NEW YORK, March 4 (Reuters) - A lawsuit seeking to force Wachovia Corp WB.N to finance a deal where U.S. radio operator Clear Channel Communications CCU.N would sell its TV assets to a private equity firm will go to trial April 7, the bank said on Tuesday.
Judge Leo Strine of the Court of Chancery, Delaware, on Monday postponed a case Clear Channel brought to force private equity firm Providence Equity Partners to complete the $1.2 billion deal, a source familiar with the cases said, in order for the case involving Wachovia to be heard first.
A call to Judge Strine’s office was not returned.
Clear Channel agreed to the deal to sell the 56 television stations to Providence in April 2007 but the deal faltered as the markets and economy took a turn for the worse. In November, Clear Channel said Providence was considering withdrawing from the deal.
Clear Channel filed a lawsuit Feb. 15 in Delaware to force Providence to complete the deal. The lawsuit was filed against “Newport,” a company set up by Providence to make the acquisition. Providence called the suit “baseless.”
To settle the dispute, Clear Channel agreed to cut its asking price by $100 million to $1.1 billion, a person familiar with the situation said on Feb. 25.
But Wachovia, one of the banks financing the deal, filed a suit in North Carolina against Newport dated Feb. 22 to get out of the financing commitment, a move that could derail the deal.
Newport retaliated and filed a lawsuit against Wachovia in Delaware, seeking a break-up fee and expenses unless the financing is provided. This is the suit which will go to trial April 7.
A spokeswoman for Wachovia said in an e-mailed statement: “This suit is completely without merit and we will vigorously defend it to protect the interests of our shareholders... We look forward to presenting our side of the story and having our claims heard in court.”
Newport has applied to postpone Wachovia’s case against it in North Carolina, the person familiar with the case said on Tuesday.
The TV deal is not related to the $20 billion leveraged buyout of Clear Channel, agreed last year but which is yet to close. Clear Channel, being bought by private equity firms Thomas H. Lee Partners and Bain Capital Partners LLC, has previously said the buyout, which last week received antitrust approval, is not conditional on the TV sale. (Reporting by Megan Davies; Editing by Tim Dobbyn)
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