Banks seek arbitration in Clear Channel dispute

PHILADELPHIA (Reuters) - The banking group involved in the $20 billion buyout of Clear Channel Communications Inc (CCU.N: Quote, Profile, Research, Stock Buzz) offered on Tuesday to enter binding arbitration with the private equity buyers to settle a dispute over funding the deal.

The banks said they would agree to terms settled through binding arbitration and they believed the situation could be resolved within six weeks. The private equity buyers, Thomas H. Lee Partners and Bain Capital Partners, balked at the offer.

"The banks remain willing to fund the Clear Channel acquisition," the banks said in a letter to the buyout firms, a copy of which was obtained by Reuters.

The group includes Citigroup Inc (C.N: Quote, Profile, Research, Stock Buzz), Morgan Stanley (MS.N: Quote, Profile, Research, Stock Buzz), Credit Suisse Group (CSGN.VX: Quote, Profile, Research, Stock Buzz), Royal Bank of Scotland Group Plc (RBS.L: Quote, Profile, Research, Stock Buzz), Deutsche Bank AG (DBKGn.DE: Quote, Profile, Research, Stock Buzz) and Wachovia Corp (WB.N: Quote, Profile, Research, Stock Buzz).

"This proposal is yet another disingenuous attempt by the banks to avoid living up to their commitments. The banks want to move this case into the back room because they fear that a public trial will clearly expose their misconduct," the private equity firms said in a statement.

Clear Channel declined to comment.

The buyout firms previously filed lawsuits in New York and Texas against the banks seeking to force them to fund the deal. Clear Channel joined them in the Texas suit, but is not a plaintiff in the New York case.

"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," the private equity firms said.

"The New York court hearing on April 24 offers a further opportunity for these critical issues to be revealed in the bright light of day," the buyout firms said.