The financial firm of a prominent alum and donor has found itself in the midst of a legal tussle over its purchase of several television stations.
Providence Equity Partners, co-founded by Chief Executive Jonathan Nelson '77 P'07 P'09 - the Corporation trustee for whom the future Nelson Fitness Center will be named - entered a deal in April 2007 to buy the stations for $1.225 billion from media conglomerate Clear Channel Communications, according to a complaint Providence Equity filed in a civil court in Delaware.
When Providence Equity balked at completing the deal at the set price, Clear Channel sued to force the company to close. When the two agreed on a lower price of $1.1 billion, the financial services company Wachovia, which had agreed to finance about half of the sale, sought a court ruling to the effect that it was free of its lending obligation, according to the complaint.
The deal fell through when Wachovia failed to send a representative to a Feb. 25 closing. On Feb. 28, a holding company that Providence Equity controls, called Newport Television LLC, filed the complaint, asking the Delaware court to require Wachovia to complete the deal.
In the complaint, Providence Equity accuses Wachovia of getting "an acute case of 'lender's remorse'" and asks the court to force Wachovia to fund the purchase or pay damages for the $45 million break-up fee and other costs Providence Equity will have to pay. Several banks have recently become cautious about funding large purchases because of the worsening economy, according to a Feb. 25 New York Times article about the lawsuits.
Representatives of Providence Equity and Clear Channel declined to comment on the case. Wachovia did not return a request for comment.
Providence Equity, founded in 1989, manages over $20 billion in funds worldwide, primarily in media and communications, according to its Web site. The sale is being managed through Newport Television.
