KKR exits Australia's Seven West Media

According to a Seven West statement, KKR sold its holding at A$2.21 apiece, an approximate 3% discount to the May 21 closing price. Disclosures made last year when Seven West issued new shares to pay down debt indicate that the private equity firm had an 11.8% stake, while Kerry Stokes' Seven Group Holdings owned 33.2%. KKR participated fully in the rights issue.

"Our decision to sell our shareholding is based on a broad range of parameters on which we based our initial investment and how we sought returns for our investors. We know Seven West Media is a great company, we know its future is strong and we know it has a well credentialed board and management," said Justin Reizes, head of KKR Australia, in a statement.

He added that the private equity firm's investment period is 5-7 years and that it had held Seven West for longer.

KKR is not expected to lose money on its investment, although the commercial environment for Australian businesses reliant on advertising revenues has been difficult ever since the global financial crisis. Seven West posted a profit of A$226.8 million in 2012, up from A$115.1 million and A$96.2 million the previous two years.

KKR invested in Seven West through a A$735 million convertible note plus around A$2.5 billion in debt, reportedly at a gearing ratio of 62.5%. West Australian Newspapers took control of the business through a A$4.1 billion buyout, which saw KKR's holding fall to 12.6% from around 45%. The combined entity owns the Seven free-to-air network, the country's second-largest magazine publisher and a host of newspapers.

Last year, Seven West raised approximately A$440 million through its share issue. This was intended to reduce net debt to A$1.4 billion and cut the net-debt to EBITDA ratio to around 2.7x.

The other large-scale media deal of the time, CVC Capital Partners' buyout of Nine Entertainment, also struggled post-financial crisis.

CVC paid A$5.3 billion for Nine - formerly known as PBL Media - through several highly leveraged transactions between 2006 and 2008. It subsequently lost almost all its A$1.4 billion equity interest in the company after creditors - led by Apollo Global Management and Oaktree Capital Management - completed a debt-for-equity swap and recapitalized the business.

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