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RBS sued over Clear Channel
27.03.08
Royal Bank of Scotland is one of six banks being sued over the failed $19.5 billion (£9.75 billion) takeover of US radio group Clear Channel Communications after they pulled out of a financing pact.
With worsening credit terms, the banks say they faced an immediate loss of $2.65 billion if they proceeded with the deal on its original terms.
They were to provide a private-equity consortium of Thomas H Lee Partners and Bain Capital Partners with more than $22 billion of financing, and earn more than $400 million in fees.
The private-equity firms are suing RBS, Citigroup, Morgan Stanley, Credit Suisse, Deutsche Bank and Wachovia for breach of contract. The banks say the case is "without merit".
The firms planned to use lines of credit to make short- term payments on $3.8 billion of existing Clear Channel debt. They claim the banks sabotaged the deal by changing financing terms in February.
The buyout firms are believed to have been alerted to the banks' change of heart as early as July, when an email not intended for their eyes was misdirected.
