Banks ask N.Y. court to dismiss Clear Channel case

NEW YORK (Reuters) - A group of six banks, sued over the $20 billion buyout of U.S. radio operator Clear Channel Communications Inc (CCU.N: Quote, Profile, Research, Stock Buzz), fought back on Monday, asking a New York state court to hear their request to dismiss the claims against them.

Private equity firms Thomas H Lee Partners and Bain Capital Partners filed complaints last week 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 deal.

The private equity firms filed the lawsuits in New York and Texas last Wednesday, with Clear Channel joining the suit in Texas. A judge in Texas has issued a temporary restraining order to forbid the banks from refusing to finance the deal.

The buyout firms and Clear Channel claim the banks balked at providing financing when the debt markets deteriorated and asked for a change in terms of the deal that prevented them from reneging on their funding commitments.

The banks were to provide more than $22 billion financing and earn more than $400 million in fees.

Despite the public disagreement, the banks said on Monday that they are still willing to reach a funding agreement on "mutually agreeable terms" and there was still time to return to the negotiating table.

"Unlike the sponsors, we have consistently negotiated the open items in good faith," a spokesman for the banks said in an e-mailed statement, "and in fact were still doing so when without warning the sponsors took the unproductive step of asking a court to intercede in our discussions only hours after sending us revised terms to review."

The court filing from the banks claims that "plaintiffs have presented no basis for litigation, much less proceeding in an expedited manner," according to a copy obtained by Reuters.

The filing says that the banks had repeatedly asked the buyout firms for details on the loan agreement but received scant replies. It also says that they were not advised that the private equity firms would start litigation if an agreement wasn't reached by a certain date.