Creditors given green light to take reins at Nine
Federal Court judge Peter Jacobson noted the plan won the support of 96.6 per cent of the company's creditors in a vote. Justice Jacobson said he was satisfied that since "no opposition to the scheme has been made, that the scheme is one that appears to be fair and reasonable".
If the lenders had not agreed to the restructure, Nine would have collapsed next week when $2.2 billion worth of senior debt falls due on February 7. Control of Nine will effectively pass from CVC Asia Pacific to Apollo Global Management and Oaktree Capital, which own nearly half the senior debt and will appoint five members of the nine-member board in the first year.
Nine's chief executive, David Gyngell, will take another board seat. Other lenders will appoint another three board members, which are rumoured to include the former treasurer Peter Costello.
Under the scheme, senior lenders will get 95.5 per cent of the equity in Nine, and share $573 million in cash payments. The cash will come from $700 million in new debt raised by Nine after the restructure. The Goldman Sachs-led mezzanine debt holders, who are owed $1 billion, will end up with 3.75 per cent of Nine and a $22.5 million cash payment.
Under Nine's new constitution, the board will "use commercially reasonable efforts to effect a listing within 18 months" of the scheme being implemented, but it is not obliged to pursue a listing.
The focus will then turn to reviving Nine's financial performance.
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Federal Court approval means Nine Entertainment's creditors won court backing to implement a scheme that converts about $3.4 billion of the company's debt into equity. The judge noted 96.6% of creditors supported the plan, and creditors are expected to take ownership of the media group within days.
The restructure was needed to avoid collapse: Nine faced $2.2 billion of senior debt maturing on February 7, and if lenders had not agreed to the plan the company would likely have collapsed. Converting debt into equity allowed the company to avoid that immediate default.
Control will effectively shift from CVC Asia Pacific to big senior debt holders Apollo Global Management and Oaktree Capital, who together own nearly half the senior debt and will appoint five members of Nine's nine-member board in the first year after the restructure.
The new board will have nine members: Apollo and Oaktree will appoint five directors, Nine's CEO David Gyngell will hold another seat, and other lenders will appoint three more directors. Media reports also rumour one of those three appointees could be former treasurer Peter Costello.
Under the scheme senior lenders will receive 95.5% of Nine's equity and share $573 million in cash payments. The cash is to be funded by $700 million in new debt raised after the restructure. The Goldman Sachs–led mezzanine debt holders, who were owed about $1 billion, will receive 3.75% of Nine and a $22.5 million cash payment.
Nine's new constitution says the board will 'use commercially reasonable efforts to effect a listing within 18 months' of the scheme being implemented, but it is not obliged to pursue a listing. That means a relisting is a stated objective but not a guaranteed outcome.
One immediate step is raising $700 million in new debt to fund cash payments to creditors as part of the scheme. Beyond that, the company and its new board will focus on reviving Nine's financial performance.
Creditor support was overwhelming: 96.6% of Nine's creditors voted in favour of the scheme. Federal Court judge Peter Jacobson said he was satisfied that no opposition had been made and that the scheme appeared to be fair and reasonable.
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