clifto wrote:
D Peter Maus wrote:
clifto wrote:
D Peter Maus wrote:
CLEAR CHANNEL has agreed to be purchased by THOMAS H. LEE PARTNERS and
BAIN CAPITAL. But lenders including CITIGROUP, MORGAN STANLEY, DEUTSCHE
BANK, CREDIT SUISSE, ROYAL BANK OF SCOTLAND and WACHOVIA have declined
to provide the financing that they once said they would issue.
Sounds more to me like the banks unilaterally and arbitrarily decided to pull
out of an ironclad contractual commitment they made, and the court told them
to live up to their contract.
I'm wondering how ironclad that is. This deal has been in negotiation
for a while, and market conditions, stock values of the company, and
earnings projections have all changed. The conditions under which the
letter of commitment were made no longer exist.

Somewhere in the reading material (which I'm having trouble finding now)
there was a part where the contracted parties all acknowledged the changing
nature of financial markets and the risk of entering into a contract early
before the full impact could be determined. So basically the parties all
said they didn't care if conditions changed.

There it is, the last paragraph of what you posted:

"It seems clear that lenders' remorse set in when credit markets
worsened," BAIN and THOMAS H. LEE said in a statement WEDNESDAY. "Now
they are trying to walk away from their commitment letter which clearly
states that they bear all the risk that conditions in the debt markets
might change."

There's the part I was referring to. The banks made the commitment that
"they bear all the risk that conditions in the debt markets might change."

I can't see the courts forcing the banks into a deal they know is a
bad deal, especially when the banks are expected to shoulder all the risk.

If the banks explicitly consented to shoulder all the risk, no matter what
it might turn out to be, AFAIAC they're stuck. And it appears the banks
did just that.




I've not encountered the term 'letter of commitment,' before this.
'Letter of Intent,' yes. But 'Letter of Commitment,' no. So, I'm not
sure how ironclad the terms of this letter are. That is, whether it has
the full force and impact of a contract. Contract law states that in
order for a contract to exist, there has to be an exchange of
consideration. Prior to that, there is no contract. Even if one party
offers consideration, if the other party does not, there is no contract.

If 'Letter of Commitment' is an established legal instrument with
defined parameters, that's one thing. And yes, the banks are screwed.
If, on the other hand, it's a term coined by the CCU publicity
department for the purpose of trying this case in the press, that's
something else entirely. I've learned to read these statements with a
carefully jaundiced eye.

Given that the subsequent press notices have acknowledged that the
Court did NOT hold the banks' feet to this fire...only retain their
engagement through a subsequent hearing, it's becoming clear that there
is enough in question to make this a case for adjudication.

And I can't see the courts forcing the banks into a deal that would
do them harm.



Myself, I think they're stupid for saying "things change, we don't care"
and not protecting themselves.


Well, yeah....That said, I've not...nor, would I imagine, have
you....known any banker to walk into a deal without due diligence and
agreeing to shoulder all the risk, without agreeing to pocket all the
benefit.

There is more to what's taking place, here, than that which has been
presented.

And keep in mind that the press notices have been written by CCU.
That alone should raise a few back-of-neck hairs.

The only reason I brought any of this up, it to 1) underscore the
fact that days when CCU can do no wrong are over, and 2) that without
public vigilance, the madness implied by these headlines could well
result precedents sharply injurious to public economic health.