Clear Channel infects global lending

Despite the Clear Channel dispute being settled out of court last month, the case is infecting lending deals at least as far away as Europe.

In May, private equity houses Thomas H Lee Partners and Bain Capital agreed to funding of $17.9 billion ($36 per share) for their purchase of Clear Channel Communications. Previously, the bank syndicate had refused to fund the buyout price of $39.20, prompting legal action for breach of contract.

This workable solution (subject to shareholder approval) is welcome news to the parties involved in the transactions, but the case is disrupting other deals.

"I was working on a deal this week where one of the lending banks was a party to the Clear Channel case. The borrower wanted special reassurance that the bank would not renege on the deal," one partner in London told IFLR.

"But the bank was...