Affiliates of Thomas H. Lee Partners, L.P. ("THL
Partners”) and Bain Capital Partners, LLC ("Bain
Capital”) today filed complaints in the
Supreme Court of the State of New York and the Texas State Court in
Bexar County, Texas, against Citigroup, Morgan Stanley, Credit Suisse,
The Royal Bank of Scotland, Deutsche Bank and Wachovia to enforce
binding commitments the banks made to provide debt financing for the
private equity firms’ acquisition of Clear
Channel Communications, Inc. ("Clear Channel") (NYSE:CCU). Clear Channel
itself has joined the private equity sponsors as a plaintiff in the
Texas complaint.
The complaints detail the binding commitments the banks made to provide
long-term financing essential to the completion of the transaction, and
the deliberate actions the banks subsequently took to renege on those
commitments -- starting with efforts to shift the costs of the financing
to the sponsors and other shareholders investing in the transaction and
culminating with an effort to derail the transaction by unreasonably
insisting on replacing long-term financing of at least six years with
bridge financing of only three years, thereby preventing the close of
the transaction.
In connection with the filing of the complaints, Bain Capital and THL
Partners issued the following joint statement:
"We are disappointed and dismayed that the
banks have chosen not to fund the transaction under the terms of the
binding commitments they entered into almost a year ago. It seems clear
that lenders' remorse set in when credit markets worsened. Now they are
trying to walk away from their commitment letter which clearly states
that they bear all the risk that conditions in the debt markets might
change. The banks are attempting to do so by changing the deal in ways
no responsible purchaser could ever accept -- replacing an extended,
long-term financing package of at least 6 years that they’ve
been committed to all along with a short-term 3-year bridge financing.” "We have invested 18 months of time and
effort to own Clear Channel. We want to do this deal. We are ready to
close, have funded the equity portion of the purchase consideration,
maintain our enthusiasm for the investment, and are fully prepared to
fulfill our contractual obligation to complete the deal. But Clear
Channel must have an appropriate capital structure that allows
management to operate the business effectively and seize growth
opportunities in the marketplace. The banks made commitments to enable
growth and now they are going back on those commitments and in the
process seeking credit terms that would place unreasonable and
unprecedented operating restrictions on Clear Channel. These
restrictions would hamstring the company’s
competitiveness, create unfair obstacles to refinancing existing debt,
and, we believe, install trip wires that could cause one of America’s
leading media companies to go into default.” "In our long histories, we have only used
litigation as a last resort. We regret the banks have left us no choice
but to notify them that they are in breach of their obligations under
their financing commitments. We continue to believe our investment in
Clear Channel will be rewarding for our investors over the long term,
and remain grateful to the company and its management team for their
constructive actions during the process.” "We are asking the courts to insist that the
banks live up to their binding financing commitments and fund the Clear
Channel transaction on terms and conditions consistent with (i) these
binding financing commitments, (ii) precedent sponsor transactions, and
(iii) the clear, documented business understanding of the parties at the
time the binding financing commitments were signed.” About Thomas H. Lee Partners, L.P.
Thomas H. Lee Partners, L.P. is one of the oldest and most successful
private equity investment firms in the United States. Since its
establishment in 1974, THL has been the preeminent growth buyout firm,
raising approximately $22 billion of equity capital, investing in more
than 100 businesses with an aggregate purchase price of more than $125
billion, completing over 200 add-on transactions and generating superior
returns for its investors. THL Partners focuses its high value-added
strategy on growth businesses, partnering with the best managers in an
industry to build great companies through strong organic growth and
targeted add-on acquisitions. Notable transactions sponsored by THL
include Aramark, Ceridian, Dunkin’ Brands,
Experian, Fidelity National Information Services, Grupo ONO, HomeSide
Lending, Houghton Mifflin, Michael Foods, The Nielsen Company, Nortek,
ProSiebenSat.1, Simmons Bedding Company, Snapple, Univision, Warner
Chilcott, Warner Music Group and West Corporation. For more information
please visit www.THL.com.
About Bain Capital
Bain Capital, LLC (www.baincapital.com)
is a global private investment firm that manages several pools of
capital including private equity, venture capital, public equity and
leveraged debt assets with more than $65 billion in assets under
management. Since its inception in 1984, Bain Capital has made private
equity investments and add-on acquisitions in over 300 companies in a
variety of industries around the world, and has a team of almost 300
professionals dedicated to investing in and supporting its portfolio
companies. Bain Capital has a history of investing in such leading
companies as Dunkin' Brands, Michaels Stores, SunGard Data Systems,
Domino's Pizza, HCA, Inc., AMC Theaters and Sensata Technologies.
Headquartered in Boston, Bain Capital has offices in Hong Kong,
Shanghai, Tokyo, New York, London and Munich.
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