U.S. hedge funds Oaktree Capital and Apollo Global Management have reached an agreement in principal with Goldman Sachs, the holders of Nine Entertainment's mezzanine debt.
Under the terms of the as-yet-to-be-signed deal, senior lenders will own 95.5% of the equity, while mezzanine holders will own the remaining 4.5%, meaning the latter will recover just 10.8% of their original A$975 million investment.
"We believe this is an outstanding outcome for all stakeholders,” Nine Chairman Peter Bush said in a statement. “The business has great momentum and strong cash flow, and now it will have the strongest balance sheet in the industry. It puts the company in a remarkable position to build on the successes of 2012.”
The biggest loser in the deal is CVC Capital Partners, the private equity company that bought Nine from billionaire James Packer in 2007 and injected A$1.9 billion into it between 2007 and 2008. A requirement to refinance over A$2 billion of its debt forced the company into negotiations with its lenders.
Nine's assets include the free-to-air provider Nine Network Australia, Ticketek, Allphones Arena and a 50% interest in the online portal ninemsn.
"The key terms of a deal to recapitalize Nine Entertainment have been agreed in principle. However, a large amount of detail remains to be worked out ahead of the deal being completed and we look forward to concluding that soon," a spokesman for Goldman Sachs Mezzanine Partners told the Wall Street Journal.