Too clever by half?

Mar 27 2008

This question might apply both to the Marketwatch website and to the principals in the Clear Channel LBO saga (details at Dan Primack’s always enjoyable peHub).

First, though, Marketwatch – their blast email message a bit ago, was entitled:

Clear Channel Communications: Judge orders banks to fund $19 billion buyout

As this is a subject that interests me, and I happened to be up and at the computer when it arrived, I clicked on it, only to find the title now was:

Clear Channel: Judge grants restraining order against banks

Which actually makes much more sense, and congrats to them on the quick kick-save. The first headline was so intriguingly worded as to be downright inflammatory (unintentionally, on the inflammatory part, I’m sure). The case went before the judge only within the last 12 hours or so, and it would seem to me (a non-lawyer) that an order to fund a $19 billion deal, under terms that everyone seems to think will start out causing a large hole in the pockets of the funding banks, would at least take longer to arrive at.

From Heidi Moore’s WSJ Deal Blog entry of yesterday afternoon, “Clear Channel: What Would Yoda Say?”, a plausible argument that neither the PE group (THL & Bain) nor the banks want to carry the deal forward:

In this upside down world, it’s easy to see doubts behind every negotiation. Blackstone Group, for instance, pointed to apparently onerous regulatory requirements as a reason it was wary of the buyout of ADS. Last week, the OCC clarified its stance. Now many people are watching Blackstone to see if that was enough.

Similarly, the buyout firms and lenders involved in Clear Channel are arguing over the terms of the debt financing. Does their inability to agree indicate a healthy negotiation, or a passive-aggressive attempt to spike the deal without suffering reputational consequences?

Sometimes contracts encourage parties to take the fight as far as possible. Walker told us, “One of the ways that the buying group can argue that it has satisified its obligations is to bring a lawsuit against the lenders. Once they satisfy that, their only obligation is to pay the termination fee, not to close the deal.”

By that playbook, the penultimate act by the banks and PE firms was taken yesterday, and a reasonable person might have concluded that CCU was well and truly a dead deal.

Whoops. The Texas court, at least (there’s a separate suit in New York) has thrown a spanner into the works, and might well, before it’s over, force a financing camel through the eye of this particular deal needle.

The commenters on Ms Moore’s blog entry are almost unfailing in their desire to say she was wrong about the intent of THL and Bain, but a reasonable person could say the jury’s still out on that.

And I do.

Addendum: In today’s PE Week Wire, Dan Primack adds:

In case you haven’t heard, Clear Channel and its prospective buyers – Bain Capital and Thomas H. Lee Partners – late yesterday sued six banks for refusing to fund the protracted $19.5 billion deal. The suits were filed in New York and Texas, with the primary difference being that the plaintiffs asked for the death penalty in Texas. No, wait, I’m being told that’s not correct. The primary practical difference is actually that CCU is being represented in the Texas suit by Joe Jamail, who represented Penzoil in a suit against M&A backtracker Texaco. The result was a jury award that essentially bankrupted Texaco, so the banks should be more than a bit concerned about that one.

(emphasis mine)

I do so like a clever turn of a phrase.

It was only after reading his piece that I realized Joe Jamail was involved, and I find myself questioning whether the addition of Jamail should cause any tremors, based on something he did half-a-life ago. He’s fast approaching 200 years old (though, admittedly, no faster than I am), and has had at least one big case in recent years that I’m aware of which ended badly enough for him that he fired the client rather than appealing.



Psst! There’s a conspiracy!

Mar 4 2008

A conspiracy of dunces, that is, spreading conspiracy theories.

Shockingly, to me as I’m sure it is to you, this one comes from a guy who’s a buddy of Ron Paul, (“R”, TX).

Via Dan Primack’s PE Week Wire:

The candidate is Murray Sabrin, a university professor who once ran on the Libertarian ticket for governor of New Jersey. He’s now running for U.S. Senate as a Republican, and last week received an endorsement from political soul-mate Ron Paul. More specifically, Paul sent out a so-called “Money Bomb” for Sabrin, which is basically an email asking supporters to immediately make an online donation. The idea is to raise lots of money in a single day, and then use the windfall as evidence of growing grass-roots support.

He got his money bomb, because the Paul-\bots are nothing if not slavish in their devotion to the directives of their jingoistic hero, Dr. Ron Paul. And it blew up Sabrin’s site, but good.

Soon after Paul lit the fuse, however, the Sabrin website crashed. It and some associated email accounts were down for approximately 16 hours, before being put back online. The campaign was furious. It had discussed the expected traffic surge with Network Solutions beforehand, and that it had been assured the site would be fine.

Or not, as it turned out – Network Solutions isn’t responsible for design and coding errors in its clients’ sites, and Sabrin’s site was buggy.

This is where it gets just bizarre. The Sabrin campaign seemed to have two choices at this point: Either accept that the crash was caused by its own coding mistake, or blame Network Solutions for having faulty technology. But it went for an unexpected third avenue: Accuse Network Solutions of taking down the website for partisan political purposes.

Which of course Sabrin’s campaign did. Utterly implausibly, but there you have it. For details, click the link to Dan’s story – it’s a good read.

As a larger issue, no wonder people are falling serially in love with Barack Obama – he promises, in some feathery and highly general way, to deliver us from this sort of functional retardation.

It’s all crap, of course – not specifically because it’s Mr. Obama (a fascinating & intelligent gentleman, good with a turn of a phrase, though married to an apparently divisive and demogogic wife and devoid of either the experience or anything that passes for coherent strategy to, you know, actually run the country). It’s crap because he’s a politician, and they’re all full of crap, as they pretty much have to be in order to aspire to the position they seek.

If Mr. Obama’s, or anyone else’s, putative “war on cynicism” had a ghost of a chance of succeeding (and it does not), one of the first things they would propose would be that, every time someone trots out a ludicrous conspiracy theory designed solely to motivate the lowest quartiles of the IQ spectrum, the government could declare a moment of silence, followed by a moment of pointing at that person and laughing.

Hey, a boy can dream.