CVC’s Nine sells magazine unit to service debts

ACP's portfolio includes The Australian Women's Weekly and Women's Day, the country's biggest-selling monthly and weekly titles, respectively, as well as TV Week, Rolling Stone and Harper's Bazaar. These titles will join Bauer's stable of 400 magazines and more than 100 digital publications released in 15 countries. It owns, among others, Closer, Grazia, Heat and FHM in the UK, and First for Women and Woman's World in the US.

David Gyngell said the decision to offload the magazine unit was not taken lightly, adding that ACP would benefit from being part of a global publishing group, while Nine can now focus on its core television business and its expanding digital and events units.

The reality is that ACP has been on the block for months as its parent company seeks to sell non-core assets. The division's earnings have fallen by almost half since CVC acquired Nine.

In February it was reported that Nine was willing to listen to offers of as little as A$300 million - or 3x earnings - after receiving little interest from prospective buyers. The company previously sold most of ACP's Asian division to Singapore Press Holdings, with the assets supposedly valued at 10x projected earnings for 2011-2012.

One problem was that Seven West Media's Pacific Magazines was the only feasible domestic acquirer, and it was thought unlikely that regulators would sanction the transaction on competition grounds.

In the past year, Nine has offloaded a range of assets including a 49% stake in auto website Carsales.com, pre-school television show Hi-5 and two ACP magazine titles to a portfolio company of Wolseley Private Equity. Ticketing business Ticketek is also said to be up for auction.

CVC bought Nine for A$5.3 billion in cash through several transactions between 2006 and 2008, but has seen the value of the assets drop significantly since then. Total debts stand at A$3.8 billion and the tranche due next February is now predominantly held by hedge funds, notably Oaktree Capital and Apollo Global Management.

The creditors have rejected several debt restructuring proposals and are thought to be pushing for a debt-to-equity swap, which would effectively see them assume control of the firm. CVC has refused to entertain any such plan.

According to Reuters, CVC faces a possible A$1.8 billion loss on its investment in Nine, which would be the biggest loss for a private equity firm on a single deal in Asia Pacific.

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• Topics
• Australasia
• Portfolio management
• Financing
• Consumer
• Australia
• CVC Capital Partners
• Structured finance
• Consumer