Nine saved as lenders settle on restructure
NINE Entertainment's lenders approved a restructure on Monday that will wipe out their $3.4 billion debt and hand them ownership of the media group within weeks.
The creditors' meetings, held at Macquarie Group's Sydney offices, barely lasted half an hour. The deal will now go back to Federal Court for final approval on January 29.
Court approval would then give the creditors just over a week to execute the restructure before $2.3 billion worth of senior debt comes due on February 7.
If the lenders did not agree to the restructure, Nine would have collapsed on this date as the media group could not repay the debt.
The scheme will see senior lenders receive 95.5 per cent of the equity in Nine, and share $573 million in cash payments. The cash will be sourced from $700 million of fresh debt to be raised by Nine after the restructure is completed.
The Goldman Sachs-lead mezzanine debt holders, which are currently owed $1 billion, will end up with 3.75 per cent of Nine and a $22.5 million cash payment.
The current owners, CVC, will end up with 0.75 per cent of the media group and $4.5 million cash, having lost close to $2 billion on their original investment.
The remainder of the cash from the debt raising will provide working capital for Nine.
Under the new constitution, the Nine board will "use commercially reasonable efforts to effect a listing within 18 months" of the scheme being implemented, but is not obliged to pursue the listing.
Nine will effectively be controlled by US hedge funds, Apollo and Oaktree, which will end up with 37.4 per cent of Nine's equity under the deal.
The hedge funds, advised by the Moelis global investment bank, will each appoint two directors to Nine's board as well as appointing another director jointly. Nine chief executive David Gyngell will take another board seat, with other lenders appointing a further three board members who are rumoured to include former treasurer Peter Costello.
The focus will then turn to reviving Nine's financial performance - including the television business that clawed back some respectability last year with improved ratings at the expense of the Ten network.