Clear Channel OKs TV station sales: report

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NEW YORK (CNNMoney.com) -- The sale of local television stations at the center of a dispute between Clear Channel Communications Inc. and Providence Equity Partners, has been settled, a person close to the situation is quoted in a Wall Street Journal story today.

The Journal story also quoted this same person saying the deal was also on the brink of collapse, after one of the banks financing the deal threatened to pull the plug.

Providence last April agreed to pay $1.2 billion to purchase dozens of TV stations from Clear Channel (CCU, Fortune 500) in a $1.2 billion deal. It pulled out later, saying it was looking at other options, according to the Journal. Clear Channel recently filed a lawsuit in Delaware to try to force Providence to close the deal.

This past weekend both parties hammered out a new deal. According to the Journal, Providence would get the stations for $1.1 billion, the person familiar with the situation said. However, Wachovia Corp. (WB, Fortune 500) has reportedly threatened to pull out of the transaction, saying it wouldn't take part in a meeting today to conclude the deal, the person quoted by the Journal said.

Wachovia's bone of contention is that even though the sale price is lower, and the new agreement contains a larger equity component, the Journal reports, it is a separate transaction from the one it originally agreed to fund.

On Friday, the bank sought a so-called declaratory judgment to free it from any obligation to finance the deal. The Journal notes that the petition leaves Wachovia in a difficult position of taking its client, Providence, to court. It also shows the length banks will go to wiggle out of funding deals.

The Journal adds that Wachovia's "threat" comes as banks wrestle with increasingly challenging balance sheets in connection with commitments they made during last year's buyout boom. Banks are sitting on nearly $200 billion of leveraged debt that they have been unable to unload as a result of the turmoil in credit markets, according to the Journal.

UBS AG (UBS)and Goldman Sachs Group Inc., (GS, Fortune 500) the other financiers in the deal, have agreed to fulfill their original financing commitments, a person familiar with the matter is quoted by the Journal saying. Wachovia reportedly agreed to finance the largest portion of the transaction, $500 million. It has also agreed to provide another $500 million for the $20 billion buyout of Clear Channel, the Journal story said. That deal, led by Thomas H. Lee Partners LP and Bain Capital Partners LLC, is said not to be directly connected to the Providence transaction. Still, some investors are said to worried that it could collapse amid the market turmoil.

If the Providence deal goes under, Wachovia may have to pay all or most of a $45 million breakup fee to Clear Channel, the Journal reported.