Bankers were asked to “amend and extend” the senior debt that falls due in February 2013 by two-and-a-half years, said two sources, who had direct knowledge of the situation. Lenders have four weeks to respond, with a two third majority needed to agree to the changes, one of the sources said. The sources asked not to be named because of the confidential nature of the talks, which accompanied a quarterly update on the Nine business.
Nine has about 80 lenders, with hedge funds holding between 20 percent and 40 percent of the debt. Media reports have said the lenders are unlikely to agree to a refinancing at this stage. One of the sources said the lenders will now need to consider the proposal on an individual basis and decide their position. In addition to the senior debt, Nine has about A$900 million in mezzanine debt which falls due in April 2014.
Nine is one of the largest buyout-backed companies in Australia, bought by CVC at the height of the buyout boom in 2006. It spent about A$5.3 billion in debt and equity in acquiring the company from media baron James Packer.
A spokeswoman for CVC declined to comment on the debt restructuring.
Nine’s auditors Ernst & Young warned in November that CVC may be forced to sell assets to help service its debt, according to the Australian Financial Review. CVC had to shelve plans for a multibillion-dollar offering of Nine shares earlier this year as equity markets turned sour, and advertising revenue growth slowed in line with weak consumer spending.
Among the lenders to Nine are Australia’s sovereign wealth fund, the
In addition to Nine, one of Australia’s three free-to-air television networks, the group also owns magazine publisher ACP, the online media company nineMSN, Acer Arena and ticketing agency Ticketek. “Nine has done a very good job of doing cross-platform (advertising) sales,” said Citigroup analyst Justin Diddams. “If you have a number of market-leading assets and positions, it means advertisers and ad agencies have to deal with you. It does provide you with some advantage.”
(Victoria Thieberger is a correspondent for Reuters in Melbourne, Australia.)