PRIVATE equity firm CVC has failed to reach a deal with creditors to refinance A$2.6bn (£1.7bn) of debt in Nine Entertainment, sources said yesterday, putting the future ownership of the Australian media network in doubt.
That leaves the London-based buyout firm facing one of the biggest potential single equity losses in private equity history, with $2.2bn at risk.
It will also have to fend off hedge funds swooping to take control of Nine.
The funds have bought up senior debt from creditors including French banks BNP Paribas and Credit Agricole Commercial and Investment Bank, sources said.
CVC’s Asia-Pacific arm had asked lenders last month to agree to a two-and-a-half year extension on the debt due in 2013, which represents some 70 per cent of Nine’s total debt, hoping it would buy crucial time for Nine’s advertising revenue to improve.
But over the past week a string of lenders – some who needed to repatriate cash to debt-stressed Europe – sold chunks of their debt to hedge funds.
Sources said that US and Australian hedge funds, including Oaktree Capital, Anchorage Advisors, Och-Ziff and Apollo Global Management, now control as much as 50 per cent of the debt and want to take control of Nine.
Should CVC ultimately lose control of the company and is forced to write down its investment, the firm faces a total paper equity loss of $2.2bn at current exchange rates, assuming the firm has not received any repayment.
City A.M. Reporter