Investors have good reason to be concerned that the BCE buyout will never close, judging by documents filed in the bitter lawsuit over the planned Clear Channel buyout. Three of the four lenders on the BCE takeover are caught up in an nasty battle over financing they promised to two private equity funds that offered to Clear Channel in a $26.7-billion (U.S.) deal. The two funds are now in New York Supreme Court, attempting to get the banks that include potential BCE lenders Citigroup, Deutsche Bank and Royal Bank of Scotland to honour their commitments. The proposed BCE buyout, which carries a $51.7-billion (Canadian) price tag when existing debt is rolled in - features prominently in the Clear Channel case. Clear Channel's potential buyers - Bain Capital and Thomas H. Lee Partners - allege the banks have "concerted strategy to renege on signed contracts that had become unfavourable in the light of changed market conditions." Reneging on the BCE financing is portrayed as part of that "concerted strategy." Clear Channels buyers allege that e-mails between the banks show the lenders were working on an exit strategy months before they came to the private equity funds, "hat in hand" in a December meeting to ask that the terms of $22-billion (U.S.) worth of loans be reworked. At that meeting, the banks asked for $600-million in concessions, and claimed that they stood to take a $2.65-billion mark-to-market loss on the loans. (Documents show the banks also stood to make $368-million in fees for financing the Clear Channel purchase.) In an e-mail sent the same day as the "hat in hand" meeting, court documents show "one Deutsche Bank executive joked to a Citi banker that they 'should just slap a (redacted by banks) logo on the front of the materials for today's Clear Channel meeting and sent them up to Providence' - a reference to the banks' attempt to escape a similar commitment to fund an even larger buyout of BCE Inc. by Providence Equity Partners and other firms, which was to be financed by Citbank, and Deutsche Bank, among others." Providence, a U.S. private equity fund focused on media and telecom buyouts, is part of a consortium of BCE buyers that's led by the Ontario Teachers Pension Plan Board. Only one of the four banks lending on the BCE buyout - Toronto-Dominion Bank - has publicly stated it continues to support the transaction. Teachers executives have also continued to state they intend to close the deal. Other players have been ominously silent. As the deadline for closing this deal draws near, Citigroup, Deutsche Bank and Royal Bank of Scotland will be forced to say if they will honour the terms of loans they made. The Clear Channel lawsuit gives reason to doubt these global banks will keep their word.