The 22-billion-dollar takeover of the largest US radio network, Clear Channel, hung in the balance Wednesday as a court was asked to rule on foot-dragging by the banks financing the deal. ( dpa )
The US investment firms Bain Capital and Thomas H Lee Partners asked a New York state court to order Citigroup, Deutsche Bank and Schweizer Credit Suisse, among others, to honour previous funding commitments for the deal, Bloomberg financial news service reported.
The escalating credit crisis in the US finance sector, triggered by mortgage loans to un-creditworthy borrowers and the purchase of such risky mortgage securities by investment banks, has tightened the credit supplies for such takeover deals.
The banks that were to finance the deal - which also include Morgan Stanley, Royal Bank of Scotland Group and Wachovia Corp - stand to lose at least 2.7 billion dollars because loan prices have fallen since they agreed to finance the transaction last year, Bloomberg reported.
The group of banks had promised to provide 22.1 billion dollars in financing for the 39.20-dollar-a-share acquisition.
The deal is among the largest transactions floated during the flurry of credit-financed takeovers that preceded the current crisis.
Clear Channel, the largest US radio and billboard conglomerate, last year was also reported to be selling its television division with 56 local stations for 1.2 billion dollars to a private investment firm.