WASHINGTON : Clear Channel Communications said Thursday a US judge has barred a global group of major banks from backing out of a 19.5-billion-dollar private equity buyout of the radio and billboard giant.

Clear Channel said a temporary restraining order issued late Wednesday by a Texas judge would allow time for the banks and the purchasers, Bain Capital Partners and Thomas H. Lee Partners, to avert a collapse of the deal.

The global media firm, the nation's largest operator of radio stations, joined a lawsuit filed by the two private equity funds in Texas seeking to prevent the banks from reneging on their commitment to finance the takeover.

Clear Channel said that Texas District Court Judge John Gabriel "clearly recognized the importance of the banks' agreement and duty to provide debt financing to the merger."

The judge "found in favour of Clear Channel's claim that irreparable harm would result if the banks were not immediately enjoined from tortuously interfering with the merger agreement," Clear Channel said in a statement.

The huge privatization deal agreed two years ago, when credit was easy, has appeared increasingly at risk as a growing liquidity squeeze has left banks with multibillion-dollar writedowns and severely limited lending capacity.

The private equity firms said late Wednesday they had filed complaints in the New York state supreme court and the Texas State Court in Bexar County, Texas.

The firms said the complaints detail "binding commitments the banks made to provide long-term financing essential to the completion of the transaction, and the deliberate actions the banks subsequently took to renege on those commitments."

"We have invested 18 months of time and effort to own Clear Channel," the private equity firms said in a statement.

"We want to do this deal. 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 six banks sued are Citigroup, Morgan Stanley, and Wachovia, of the US; Credit Suisse of Switzerland; Deutsche Bank of Germany; and British bank Royal Bank of Scotland.

Citigroup, which is representing the banks' public reaction on the lawsuits, was not immediately available for comment.

According to Clear Channel, the Texas judge's orders to the banks include a provision that they must not "interfere with or thwart consummation of the merger agreement" by refusing to fund the transaction, insisting on terms that are inconsistent with their commitment document or refusing to act in good faith in the drafting of definitive loan documents.

"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," the San Antonio, Texas-based company said.

Shares of Clear Channel Communications rallied Thursday on news of the judge's order, retracing nearly half of what they lost in the previous session.

The stock was up 10.55 percent at 29.75 dollars around 1622 GMT.

On Wednesday, the stock tumbled 17 percent to 26.92 amid reports that the private equity buyout was on the verge of collapse as the buyers were having trouble reaching a financing agreement with the banks.

The takeover was agreed in November 2006 and under the terms of the merger agreement, the transaction must close by June 12, 2008.

- AFP /ls