CVC cuts price for Nine’s magazine division – report
CVC Asia Pacific is reportedly willing to listen to offers of as little as A$300 million ($323 million) – or 3x earnings – for Nine Entertainment’s magazine division after receiving little interest from prospective buyers. The sale of ACP Magazines would help ease the burden of the Australian media group’s A$2.7 billion in senior debt, which is due to mature next February.
According to The Australian, only Seven West Media's Pacific Magazines has been touted as a likely bidder and it is thought the regulators wouldn't sanction such a transaction on competition grounds. Nevertheless, it was reported last week that preliminary talks have taken place between the two parties.
CVC originally valued ACP at up to 8x EBITDA last year, and then cut its asking price to 5x at the end of 2011. When Nine sold most of ACP's Asian division to Singapore Press Holdings last year, the price was said to be about 10x projected earnings for 2011-12. The magazine division's earnings have fallen by almost half since CVC acquired Nine - then known as PBL Media - in 2007, paying 11.5x EBITDA.
ACP publishes titles including The Australian Women's Weekly, Harper's Bazaar and Cosmopolitan. It had a 50.7% share of the magazine market for the six months to December 2011, maintaining a leadership position in categories including major monthlies, major weeklies, women's lifestyle, fashion and homemaking.
Oaktree Capital and Apollo Global Management hold A$1 billion or about 37% of Nine's senior debt, and CVC has refused to entertain their proposals for a debt-to-equity swap which would effectively hand the hedge funds control of the company. In total, hedge funds are thought to own 50-60% of the debt.
CVC needs 100% lender approval to extend the life of the debt and a two-thirds vote to amend covenants. Two proposals to restructure the debt have met with a lukewarm response from creditors and subsequently been shelved.
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