Australia's Nine Media Company Agrees to Debt/Equity Swap, CVC Loses $1.8 Billion in Asia's Largest-Ever Single Deal Private Equity Loss

By Eileen Elliott

Oct 17 2012, 10:52 AM EDT

After months of negotiations, Australia's Nine Entertainment television network, one of the country's biggest and best known media companies, has agreed to swap more than $3 billion in debt for equity, Reuters reported Wednesday.

The players involved in the negotiations included the venture capital firm CVC Capital Partners, which is Nine's parent company, and Nine's creditors, comprising hedge fund investors led by Oaktree Capital and Apollo Global Management and funds led by Goldman Sachs.

The deal will wipe out Nine's senior debt to the hedge funds of about A$2.2 billion and prevent the company from falling into receivership. It will also wipe out CVC's $1.85 billion equity investment in Nine, constituting the largest single-deal private equity loss in Asia ever, according to Reuters.

"This is an outstanding outcome for all stakeholders," Nine's Chairman Peter Bush said, as reported by Reuters. "The business has great momentum and strong cash flow, and now it will have the strongest balance sheet in the industry."

The hedge funds led by Oaktree and Apollo now own 95.5 percent of the equity in Nine, the media company announced Wednesday, as reported by Reuters. Funds led by Goldman Sachs, owed A$975 million, are to receive the remaining 4.5 percent, estimated to be just over A$100 million.

Nine said the deal will go into effect within the next three months.

CVC bought Nine over a period from 2006 to 2008, just before the global financial crisis hit, then suffered advertising revenue loss brought on by the crisis.

Former head of CVC's Australian business, Adrian MacKenzie, appears to be a casualty of the deal, resigning last month after 17 years with the company, as announced by CVC. According to the Financial Times, bankers and investors involved in private equity in the region said that his role in projected heavy losses related to a media investment contributed to his decision to resign.

CVC Australia boss quits as Nine loss looms

Australia's Nine reaches debt deal, owner CVC loses $1.8 billion