(Updates with CVC comment in fourth, 12th paragraphs.)
Dec. 8 (Bloomberg) -- Nine Entertainment Co., the Australian media company owned by CVC Asia Pacific Ltd., has dropped a proposal asking senior lenders to extend the maturity of a A$2.8 billion ($2.9 billion) loan to 2015, according to two people with knowledge of the matter.
CVC Capital Partners Ltd., a London-based buyout firm, will continue talks with lenders, including Goldman Sachs Group Inc., on a revised proposal to refinance the Australian media company, said one of the people, who declined to be identified as the details are private.
Nine was forced to scrap the plan after banks, including Credit Agricole SA and BNP Paribas SA, sold their portion of the loans to hedge funds, which are seeking to take control of the media company, the Australian Financial Review reported. Goldman Sachs, which owns about 20 percent of the so-called mezzanine debt and manages the rest on behalf of other investors, has agreed to swap its debt for equity, the AFR reported today, without saying where it got the information. Mezzanine debt is the layer of funding between common equity and senior debt.
“CVC has proactively commenced discussions with its lenders regarding refinancing options,” CVC said in an e-mailed statement today. Nine’s “senior debt matures in February 2013 and there is no current requirement to refinance this debt in advance,” it said. The company “is not in breach of any of its financial covenants or in default under any of its banking agreements.”
Hayley Morris, a spokeswoman for Goldman Sachs in Hong Kong, declined to comment.
Nine, which owns one of Australia’s three commercial free- to-air television networks, posted $415 million in earnings before interest, taxes, depreciation and amortization in the full year as of June 2011, up 16 percent from the previous year, CVC said in the statement.
The media company was sold by billionaire James Packer in 2006 to raise A$4.5 billion to fund his push into gaming. Typically, private investors restructure acquired companies and later issue new shares to the public to profit. Share sales by Australian and New Zealand firms are on course for the slowest year since 2004, according to data compiled by Bloomberg.
Senior Debt Split
Nine had been offering senior lenders an increased margin of 400 basis points more than the bank-bill swap rate on the debt, plus a 75-basis point fee if they agreed to the extension by mid-December, people with knowledge of the matter said last month.
CVC has asked lenders to consider splitting the senior debt into a higher-ranking A$1.8 billion portion and A$900 million of high-yield warrants, the AFR reported today.
Nine owes about A$900 million to mezzanine lenders, which is due in April 2014, data compiled by Bloomberg show. CVC bought its first stake in Nine, then called PBL Media, in February 2007, according to information on the private-equity firm’s website. Nine has revenue of almost A$2 billion and employs 4,500.
CVC’s buyout of Nine, known as PBL Media until December 2010, was the biggest mezzanine finance transaction completed in Australia at the time, according to information on a Goldman Sachs website. The debt was one of 15 investments made by Goldman Sachs’s mezzanine portfolio, according to the site.
The investment in Nine was made through four CVC funds and represents less than 5 percent of CVC’s private-equity funds under management, the buyout firm said today in the statement. CVC is currently investing a 10.8 billion-euro ($14.4 billion) European buyout fund and a $4.12 billion Asian pool, both raised in 2008.
CVC’s overall funds performance “continues to be top quartile after fully reflecting the latest financial position of Nine Entertainment,” the firm said.
--With assistance from Katrina Nicholas in Singapore and Anne- Sylvaine Chassany in Paris. Editors: Katrina Nicholas, Steve Bailey
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