UPDATE 4-Clear Channel buyers sue banks over $20 bln deal

(Adds details about breakup fee, paragraph 17)

By Megan Davies

NEW YORK, March 26 (Reuters) - The private equity firms trying to buy U.S. radio operator Clear Channel Communications Inc (CCU.N: Quote, Profile, Research, Stock Buzz) on Wednesday filed lawsuits against the banks that agreed to fund the $20 billion buyout to force them to finance it.

The banks were to provide more than $22 billion financing and earn more than $400 million in fees, but they balked when the debt markets deteriorated, and asked for terms of the deal to be changed, according to a copy of one of the suits.

Thomas H. Lee Partners and Bain Capital Partners LLC 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).

Clear Channel is also joining THL and Bain in a complaint filed in Texas against the banks to force completion of the deal. That suit says it stems from defendants' "tortious interference" with the deal which "if allowed to continue and succeed, could result in immeasurable damages" exceeding $26 billion, according to a copy of the suit.

"I expect that they had reached an impasse in negotiations and that's an attempt to spur either a settlement or receive damages, if the game is over," said William Bates, a mergers & acquisitions partner at King & Spalding. Bates said he expected the sides would settle rather than go to trial.

Clear Channel struck the $39.20-a-share deal to be bought by private equity firms Thomas H. Lee and Bain 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 and banks unwilling to take losses on loans they agreed to finance in better times.