Bain Capital

Texas lawyer Joe Jamail is the lead lawyer for Clear Channel, which has sued the banks that are trying to back out of financing the acquisition of Clear Channel by a pair of private equity firms. Clear Channel claims the banks hesitation amounts to tortious interference with the acquisition agreement. Although there’s little—or perhaps no—precedent for this kind of case, the banks being sued have reason to be afraid.
You see, Jamail famously won a $10 billion verdict for Pennzoil in a tortious interference suit in against Texaco. Pennzoil had agreed buy Getty Oil in 1984, but Texaco swept in and bought Getty before the deal had closed. The massive award forced Texaco into bankruptcy. At the time it was the largest judgment in American history.
Pennzoil wound up collecting only $3 billion after Carl C. Icahn, who was Texaco’s largest shareholder, helped negotiate a settlement with Jamail. Before the settlement, the two sides spent years battling each other. “The fight has been punctuated by thousands of hours of fruitless negotiations, legal wranglings, dashed hopes and charges by executives of both companies accusing the other side of greed, arrogance and duplicity,” the New York Times said in 1987.
So how did Icahn resolve things with Jamail? After the jump, Icahn reveals all in a standup performance at Carolines Comedy Club in 2003.

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Clear Channel and PE Firms Sue Citi

Clear Channel and the two private equity firms that planned to take it private, Bain Capital and Thomas H. Lee Partners, plan to sue Citibank and other lenders, The Deal Is reporting.
Shares of Clear Channel dropped softly yesterday after The Wall Street Journal reported on its website that the banks and the buyers had “failed to resolve their differences over final financing terms” and warned the deal was near collapse. The Clear Channel deal would be one of the biggest leveraged buyouts to collapse in the credit crunch.
“Clear Channel plans to file suit in state court in Texas for tortious interference with its buyout agreement. The buyers will sue separately to enforce the debt commitments given by the banks. Those agreements are governed by New York law, while the buyout agreement was struck under Texas law and the parties agreed that any disputes would be litigated there,” The Deal’s Scott Stuart writes.
The lending syndicate includes Deutsche Bank Securities Inc., Credit Suisse Securities LLC, Morgan Stanley, Wachovia Bank and Royal Bank of Scotland plc, according to the deal. All could be sued along with Citi.
Update: It’s on. The Wall Street Journal just reported that the two lawsuits have been filed.
Clear Channel, PE firms poised to sue lenders over buyout [The Deal]

Help Wanted: DealBreaker Summer Interns Gone Wild!

summerinternships.jpgThe resumes are already starting to pour in but it’s not too late. DealBreaker is still looking for summer interns and we might just be looking for you!
Our internships fall into two categories, editorial and graphics. For editorial interns we’d like someone interested in spending their summer writing, reporting, research and performing mild administrative tasks—things like making frozen margaritas for Bess and keeping Keith Hahn away from Carney’s whiskey. Ideal candidates will have an interest in finance, some writing experience, a mischievous sense of humor and a history of causing trouble.
We’re also looking to improve our graphics this summer through the use of slave labor with the help of a graphics intern. The ideal candidate will have a well-developed aesthetic sense, a desire to make pretty pictures on the internet and some experience using photoshop. We’re going to be providing original video and podcatsing content in the near future, so experience in podcasting, film-making or online video is a major plus. It will probably make your summer much more pleasant if you have some interest in finance as well.
DealBreaker internships are great resume building opportunities. This is a nice way of saying they are unpaid—although you can expect to receive cocktails and food on occasion. If you are a student, we will work with you to get credit for the position. Also you should keep in mind that DealBreaker internships are not dead-end jobs. Bess Levin started as an intern, and is now a full-time contributing editor.*
And now she’s also our internship coordinator, too! Send your resumes to bess (at) dealbreaker (dot) com. Include “Editorial Intern” or “Graphics Intern” in the subject line as appropriate.
*Past performance is not necessarily indicative of future results. This “help wanted” item contains forward looking statements that rely on certain assumptions, projections and flat-out baloney that the management of DealBreaker believes to be reasonable or at least knows how to spell.

Private Equity & Politics: Mitt Romney Winning The PE Primary

Mitt_Romney_Photo.jpgIf different sectors of the financial industry were to hold primaries, Mitt Romney would be the clear favorite to win the private equity primary. The founder of Bain Capital who is running for the Republican nomination for president has been received far more than any other White House contender from the private equity industry, taking in $258,000 in the first quarter of 2007, according to Dan Primack at
The list of Romney’s donors include Steve Schwarzman of the Blackstone Group and Henry Kravis of Kohlberg Kravis Roberts. And despite the amounts collected from private equity employees, Romney has hardly topped out. Only one of his donors—Charles Haneman of H.I.G. Capital—has hit the statuory maximum donation. So Romney can probably expect to collect even more from his former fellow private equity colleagues.
Unlike hedge funds managers—many of whom have only recently become politically active and tend to lean toward Democrats—the top names in private equity have a history of political involvement with Republicans. Schwarzman is also a donor to John McCain’s campaign and there was talk that he might have been in the running for the top job at the Treasury department. That job eventually went to Hank Paulson, who had been running Goldman Sachs.

Romney Rakes in LBO Dough
[PE Hub]

The Pirates Miss Out On Outback Booty

Pistol Pirate Bust.jpgIt’s been a while since we checked in on Pirate Capital. Several weeks ago, the troubled Norwalk, Connecticut hedge fund was all over this page with news of mass analyst defections, loss-making sales of its large stake in the parent company of Outback Steakhouses, an SEC probe and a letter from founder Tom Hudson to the fund’s investors seeking to reassure them that the fund was not melting down.
After that the notoriously noisy hedge fund went quiet. The people handling press calls seemed program not say “no comment” to all inquiries. New letters from Hudson—either to investors or to companies in which Pirate funds hold positions—were not forthcoming. It seemed clear that Hudson had decided to bunker down and regroup.
Today Pirate is back in the news and its not pretty. It appears that the soaking Pirate took on its Outback position—buying a 5.3 percent stake when shares were priced at $42 to $39 and selling at $27.59 to $29.37 a share—might have been unnecessary. Yesterday the parent company of Outback announced a Bain Capital led leveraged buyout, sending the stock up to $39.72 a share. Ouch.
Pirate Jumped ‘Out’ Too Early [New York Post]