CVC-backed Nine in talks to sell magazine business – reports
CVC Capital Partners-owned Nine Entertainment has held talks with Seven West Media over the potential sale of its ACP magazines division. The funds raised would help pay down some of the beleaguered company’s A$2.7 billion ($2.8 billion) in senior debt due to mature in February 2013.
Sources close to Seven West told The Australian Financial Review that a meeting had taken place involving senior executives, but discussions were "very, very preliminary." Apparently, Nine has appointed Macquarie to explore a potential sale.
Seven West's Pacific Magazines division is the logical buyer of ACP, which publishes titles including The Australian Women's Weekly, Harper's Bazaar and Cosmopolitan. However, any transaction would require regulatory approval as the combined entity would account for the bulk of Australia's A$650 million magazine advertising market.
According to the Audit Bureau of Circulations, ACP 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 following fierce secondary market trading.
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.
Nine also has A$975 million in mezzanine debt, some of which is held by Goldman Sachs.
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