Legal News

Preparing for Litigation? Parties in Clear Channel Do Kabuki Dance

By Dan Slater

As the negotiations between the banks and the private equity firms sputter out in the planned $19 billion buyout of radio broadcaster Clear Channel, each side is posturing in preparation for deal litigation.

A “kabuki” dance has ensued, reports the WSJ: to protect against litigation, neither the PE firms nor the banks want to leave any doubt that they are committed to closing the deal, though a different story may be unfolding behind closed doors. “No one can be seen publicly speaking against the deal,” a source told the WSJ. “It’s a game of who blinks first.” (Here’s another report on the troubled deal from the NYT.)

A court battle would pit the two buyout firms in the deal, Thomas H. Lee and Bain Capital — which in 2006 agreed to acquire Clear Channel for $19.4 billion and take on $7.8 billion of its debt — against the banks that agreed to finance the deal: Citigroup, Morgan Stanley, Deutsche Bank, Credit Suisse, Royal Bank of Scotland and Wachovia.

For the deal, Boston-based Bain and T.H. Lee tapped hometown firm Ropes & Gray, Bain’s longtime outside counsel. Ropes partners David Chapin, Alfred Rose, Patrick Diaz and Shari Wolkon worked on the corporate side of the deal, while Jay Kim and Steven Rutkovsky in the firm’s New York office handled debt-financing issues. And, since Clear Channel is the nation’s largest radio broadcaster, in addition to deal lawyers, T.H. Lee hired Washington communications lawyer John Logan at Dow Lohnes, while Bain turned to Meredith Senter Jr. of Leventhal Senter & Lerman.

The financing banks used Cahill Gordon’s Jonathan Schaffzin and John Tripodoro.

Casey Cogut, the Simpson Thacher deal veteran, is representing the Mays family — the controlling stakeholder in Clear Channel — as well as the company’s management.

Full post as published by Law Blog - WSJ.com on March 26, 2008 (boomark / email).