Hedge Fund Pentwater Joins Litigation In Clear Channel Deal

A Clear Channel Communications Inc. shareholder has jumped into the litigation against a bank group accused of impeding the $ 19.5 billion buyout of the company.

Hedge fund Pentwater Capital Management L.P. filed suit in Texas against the banks, led by Citigroup Inc. (C) and Deutsche Bank AG (DB), effectively joining litigation already filed by Clear Channel and its proposed buyers, Thomas H. Lee Partners and Bain Capital.

The New York Post reported the Pentwater suit in Friday's editions. The paper also said another Clear Channel investor, Highfields Capital Management, was close to filing a similar suit. A Highfields representative denied the report and said the firm wasn't on the verge of filing suit.

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In its lawsuit, Pentwater said the bank group conspired to kill the Clear Channel deal by suggesting improper financing terms. Pentwater said the banks' actions - including "spreading lies and rumors" - endangered Clear Channel shareholders' windfall from the buyout.