CVC considers US bond issue to cover Nine Entertainment debt
CVC Asia Pacific may service Nine Entertainment’s A$3.5 billion ($3.7 billion) in debt by raising more debt from private investors in the US. It is thought that a “144A” bond issue would raise $500 million to $1 billion that would go toward reducing $2.6 billion in senior loans due in February 2013. Should this be achieved, creditors might be more accommodating in renegotiating the remaining debt, The Australian reported.
In order to issue 144A bonds, CVC would need a public credit rating in the US as the instruments are tradable. It would also have to find a way around cross-currency issues that arise from raising US dollar-denominated debt when Nine's earnings are in Australian dollars.
In addition to the A$2.6 billion in senior debt, Nine is carrying A$900 million in mezzanine debt, which is due in April 2014. Reports vary as to how much of this is held by hedge funds - The Australian put it at 20-30% while Reuters claimed less than 20%.
Aside from straight debt refinancing, CVC's options include a debt-for-equity swap or a public listing, but the latter is highly unlikely given current market conditions. In March, Nine's 49% stake in CarSales.com was sold off for a reported A$565.5 million in order to raise capital.
Nine owns an Australian television network as well as the country's largest magazine publisher. CVC first invested in Nine's former company, PBL, in 2006 via a 50-50 joint venture with Consolidated Media Holdings. It committed A$1.8 billion in equity. In late 2007, CVC bought an additional 25% stake in PBL for approximately A$530 million.
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