The six banks being sued by Clear Channel, Bain Capital and Thomas H. Lee Partners sent Bain and TH Lee a letter asking to send their dispute over funding the 26.7 billion bucks buyout of Clear Channel to arbitration. The offer was quickly rejected by Bain and TH Lee, who called the offer “another disingenuous attempt by the banks to avoid living up to their commitments.”
The letter from the banks had insisted that they “remain willing to fund the Clear Channel acquisition transaction.” It said the banks would agree to fund the closing by the June 12th drop dead date, provided the final terms were determined by a single, neutral arbitrator agreeable to all of the parties involved. The letter said the arbitration would be binding and should be completed within six weeks.
“We would appreciate a prompt response to this offer,” said the letter signed by Charles A. Gilman, a lawyer representing the banks. He got that prompt response – a prompt no.
“The banks want to move this case into the back room because they fear that a public trial will clearly expose their misconduct. We are ready to complete the deal to buy Clear Channel on terms consistent with the binding commitments the banks made nearly a year ago, and provided all the documentation needed to execute the funding, but the banks refused to sign,” said a statement from Bain and TH Lee.
RBR/TVBR observation: At deadline, there was still no action by the Texas Supreme Court, from which the banks had requested an emergency stay of the lawsuit filed by Clear Channel in San Antonio, which is on a fast track. So long as Clear Channel has the banks behind the eight-ball in the Texas courts, we think a firm settlement offer would be more effective for the banks than calling for arbitration. The banks have repeatedly lost in their efforts to kill off the Texas lawsuit or move it to federal court. That lawsuit seeking more than $26 billion in damages is keeping the screws on the banks to come up with their $22 billion in loan commitments. Why would Clear Channel and the buyout firms give up that advantage for the uncertainty of arbitration?