Lenders to Take Over Endemol

Lenders to Endemol look set to take over the Dutch TV show producer in a debt-for-equity swap, rejecting Time Warner‘s new 1 billion euro ($1.3 billion) bid, writes Reuters. Silvio Berlusconi’s Mediaset, Goldman Sach’s Capital Partners and Cyrte Investments agreed to buy Endemol in 2007 for 2.6 billion euros. Barclays Capital, Credit Suisse, Goldman Sachs, ABN AMRO, Lehman, and Merrill Lynch arranged 2.2 billion euros of loans in 2008 to back the buyout, according to Thomson Reuters LPC data, writes Reuters.

(Reuters) – Lenders to Endemol look set to take over the Dutch TV show producer in a debt-for-equity swap, rejecting Time Warner’s new 1 billion euro ($1.3 billion) bid, two people close to the process said on Tuesday.

The deal would cut the Big Brother producer’s 2 billion euros of loans to around 550 million, they said.

Two of the largest lenders — Royal Bank of Scotland and Lehman Brothers — and two shareholders — investment firm Cyrte and Goldman Sachs — have joined the supporting lender group, ending a deadlock by getting two thirds of lenders to agree to a deal.

Lender Barclays and Endemol’s third shareholder, Italian broadcaster Mediaset — which holds 6 percent of the debt — are holding out for better terms but do not have enough voting rights to block the restructuring, the people said.

Mediaset had presented its own plan for a joint bid with Italian private equity fund Clessidra.

The restructuring would be implemented through a Dutch court enforcement process that would require approval from two thirds of Endemol’s lenders, who also include hedge funds Apollo Management and Providence Equity Partners, the people said.

Mediaset and Barclays were not available to comment. A spokesman for Endemol declined to comment.

EQUITY SPLIT

Endemol’s equity would be split among lenders and existing shareholders, depending on the debt each holds.

Existing shareholders would receive around 30 percent, while the rest would be distributed amongst hedge funds and bank lenders, one of the people said.

Lenders were set to extend a waiver of the covenant breach on Endemol’s debt until next year to finalise the restructuring, the person said.

Silvio Berlusconi’s Mediaset, Goldman Sach’s Capital Partners and Cyrte Investments agreed to buy Endemol in 2007 for 2.6 billion euros.

Barclays Capital, Credit Suisse, Goldman Sachs, ABN AMRO, Lehman, and Merrill Lynch arranged 2.2 billion euros of loans in 2008 to back the buyout, according to Thomson Reuters LPC data.

After a drop in earnings, Endemol failed to meet terms on the loans this year. ($1 = 0.7567 euro) (Additional reporting by Georgina Prodhan,; Roberta Cowan in Amsterdam, and Claudia Cristoferi in Milan; Editing by Dan Lalor)