CVC Capital Partners, the private equity firm, is preparing to crystallise a multi-billion loss on its investment in Australian media giant Nine Entertainment Company, as it mulls a debt for equity swap to pacify the company’s creditors.
CVC, which owns Nine’s entire portfolio of TV stations and magazines, paid A$5.3bn (£3.4bn) through its private equity vehicles for the firm in 2006. Since then however, the firm has struggled and racked up debts of A$2.7bn.
With senior debt due to mature in February 2013, and mezzanine debt in 2014, CVC is now hatching plans to strike a deal with lenders – including Goldman Sachs, Apollo Global Management and Oaktree Capital Group – to give control of the group to the lending constituents. The plan would see senior creditors receive 70 per cent of CVC’s equity with mezzanine debt holders taking 30 per cent.
Under the plan, senior lenders are expected to end up with 70 per cent equity in Nine, with the remaining 30 per cent going to Goldman Sachs.
About 80 per cent of the senior debt is in the hands of rival private equity firms and hedge funds, which bought the debt from original bank lenders on the secondary market.
Apollo and Oaktree own about A$1bn of the debt and hedge funds including Och-Ziff Capital Management another A$1bn.