Wachovia's Lawsuit Against Providence Equity

Providence Equity Partners, a private equity firm, signed a deal to purchase television stations from Clear Channel.  Wachovia agreed to finance the $500m deal.  Providence and Clear Channel agreed to a reduced purchase price because the stations revenues were down.  Now Wachovia wants out, arguing the price reduction is not enough and that the deal should be canceled.  Wachovia is arguing that the price reduction itself is a material adverse change, triggering the MAC condition in the deal agreement and, incorporated by reference, a similar MAC condition in the financing arrangement.  This case is odd because Wachovia must convince a judge that a reduction in price (and thus in the financing commitment) is an "adverse" change.  The case is representitive of the new kind of "hardball' being played in the buyout financing markets.  Reputation (for honoring one's word) be damned; save the ship.