CVC May be Forced to Sell Assets at Nine Entertainment

Auditors of Australian television network Nine Entertainment Co. have warned that its owner, private equity firm CVC Asia Pacific, may be forced to sell assets to help service A$3.6 billion ($3.7 billion) in debt, Reuters reported, citing the Australian Financial Review. The newspaper reported that the accountants Ernst & Young said there were doubts about Nine’s ability to continue as a going concern unless it was able to repay or renegotiate A$975 million of debt due in 2014, Reuters wrote.

(Reuters) – Auditors of Australian television network Nine Entertainment Co have warned that its owner private equity giant CVC Asia Pacific may be forced to sell assets to help service A$3.6 billion ($3.7 billion) in debt, according to the Australian Financial Review.

The newspaper reported that the accountants Ernst & Young said there were doubts about Nine’s ability to continue as a going concern unless it was able to repay or renegotiate A$975 million of debt due in 2014.

Nine Entertainment’s accounts for fiscal 2011 included a statement from directors that depending on how the company performed, “a renegotiation of terms, waiver, recapitalisation or the sale of assets could be necessary,” according to the report.

A spokeswoman for CVC declined to comment on the report.

The AFR article did not refer to one asset sale that Nine made last week, offloading the group’s ACP Asian magazine assets in Singapore, Malaysia and Indonesia to Singapore Press Holdings for A$45 million.

A major writedown of the ACP Australian magazine business has wiped out the last of the equity in Nine Entertainment, the Financial Review reported.

Nine is one of the largest private-equity owned companies in Australia.

In September, sources told Reuters that CVC Asia Pacific was considering refinancing up to A$3.5 billion in debt at Nine Entertainment.

Up to A$2.6 billion in senior debt falls due in February 2013, and about A$900 million in mezzanine debt is due in April 2014.

Earlier this year, CVC decided to shelve a plan to float Nine given the difficult environment for IPOs.