March 27, 2008 in Business

Clear Channel, purchasers sue lenders

From Wire Reports The Spokesman-Review
 

Clear Channel Communications Inc. and the private equity firms seeking to close a $19.5 billion purchase of the company Wednesday sued the banks committed to backing the deal.

In lawsuits filed in Texas and New York, Clear Channel and the buyers group, led by Bain Capital and Thomas H. Lee Partners LLC, claimed the six banks that promised to finance the deal were reneging on the agreement to provide long-term financing, looking to offer little more than a short-term bridge loan.

The lenders, which include Citigroup Inc., Morgan Stanley, Credit Suisse Group, the Royal Bank of Scotland, Deutsche Bank AG and Wachovia Corp., signed commitments when the deal was inked 18 months ago saying they would bear all the risk in changes to the debt market climate.

In that time, the credit market has seized up, making it much more difficult for the banks to resell the loans, so instead of sticking with the minimum six years of financing, the lenders had sought to provide only a three-year loan, the equity firms said.

“Oracle Corp.‘s third-quarter profit jumped 30 percent, matching Wall Street’s expectations, but a sales miss sent shares of the business software maker tumbling after hours on fears the company is being pinched by falling technology spending.

Investors were also disappointed by lower-than-expected guidance for the fourth quarter in a key area of Oracle’s business – sales of new software licenses, which are important because they open the door for Oracle to sell product upgrades and maintenance services to the same clients later.

Oracle shares fell $1.78, or more than 8.4 percent, to $19.16 in heavy after-hours trading, when the price swung as low as $19. The shares had fallen 14 cents during regular trading Wednesday to close at $20.94 before the financial results were reported.

Archer Daniels Midland is suing the five big U.S. railroads, accusing them of violating antitrust laws in fixing their fuel surcharges.

Decatur, Ill.-based ADM said it has paid more than $250 million in fuel surcharges since 2003. The lawsuit doesn’t say the surcharges are illegal but accuses the railroads of illegally acting in concert to set them.

ADM is one of the world’s largest agribusiness companies and a major rail customer.

The lawsuit filed Tuesday in federal court in Minneapolis names Omaha-based Union Pacific Railroad Co., Fort Worth, Texas-based BNSF Railway Co., Jacksonville, Fla.-based CSX Transportation Inc., Norfolk, Va.-based Norfolk Southern Railway Co., and Kansas City, Mo.-based Kansas City Southern Railway Co.

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