The day Murdoch broke the banks

Rupert Murdoch probably still has vivid memories of the morning of Tuesday, 13th November 1990.

It was then that Murdoch kicked off his campaign to save News Corp from collapse. To do that he had to persuade his vast horde of 146 bankers – spread across the globe – to promise not to call in billions of dollars in short-term loans they'd made to his company.

Murdoch's Australian bankers were the first to hear the survival plan that was being put forward by the media mogul, and his financial adviser,  Citibank's Ann Lane.

So it was on that sunny November morning that dozens of sombre-suited bankers began streaming into the ornate headquarters of the Commonwealth Bank in Sydney's Martin Place, ready to hear what Murdoch – and his advisors – had to say.

I also remember that morning clearly. At that stage, I was the banking writer for the Sydney Morning Herald, and I'd been tipped off about the meeting between Murdoch and his bankers. My editor decided that it would be an excellent idea for me to stand outside the bank and to try and get comments from bankers – and possibly even Murdoch himself – as they made their way into the meeting.

Not that I met with any success. The bankers responded to my questions by giving embarrassed "no comments”, or simply shaking their heads. A few former colleagues – before becoming a journalist, I'd spent a few years working in a bank – smiled and greeted me cordially as they made their way into the meeting.

Nor was I hopeful of running into Murdoch himself. There were, I worked out, three separate entrances into the bank, including an underground car park. What were the chances that the media mogul would come strolling along Sydney's Elizabeth Street, late for a meeting with his bankers? Or that he'd feel like a chat with a journalist from a rival newspaper? My mood was even bleaker as there was no sign of the Herald's photographer.

Further waiting, I decided, was futile. But before heading back to the office, I might as well deposit a cheque that had been sitting in my wallet for quite some time. So I slipped across the road, into the glass-walled atrium of what was then the State Bank of NSW. As I stood at the bench, filling out the deposit forms, I happened to look up. A white car had pulled up, and out climbed the unmistakable figure of Murdoch. He walked past the spot where I had stood barely three minutes earlier, before disappearing into the Commonwealth Bank.

I returned to the newspaper office in dread, but was hugely relieved to find a scene of unabashed jubilation. The Herald's photographer had arrived just in time to catch Murdoch's arrival at the bankers' meeting. And his shots – run in the paper the next day – were sensational.

Not surprisingly, Murdoch's bankers – now mostly in retirement – also retain strong memories of that Tuesday morning meeting.

Some recall bristling as Citibank's Lane – who opened the meeting – told them in no uncertain terms what was going to happen and how it was going to happen.

And how Murdoch, dressed conservatively in a dark suit and white shirt, unsettled some of his bankers by stating that News Corp would not be able to meet its upcoming loan repayments as they were currently structured.

In fact, one banker was later seen going up to Ann Lane and telling her that Murdoch seemed very close to saying that News Corp was trading while insolvent – which is considered a reasonably serious offence under Australian law. Lane barely blinked.

Bickering broke out between the bankers, with some of the smaller banks expressing resentment that Murdoch's big lenders – particularly Citibank and Commonwealth Bank – were dictating the terms for all the others. The smaller banks argued that the big banks should simply take them out, and then they'd be free to restructure Murdoch's debt as they pleased. The big banks were adamant they'd do no such thing.

At times through the three-hour meeting, Murdoch could barely conceal his irritation at having to spend so much time placating his banks. Still, his bankers gave him credit for turning up in person, and answering their questions. And Murdoch was able to convince them that – unlike some other failed Australian entrepreneurial companies – News Corp owned a swag of high quality assets.

As the close of the meeting, the bankers filed out, each clutching a thick document that outlined Murdoch's survival plan. But they gave no commitment to supporting his scheme.

After Sydney, the Murdoch roadshow moved on to London, and then New York, where Murdoch and his advisers again tried to use a combination of cajoling and flattery to win the support of his European and US bankers.

It was a rocky process. Deadlines were missed continually as some banks – including some Australian bankers – objected to having $800 million in loans made to Queensland Press, which was a private company controlled by Murdoch private family interests, included in the debt deal.

For a terrifying moment in December 1990, Pittsburgh National Bank – which had a £10 million (equivalent to $16 million today) loan to News Corp – threatened to stymie the plan, which could have triggered the collapse of the whole News Corp edifice.

It wasn't until February the following year that all 146 banks finally gave their blessing to Murdoch's plan and agreed to freeze more than $8 billion in loans to News Corp for three years.

Murdoch – who was then just one month shy of his 60th birthday – could finally breathe a little easier.