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Nine Entertainment lenders approve $3.6bn recapitalisation scheme

22 Jan 2013

sydney6sq_lrgHedge fund creditors to CVC-backed Nine Entertainment have reportedly approved a $3.6bn recapitalisation plan that will prevent the beleaguered Australian television network from going into receivership.

The deal, which slashes the company’s debt and paves way for a possible relisting next year, follows protracted talks that saw Nine defeat some of its lenders that opposed the scheme in court last month, Reuters reported, citing an unnamed source familiar with the situation.

Oaktree Capital and Apollo Global Management will swap debt to take a 95.5 per cent stake in Nine, the report said.

The breakdown between the two funds was not disclosed.

CVC will retain just one per cent of Nine following the recapitalisation, a move that will wipe out nearly all of the $1.8bn of equity the London-based firm invested in the company, crystalising the largest-ever loss on a single private equity deal in the Asia Pacific region.

Mezzanine debt holders led by Goldman Sachs will receive 3.4 per cent, the report said.

Oaktree and Apollo will have representatives on the new nine-member board, the report added.

The new owners will also consider a listing on the Australian Stock Exchange next year.

“It depends on whether it makes sense at the time,” the sources told Reuters.

Nine Entertainment’s woes are seen as a significant contributing factor to CVC’s recent withdrawal from Australia, as it comes to grips with large losses from its third Asia fund and a lack of debt financing to support deals.

The firm has ceased doing new deals and is in the process of cutting its Australian employee base following huge losses incurred from its investment in Nine.

Three partners – equivalent to half of the firm’s dealmaking team in Australia – left CVC to work for other financial services businesses in December, soon after the firm told them it would not be making any future investments.

At the end of last year renowned buyout veteran Adrian MacKenzie also announced his intention to resign from his role as a managing partner at CVC Asia Pacific.

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