Barclays says avoided worst of leverage finance hits

LONDON (Reuters) - British bank Barclays (BARC.L) said it avoided many of the leveraged finance deals that left rivals with big losses as it defended itself against criticism its writedowns have not been conservative enough.

"There's a lot of noise out there but we've been consistent from the beginning, we know our exposures," said Bob Diamond, head of Barclays Capital, adding it had been selective on the financing deals it got involved in.

"These are clients we've worked with for a long time and we think we've avoided a lot of the deals that people are writing down," he told analysts at a presentation.

Earlier he told reporters on a conference call: "We turned down an opportunity to be a lead (manager) on Clear Channel and there were two or three other deals where we said 'no' when we were offered the chance to be a lead. All of those have created significant writedowns."

Another financing deal the bank turned down was last year's buyout of music group EMI, he said.

Clear Channel Communications (CCU.N) in June offered some of the debt backing its $17.9 billion leveraged buyout by Bain Capital Partners and Thomas H. Lee Partners at 90 to 91 cents on the dollar, sources told Reuters Loan Pricing Corp.

EMI, meanwhile, had planned to make use of securitization to refinance its buyout by Terra Firma, but that market has been frozen by the credit crisis.

Diamond was speaking after Barclays said it was raising 4.5 billion pounds ($8.9 billion) from outside and existing investors to help rebuild its balance sheet nL25637237.

Barclays has written down over $5 billion on assets tarnished by the credit crunch, although that loss is lower than most rivals and there has been persistent speculation it will need to take more hits.

"Leveraged finance has played out as we said it would play out," Diamond said, saying the bank had been consistent and had not changed its accounting policies.

BarCap had also refused to exit a financing deal on U.S. mobile service firm Alltel early at a big loss.

"We are managing our Alltel business not to exit at 90 (cents on the dollar), but as the Verizon deal takes place we'll exit at par and we'll have a profit on that position, not a loss."

Alltel is being bought by Verizon Wireless in a deal that will include $22 billion of Alltel debt. Alltel was bought in a private equity leveraged buyout just last year, with finance provided by Barclays, Citigroup (C.N), Royal Bank of Scotland (RBS.L) and Goldman Sachs (GS.N).

The value of Alltel's debt had fallen but rallied after the deal.

Exiting that deal will also cut Barclays' leveraged finance exposure by one third, Diamond said.

Banking sources said that Barclays had also declined to sell out of loans for Dutch TV producer Endemol, the creator of the "Big Brother" reality TV show, and British pharmacy business Alliance Boots AB.UL.

(Additional reporting by Richard Barley and Tessa Walsh)

(Reporting by Steve Slater; Editing by David Cowell)