CVC Drops Nine Debt Idea

Private equity firm CVC has dropped an idea to split its A$2.6 billion ($2.6 billion) of debt in Australia’s Nine Entertainment, with talks on refinancing likely to go well into 2012, writes Reuters. CVC had been exploring the idea to split the debt, with one tranche for banks and a second class for hedge funds who have snapped up the senior debt in recent weeks to own between 50 and 60 percent, writes Reuters.

(Reuters) – Private equity firm CVC CVC.UL has dropped an idea to split its A$2.6 billion ($2.6 billion) of debt in Australia’s Nine Entertainment, with talks on refinancing likely to go well into 2012, a source said on Thursday.

CVC had been exploring the idea to split the debt, with one tranche for banks and a second class for hedge funds who have snapped up the senior debt in recent weeks to own between 50 and 60 percent. It had sought responses by Christmas.

“It’s effectively not on the table,” a source involved in the deal told Reuters, adding that the idea had been discussed with a few senior lenders.

“There is no likelihood of anything happening between now and Christmas and it could be well into next year before they reach any finite outcome,” the source said, speaking on condition of anonymity because the talks are confidential.

Hedge funds have been picking up Nine debt from senior lenders at around 80 to 90 percent of par, which CVC sees as a sign that the hedge funds have faith in the underlying business rather than seeing it as a distressed situation.

“The sale of debt at 80-90 cents, rather than much lower, shows belief in the future of the business,” the source said.

Nine’s senior debt is due to be refinanced by February 2013, and hedge funds have been buying up chunks of debt from bank lenders in the past two weeks to try and win control of the media network.

CVC Capital put out a statement last week saying there was no current requirement to refinance its senior debt in advance of the maturity date.

“CVC has proactively commenced discussions with its lenders regarding refinancing options,” CVC said at the time.

A spokesperson for CVC declined to comment on Thursday.

Nine’s assets include the Nine Network free-to-air television station, ACP Magazines which publishes the Australian Women’s Weekly, ticketing agency Ticketek and Acer Arena.

Its owners could put up non-core assets for sale to reduce the debt load.

($1 = 1.0107 Australian dollars)

(Reporting by Sonali Paul and Victoria Thieberger; Editing by Lincoln Feast)