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Monday, 15 September 2014

Goldman backs Nine's debt-for-equity deal

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(Reuters) Goldman Sachs Group-run funds agreed to swap debt for equity in CVC Capital Partners’ Nine Entertainment as the beleaguered Australian television network scrambled to avoid going into receivership.

Other lenders, including hedge funds, have yet to decide if they agree to the debt-for-equity swap plan that the Nine management put forward, under a deal that would wipe out CVC Capital’s A$1.8bn (US$1.84bn) equity investment in the company. That would be the largest loss on a single private-equity deal in Asia.

The swap would give the Goldman Sachs funds, which are owed A$975m in mezzanine debt, a 7.5% equity stake in the broadcaster, plus warrants providing it with some upside if the business was sold or floated.

“Goldman Sachs Mezzanine Partners understands the importance of keeping this iconic Australian broadcaster out of administration and is supporting the Nine board and management,” a spokesman for Goldman Sachs Mezzanine Partners said today. “Therefore, Goldman Sachs Mezzanine Partners has agreed to endorse Nine’s proposal.”

An earlier plan Goldman and CVC had put forward, proposing the former end up with a 30% equity stake was rejected by the senior lenders of Nine, mostly rival private-equity firms and hedge funds, including Apollo Global Management and Oaktree Capital Group.

The funds, which own about A$2.2bn in senior debt bought from original bank lenders on the secondary market, could not immediately be reached for comment.

The debt must be repaid by a February deadline and negotiations are going close to the wire for a complex deal that will take some months to finalise.

Nine, one of the biggest PE-owned companies in Australia, has assets that include the Channel Nine free-to-air network, ticketing agency Ticketek and a 50% stake in online site ninemsn.com.

CVC paid A$5.3bn in cash and debt for Nine in two deals at the peak of the buyout boom in 2006–08, overloading on cheap debt just before the global financial crisis hit.

Since then, advertising revenues have collapsed across the media sector, slashing profits at Nine and rival TV networks.

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