Banks seek to dismiss Clear Channel case

By Megan Davies and Paritosh Bansal

NEW YORK (Reuters) - The banks being sued in the Clear Channel Communications Inc CCU.N case filed counterclaims against the private equity buyers and the U.S. radio operator on Friday, asking a New York state court to dismiss the case against them.

They also asked for a declaration from the judge that would cap their liability at $600 million, according to a copy of the filing obtained by Reuters.

The $20 billion buyout has been rocked by a dispute between the banks set to finance the deal and the private equity buyers, Thomas H. Lee and Bain Capital.

The buyout firms claim the banks balked at providing financing when the debt markets deteriorated and asked for a change in terms of the buyout that prevented it from being completed. The banks were to have earned more than $400 million in fees.

"This is just another desperate attempt by the banks to avoid being held accountable for the enormity of the harm caused by their unlawful interference with our merger agreement," Clear Channel said in an e-mailed statement. "We are confident these tactics won't work."

A representative for the private equity firms said there was nothing new in the banks' filing.

"What remains significant is that the court has agreed to address the matter on an expedited basis, with a trial set to begin in early May," the firms said. "We want to complete the deal to buy Clear Channel, and are looking forward to proving our case that the banks should be forced to live up to the binding commitments they made to finance the transaction."

The private equity firms filed complaints in New York and Texas last week against Citigroup Inc (C.N: Quote, Profile, Research), Morgan Stanley (MS.N: Quote, Profile, Research), Credit Suisse Group (CSGN.VX: Quote, Profile, Research), Royal Bank of Scotland Group Plc (RBS.L: Quote, Profile, Research), Deutsche Bank AG (DBKGn.DE: Quote, Profile, Research) and Wachovia Corp (WB.N: Quote, Profile, Research) to force them to fund a $20 billion buyout of Clear Channel. Clear Channel joined them in the Texas suit, but was not a plaintiff named in the New York case.