Clear Channel banks seek lawsuit dropped in Texas

By Megan Davies

NEW YORK, May 5 (Reuters) - The banks being sued in the Clear Channel Communications Inc. (CCU.N: Quote, Profile, Research, Stock Buzz) buyout case on Monday filed a new motion asking a Texas court to dismiss a lawsuit against them, court documents show.

The banks, which were to provide more than $22 billion financing and earn more than $400 million in fees for the leveraged buyout, argue that the lawsuit filed against them in Texas is "not ripe or justiciable and should be dismissed".

They argue that the suit is based on events that have not -- and may not -- occur, as a June 12 deadline to complete the deal is still pending, according to a copy of the filing obtained by Reuters and dated Monday.

Bexar County State District Judge Joe F. Brown Jr in April had refused a separate request by the banks to dismiss the Texas lawsuit, as he set a June 2 trial date. In that request, the banks had argued that the Texas case should be dismissed and folded into the litigation under way in New York.

Clear Channel struck the deal to be bought by private equity firms Thomas H. Lee Partners and Bain Capital for $39.20 a share at the height of the private equity boom last year. But the market has changed significantly since then, with the cost of financing leveraged loan debt skyrocketing.

The deal descended into litigation earlier this year when THL and Bain filed complaints in New York and Texas against 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) to force them to fund the buyout. Clear Channel joined them in the Texas suit, but was not a plaintiff in the New York case.

The buyout firms claim the banks balked at providing financing when the debt markets deteriorated and asked for a change in terms that prevented completion of the deal.

In the Texas case, Clear Channel, THL and Bain claim "tortious interference" with the deal which "if allowed to continue and succeed, could result in immeasurable damages" exceeding $26 billion, according to the suit.

In New York, the private equity firms are seeking "specific performance" of a commitment letter that details the plans to fund the deal. Specific performance is when one party asks a judge to order another party to stick to a contract. (Editing by Leslie Adler)