Monday, September 24, 2012

Nine's Debt Collectors Locked In A Stand-Off


Mon., September 24, 2012
The US hedge funds Apollo and Oaktree, investment bank Goldman Sachs and Nine Entertainment begin talks on Monday and Tuesday that will decide whether the television group gets new owners quickly or slides into the purgatory of receivership,The Sydney Morning Herald reported. Nine convened the meeting to try and resolve a stand-off between the hedge funds, which own most of Nine's $2.7 billion senior debt, and Goldman, which manages investment funds that own about 80 per cent of Nine's lower-ranking $1.1 billion tranche of mezzanine debt. Nine's chairman, Peter Bush, and chief executive, David Gyngell, will attend, Steven Sher will be Goldman's lead, Oaktree distressed debt specialists Ken Liang and Edgar Lee are expected to fly in, and so are Apollo's Asia-Pacific head, Steve Martinez, and his Hong-Kong-based based colleague, Kevin Crowe. It's going to be the financial markets version of a cage fight: polite but bruising. Apollo and Oaktree own more than half of Nine's senior debt after buying chunks of it at a discount from banks that backed private equity group CVC's ill-fated takeover of Nine in 2006. They are pushing for a debt-to-equity swap that will give them 100 per cent ownership of Nine. Goldman is proposing a debt-for-equity swap that will hand senior lenders 70 per cent of Nine, and its funds and the other mezzanine debt holders 30 per cent. Time is tight. The senior debt load will shrink to about $2.2 billion if the senior lenders approve Nine's already-announced sale of its ACP Magazines division to Germany's Bauer Media group for $525 million.

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