Clear Channel documents reveal credit proposal

By Megan Davies

NEW YORK (Reuters) - Court documents related to the fight between buyers and banks over the $20 billion buyout of U.S. radio operator Clear Channel Communications Inc CCU.N, obtained by Reuters on Friday, gave details of a proposed credit agreement to fund the deal.

Intricate details of how the deal would have been financed have been awaited by the market. Traders and analysts have been sifting through documents trying to work out which way the litigation could go.

Thomas H. Lee Partners and Bain Capital Partners LLC filed complaints on Wednesday in New York and Texas 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 completion of the deal. Clear Channel is also joining THL and Bain in a complaint filed in Texas against the banks.

The private equity buyers and Clear Channel claim the banks balked when the debt markets deteriorated, and asked for a change in terms of the deal that prevented it from being completed, according to a copy of one of the suits.

The banks say the suits are without merit.

The court documents dated March 26, obtained by Reuters in New York Supreme Court, show an "execution copy" of a credit agreement for $17.53 billion. It is unclear whether the agreement, dated March 27, 2008, was drawn up by the banks or by the buyers.

The credit agreement calls for $15.53 billion in term loans, of which the largest is Tranche B of $12.6 billion.

For the largest tranche, Tranche B, Clear Channel would have paid 300-325 basis points over the London interbank offered rate (LIBOR).