Apollo, Oaktree-owned Nine Entertainment targets $658m IPO
Australian TV network Nine Entertainment - which is backed by US hedge funds Oaktree Capital Group and Apollo Global Management - is looking to raise up to A$697 million ($658 million) in its IPO set for December. The capital raised will be use to pay down debt and allow Oaktree to make a partial exit.
The listing comes a year after the beleaguered company narrowly avoided receivership when Oaktree and Apollo Global took control in debt for equity swap worth nearly $3 billion. The agreement wiped out A$1.8 million of equity held by former backers CVC Capital Partners in the largest-ever loss on a single private-equity deal in Asia.
According to a prospectus, Nine plans to sell 131 million new shares and 179.7 million existing shares at A$2.05-2.35 apiece. The IPO will give Nine a market capitalization of up to A$2.2 billion.
Oaktree, which currently owns 28% of the company, will sell 89.1 million shares, reducing its stake to 14%. Apollo meanwhile will retain all its shares but its holding will be diluted from 26% to 22%.
Of the money raised, $198.7 million will be used to pay down debt while $395.3 million will go to sellers of existing shares. The company wants to retain $49.6 million in cash while $22.3 million and $4.4 million will go towards IPO transaction costs and management bonuses, respectively.
CVC paid A$5.3 billion for Nine Entertainment - formerly known as PBL Media - through several highly leveraged transactions between 2006 and 2008. However, the company ran into trouble following the global financial crisis as advertising sales began to decline.
CVC's investment in Nine came around the same time as KKR's investment in media firm Seven West Media - then Seven Media Group - which was exited for A$265 million in May.
While Seven West did not fare as badly as Nine, most Australian businesses reliant on advertising have suffered. Earlier this week another broadcaster Ten Network posted a full year loss of A$285 million.
Nine's revenue for the financial year 2013 was A$1.49 billion compared to A$1.39 billion the previous year. However, over the same period, EBITDA decreased from $313 million to $297 million.
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