Clear Channel deal suit sent back to Texas court

NEW YORK (Reuters) - Clear Channel Communications Inc (CCU.N) and the private equity firms trying to buy the U.S. radio operator won a legal victory on Wednesday when a federal judge sent a case they filed against six banks back to a Texas state court.

Private equity firms Thomas H Lee Partners and Bain Capital Partners had filed complaints last week against Citigroup Inc (C.N), Morgan Stanley (MS.N), Credit Suisse Group (CSGN.VX), Royal Bank of Scotland Group (RBS.L), Deutsche Bank AG (DBKGn.DE) and Wachovia Corp WB.N to force them to fund the $20 billion (10 billion pound) buyout of Clear Channel.

The private equity firms, which formed CC Media Holdings Inc to buy the company, filed lawsuits in New York and Texas last Wednesday. Clear Channel joined them in the Texas state court suit.

The Texas lawsuit claims the banks "tortiously interfered" with the deal in an overt effort to "run out the clock" and cause the deal to collapse.

The banks had sought to move the Texas case to a federal court there, but on Wednesday U.S. District Judge Orlando Garcia sent the case back to Bexar County court, according to a court filing.

"The question is not whether CC Media will actually prevail in prosecuting its claim," Garcia wrote in an order. "The only question is whether it has any reasonable possibility of prevailing under the facts alleged. The court finds that such possibility exists."

A spokesman for the bank group said: "The decision is procedural in nature, and has nothing to do with the merits of the case."

Clear Channel said it was "pleased that Judge Garcia saw through this blatant attempt by the banks to impose further delay and confusion."

"This is really a very simple case, and no matter how many legal briefs they file, the banks will not be able to keep the plain facts from a Texas jury," it said in an e-mailed statement. "The banks' outright refusal to fund this deal is unjustified, unethical, and unlawful, and we are confident they will be held accountable for their actions."