Wachovia sues its own client

Charlotte, N.C -- Wachovia Bank is suing its own client, Providence Equity Partners, in a move that could upend a $1.2 billion sale and result in a $45 million payment.

Wachovia is committed to loaning $450 million to Providence Equity Partners as part of a $1.2 billion, three-bank deal to help the company purchase Clear Channel's television operations.

Media conglomerate Clear Channel, based in San Antonio, Texas, recently settled a deal with Providence at $100 million below the initial offer. The banks, including Goldman Sachs and UBS, will loan them less at higher interest rates, The New York Times reported Monday.

But, Wachovia is nervous it will get stuck with the loan and filed suit in North Carolina state court on Friday, saying the change in price has severed its commitment to the loan.

By disrupting the sale, Wachovia could get saddled with a $45 million break-up fee, the report said.

By suing its own client, Wachovia could also jeopardize future business.

Wachovia is committed to helping Clear Channel with a $25 billion sale of the rest of its assets and to providing a bridge loan to Clear Channel should the sale of its television assets fall apart.

Copyright 2008 by United Press International.