Clear Channel Communications scored another win on Friday as a Texas state judge in San Antonio refused to throw out the company’s lawsuit against six big banks who were to have financed its 26.7 billion bucks buyout. The judge also granted a motion for an expedited trial, which is set to begin June 2nd, ten days before the buyout deal expires. The battling sides then agreed on a temporary injunction that essentially maintains the status quo – baring the banks from destroying any documents related from the case and from depleting the funds they would use for some 22 billion in lending if the buyout goes to closing.
Clear Channel and the company created for the buyout, CC Media Holdings, have thus far won every legal battle in Texas – first a temporary restraining order against the banks, then rebuffing an attempt by the banks to move the Texas case to federal court, and then Friday’s rulings. The drama moves tomorrow to a New York court, where the banks are seeking to have Clear Channel made a defendant in counterclaims brought by the banks against Thomas H. Lee Partners and Bain Capital, the private equity firms who are the principal owners of CC Media. Clear Channel is fighting to stay out of the New York case, arguing that it should not be in the legal battling there because it was not a party to the loan commitment letter between the banks and the two private equity firms.
The banks are also seeking a ruling in the New York court that their potential liability is around 600 million bucks. Clear Channel’s lawsuit in Texas is seeking more than 26 billion.
RBR/TVBR observation: Why are the banks so fearful of going to trial in Texas? Back in 1985 there was a case where a jury in Houston awarded 10.53 billion bucks in damages to Pennzoil from Texaco, finding that Texaco had interfered with Pennzoil’s efforts to buy Getty Oil. Texaco filed Chapter 11 to protect its assets and eventually agreed to pay 3.3 billion to settle the Pennzoil claim. The lawyer for Pennzoil in that famous case was Joe Jamail, known in Texas as “The King of Torts.” It probably will not surprise you to learn that Clear Channel has retained Joe Jamail for its battle with the banks.