Several e-mails that were sent between a number of Wall Street banks could be a serious setback in their defense against the private-equity firms that are trying to force them to finance the contentious $27 billion takeover of Clear Channel Communications.
The e-mails, which are referenced in confidential court papers obtained by The Post, purport to show the banks scheming to get out of financing the Clear Channel buyout by offering terms they know the private equity firms won’t be able to accept.
The banks, led by Citigroup and Deutsche Bank, committed to providing $22 billion in debt financing at the height of the buyout boom to fund the takeover by Bain Capital and THL Partners. The deal was supposed to close on March 27, but the firms sued the banks after failing to come to specific terms on the financing.
The banks, which also include Wachovia, Credit Suisse, Morgan Stanley and Royal Bank of Scotland Group, could record an immediate $3 billion loss on the debt if they are forced to fund it. The banks argue that Bain and THL have soured on Clear Channel and are looking for any way to get out of buying the company without having to pay the $500 million break-up fee.
The private-equity firms claim that the banks’ scheming actually began last year as the credit crunch was starting to take hold. They cite an August e-mail from one banker calling for the other banks to “start focusing on a plan of action for restructuring the financing.”
The firms also cite an e-mail where one banker asks another “is there is something more severe we could be doing” and another from a bank executive that said the documents outlining the terms of the debt were “meant to be draconian.”
“Ah there will be war . . . . but it will be interesting won’t it,” read another email from a Credit Suisse banker on the deal.
Antony Page, a professor at Indiana University School of Law, said the private-equity firms appear to have “some significant evidence” but said they don’t really show anything new.
A judge will hear the banks’ request to drop the suit in a hearing today New York.