USA LLC, RBS Securities Corp., Wachovia Investment Holdings LLC, Wachovia Capital Markets LLC and Deutsche Bank Securities Inc. as defendants, and it alleges they collectively pledged more than $22 billion to the transaction. A spokeswoman for Citigroup, Danielle Romero-Apsilos, issued a statement on March 26 on behalf of the banks, saying the litigation was meritless, but she could not immediately be reached for comment. Jamail, Cedillo, Gibbs and Nickens did not immediately return telephone messages, and Beck’s assistant referred comment to a company spokeswoman. However, outside spokesman Ray Yeung says he cannot comment beyond press releases. Terms of the deal call for CC Media, through the merger, to become the owner of Clear Channel no later than June 12.
-- Brenda Sapino Jeffreys