PE-owned MediaWorks goes into receivership

Investors and debt holders in MediaWorks, a media company which owns the rights to X Factor in its native New Zealand, have begun discussions over refinancing the business as it struggles to repay debt.

New Zealand media company MediaWorks, owned by Australian private equity firm Ironbridge Capital, has been placed in a receivership with financial advisory firm KordaMentha as it struggles with an overwhelming debt burden, according to separate statements from MediaWorks and KordaMentha.

“For some time now, management has been working closely with our funders to settle on a structure that will enable MediaWorks to reduce its debt burden. The debt structure that was adopted when MediaWorks Limited changed hands in 2007 was unsustainable after the GFC,” MediaWorks managing director, Sussan Turner said in the statement.

Ironbridge acquired MediaWorks in 2007 for NZ$551 million (€299 million; $407 million at the time) excluding debt, or NZ$727 million including debt. The deal represented a 49 percent premium over MediaWorks’ closing price of NZ$1.63 a share on 20 October 2006, the day before Canadian media owner CanWest revealed its decision to reconsider its ownership in the New Zealand media company.

The company has now been placed in a receivership, with media reporting that the private equity owners and bankers could not agree on a refinancing deal.

Ironbridge did not respond to requests for comment.

Investors led by Australian businessman Rod McGeoch, a director of gaming company SkyCity Entertainment Group and chairman of Vantage Private Equity, have proposed to take over MediaWorks, once the capital structure is revised, a later statement from MediaWorks said.

McGeoch commented, “It goes without saying that the new company needs the right capital structure to continue successfully. We have put in place a capital structure that will see debt levels reduced from over NZ$700 million to less than NZ$100 million. This puts the company in a much stronger financial position. I see a positive future built on the back of the current strong trading performance.”

The deal reflects the difficulties of media investments. In October last year, CVC Capital Partners ceded control of the Australian media group Nine senior lenders Apollo Global Management and Oaktree Capital Management as part of a $3.4bn debt-for-equity swap, representing the Asia-Pacific region’s biggest ever private equity write-off, PEI reported earlier.