Reuters – CVC’s Nine Begins Talks with Lenders

Australian television network Nine, owned by private equity firm CVC Capital Partners Ltd., will soon start talks for the first time with the hedge funds that own most of its A$2.7 billion ($2.75 billion) in debt, two sources said on Friday, Reuters reported. Nine Entertainment Co. Pty Ltd. will open its books to lenders, the first step towards restructuring its debt before a February repayment deadline, having rebuffed approaches from hedge funds and other buyout firms for almost a year. About 80% of that debt is now in the hands of rival private equity firms including Apollo Global Management and Oaktree Capital Group, which bought the debt from original bank lenders on the secondary market.

(Reuters) – Australian television network Nine, owned by private equity firm CVC Capital Partners Ltd , will soon start talks for the first time with the hedge funds that own most of its A$2.7 billion ($2.75 billion) in debt, two sources said on Friday.

 

Nine Entertainment Co Pty Ltd will open its books to lenders, the first step towards restructuring its debt before a February repayment deadline, having rebuffed approaches from hedge funds and other buyout firms for almost a year.

 

About 80 percent of that debt is now in the hands of rival private equity firms including Apollo Global Management and Oaktree Capital Group, which bought the debt from original bank lenders on the secondary market.

 

Those funds hope to win control of Nine via a debt-for-equity swap, which CVC has been fighting to avoid.

 

CVC abandoned two previous proposals to restructure Nine’s debt because of a lack of support from lenders.

 

The A$2.7 billion in senior debt falls due in February 2013, and restructuring deals typically take months to negotiate.

 

“It’s got to the point where they have exhausted their options,” said one source familiar with the situation, who spoke on condition of anonymity because he was not authorised to speak publicly on the matter.

 

CVC declined to comment.

 

CVC paid A$5.3 billion in cash and debt for Nine at the peak of the buyout boom between 2006 and 2008, overloading on cheap debt just before the financial crisis hit.

 

Nine Entertainment, one of the biggest private equity-owned companies in Australia, has assets including the top-rated Channel Nine free-to-air television network and ticketing agency Ticketek.

 

CVC is likely to post a massive A$1.8 billion loss on its original equity investment, which would be the largest loss on a single buyout deal in the Asian region.

 

Nine has sold off assets to cut debt. This week it sold its ACP Magazines division for around A$500 million to German publishers Bauer.

 

Nine sold ACP’s Asian magazines last year, as well as a 49 percent share in online advertiser Carsales.com Ltd. Shares in Carsales.com have surged 53 percent since Nine sold its stake in March 2011.