News & Analysis

Report: CVC asks for more time on Nine Entertainment

However, the lenders are reportedly expected to reject extension on the A$2.6bn senior debt package.

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Private equity firm CVC Asia Pacific has reportedly met with Nine Entertainment’s lenders to ask for a two-and-a-half-year extension on its A$2.6 billion senior debt package.

According to a Reuters report, a syndicate of 80 lenders have four weeks to respond, while a two-thirds majority is needed to agree to the changes. The debt is due in February 2013.

However, lenders are expected to reject the proposal even though they were likely presented with an upfront fee and a higher interest rate, according to local media The Australian. 

“I don’t think CVC will be able to offer enough of an incentive for the lenders to agree to this deal,” a source was quoted as saying in the report.

In addition to the senior debt, Nine has about A$1 billion of mezzanine debt due in April 2014, most of which is reportedly held by a Goldman Sachs fund.

CVC paid A$5.5 billion (then $4.16 billion) in February 2007 to acquire half the assets of PBL Media, which was rebranded as Nine Entertainment in December last year. In June 2007, the private equity firm bought an additional 25 percent stake of PBL for an undisclosed amount.

In November 2008, CVC agreed to inject a further A$335 million into PBL, increasing its holding in the company to 99.9 percent. The capital injection was part of PBL’s A$445 million recapitalisation plan, which was planned to help banks relax debt covenants on the company.

Early this year, CVC shelved plans for a float of Nine, which could have fetched the firm a reported A$5 billion.

CVC has had an eventful year in Australia. In April, its diagnostic imaging business I-Med was poised to submit a restructuring proposal to its creditors in a bid to alleviate mounting pressure to repay over A$1.2 billion in senior and subordinate debt.

However, the agreement later reached with the lenders not only lost CVC money on the business it bought in 2006 as part of its $2.7 billion takeover of the listed DCA Group but also failed to negotiate an equity stake in the restructured company, according to The Australian.