Clear Channel Boosted by Judge's Ruling

A last-ditch effort to take Clear Channel (CCU Quote - Cramer on CCU - Stock Picks) private went in the company's favor late Wednesday after a Texas judge said the radio-station owner would face irreparable damage if funding for the deal was refused.

Private-equity firms Bain Capital and Thomas H. Lee Partners filed breach-of-contract suits against the six banks involved in the financing for the $19 billion privatization of the media giant. The firms claim the banks have made changes to their initial contract that tighten credit restrictions and could eventually cause Clear Channel to go into default.

Bexar County, Texas, Judge John Gabriel ruled in favor of Clear Channel and ordered that the banks must not interfere with the finalization of the merger agreement. Shares of Clear Channel jumped 11% on the ruling, after having dropped more than 17% during the previous session.

"We are pleased that the banks and the purchasers will now be able to move quickly to complete the loan documents and fund the merger," Clear Channel said in a release. "[Judge Gabriel] found in favor of Clear Channel's claim that irreparable harm would result if the banks were not immediately enjoined from tortiously interfering with the merger agreement."

"We want to do this deal," said Bain and THL in a joint release. "We are ready to close, have funded the equity portion of the purchase consideration, maintain our enthusiasm for the investment, and are fully prepared to fulfill our contractual obligation to complete the deal."

The suits were filed in the Supreme Court of the State of New York and the state court of Texas, where Clear Channel is based. Clear Channel also jumped into the fray, joining the firms as a plaintiff in the Texas suit.

Among those banks that are at odds over the credit agreement are Citigroup (C Quote - Cramer on C - Stock Picks), Morgan Stanley (MS Quote - Cramer on MS - Stock Picks), Wachovia (WB Quote - Cramer on WB - Stock Picks), Credit Suisse (CS Quote - Cramer on CS - Stock Picks), Deutsche Bank (DB Quote - Cramer on DB - Stock Picks), and Royal Bank of Scotland (RBS Quote - Cramer on RBS - Stock Picks).

The judge's ruling becomes the latest chapter in the dramatic saga of Clear Channel's buyout. Since the initial deal was announced in December 2006, the transaction has been marred by various parties disputing the price, the sale of certain assets and financing arrangements.

Those issues have knocked shares of Clear Channel more than 30% below the $39.20 buyout price as investors doubted the deal would go through. Before this week's developments, completion of the takeover was expected before the end of March.