Goldman tables Nine Entertainment debt proposal – report
Goldman Sachs has reportedly put together a restructuring proposal for Nine Entertainment that would see the Australian company’s A$3.8 billion ($3.9 billion) in debt convert to equity, writing off the vast majority of CVC Capital Partners’ investment.
Mezzanine debt funds operated by Goldman are owed about A$1 billion by Nine, while A$2.8 billion in senior debt - scheduled for repayment in February 2013 - is predominantly held by hedge funds Oaktree Capital and Apollo Global Management.
According to the Australian Financial Review, the Goldman proposal would see the senior lenders take a 70% stake in Nine, with the Goldman funds getting the remaining 30%. CVC would retain a small portion of the equity, which means most of the A$1.9 billion it has pumped into the company since 2006 would be lost.
Under the proposal, Nine would retain A$1.25 billion in debt through a new five-year facility, with the leverage dropping from 10x EBITDA to around 4x. The overall package values the business at A$2.6 billion, or 10x forward EBITDA, lower than the 11.5x valuation CVC paid in 2006.
CVC has previously refused to entertain proposals for a debt-to-equity swap but the hedge funds are in a strong position because they have the power to veto any attempt to amend covenants and extend the life of the loans. Several restructuring plans put forward by the private equity firm have been shelved due to a lukewarm response from creditors.
Nine has offloaded a number of non-core assets in order to help pay down the debt. Last week it sold ACP magazines to German publisher Bauer for A$500 million. The company's stake in auto website Carsales.com and pre-school television show Hi-5 have also gone, while ticketing business Ticketek is said to be up for auction.
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