Goldman rejects hedge funds’ Nine restructuring plan

The hedge funds own the majority of Nine's A$2.8 billion ($2.9 billion) in senior debt, which is due in early 2013, while mezzanine funds controlled by Goldman are owed $1 billion. CVC paid A$5.3 billion for the company through several transactions between 2006 and 2008, but has seen the asset value drop significantly. The private equity firm is likely to see the bulk of its A$1.9 billion in equity wiped out.

Under the Oaktree and Apollo proposal, the senior debt would convert fully into equity, with Goldman receiving warrants worth 5% of the excess value generated by any future sale of Nine above A$2.8 billion, The Australian reported. CVC would get nothing more than reimbursement for its costs in the restructuring.

Goldman and CVC earlier suggested that the hedge funds receive a 70% equity stake, with 30% going to the mezzanine funds and the private equity firm getting a small portion of the latter stake.

A key area of difference is valuation of the asset. Under the Goldman 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, similar to the valuation of Ten Network, a rival media company backed by KKR.

Oaktree and Apollo don't believe Nine is worth so much - and this underpins the argument for denying Goldman and CVC any equity in the business. They also want to reduce the debt load to 1.5-2.5x EBITDA.

Nine expects an EBITDA of A$253 million for 2013, excluding contributions from the ACP Magazines unit recently sold to German publisher Bauer for A$500 million.

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• Topics
• Australasia
• Financing
• Media
• Restructuring
• CVC Capital Partners
• Oaktree Capital
• Apollo Global Management
• Australia
• TMT
• Goldman Sachs
• Structured finance