Super-dad David Gyngell saves Nine
Updated: Lenders agree to a deal to save Channel Nine from administration, just hours after David Gyngell becomes a new dad.
- Published by David Knox
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- Filed under News, Top Stories
From a hospital bedside to board room meetings with just an hour’s sleep in between, David Gyngell has become a father and managed to rescue Nine from administration.
Lenders have agreed to a deal that leaves the company debt free just hours after the birth of his son Edmund, to Leila McKinnon.
The deal was announced by Gyngell outside a meeting with the media company’s lenders in Sydney.
“Channel Nine’s back,” he told reporters. “[It] is going to be a debt free company which makes it the most powerful media balance sheet in the country.”
Senior lenders will own a 95.5 per cent stake in Nine and the Goldman Sachs-led Mezzanine lenders, who faced losing the entire $1 billion they had invested in second-ranked debt, will receive a 4.5 per cent stake valued at around $100 million.
“All the doomsdayers out there will have to eat their words,” Gyngell said.
“We’ve never had a more powerful balance sheet.
‘‘We are ready to rock and roll for next year.’’
That will be a story to tell the kids, one day…
Press Release:
The Nine Entertainment Co. (NEC) Group today reached a landmark agreement with representatives of its senior and mezzanine lenders for a restructuring of its financing arrangements.
NEC and its lenders intend to implement the restructure through schemes of arrangement to be implemented over the next 3 months.
Funds managed by Oaktree and Apollo, NEC’s two largest senior lenders (who have advised they are negotiating on behalf of 75% of the outstanding senior debt), as well as Goldman Sachs Mezzanine Partners (representing 80% of the mezzanine debt), have confirmed that they support the terms of the restructure. Full details of the restructure will be contained in the scheme booklets which are expected to be lodged with ASIC in late November.
As soon as the restructure is effected, all the existing senior and mezzanine debt will be converted to equity and the Group will have no debt. In exchange for cancellation of existing senior and mezzanine debt, senior lenders will collectively receive 95.5% of the equity in the Group with mezzanine lenders receiving the remaining 4.5%.
Announcing the breakthrough deal, Peter Bush, Chairman of NEC, said: “We believe this is an outstanding outcome for all stakeholders. 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.”
Mr Bush said the trading and operating activities of Nine Network and Ticketek continue as normal. Customers, employees and business partners of both businesses will be unaffected by the restructure.
David Gyngell, Chief Executive Officer said: “Nine’s back! And back in a huge way with zero debt, which is the best possible news for our stakeholders – Nine’s viewers, our clients, our partners and our staff. As I’ve reiterated throughout this process, Nine is a great business with terrific people and outstanding brands.
“This historic agreement positions us for unrivalled leadership and I cannot wait to lead the Group into an exciting 2013 and beyond.”
Mr Gyngell paid tribute to Peter Bush, his team at NEC, and their advisors Macquarie Capital and Gilbert + Tobin who have been extraordinarily helpful working through a very challenging period, and acknowledged the support of CVC Asia Pacific throughout the process.
“It’s been a long and often tortuous process and to all the parties I say a big thank you – because the outcome is the best imaginable result” he said.
Source: NineMSN, smh.com.au
38 Responses
Nine is now owned by Oaktree, Apollo with Goldman Sachs as a minor shareholder.
Seven is owned mostly by Stokes and KKR, another private equity company.
Channel 10’s biggest shareholders are Rhinehart, Murdoch, Gordon and Packer.
Those who bought in 2006 have all lost a lot of money because the value of TV networks has halved due to declines in advertising revenue. CVC most of all they lost $2b.
Hmmm… I’d say Nine is still on death row. Ten are a basket case and hungry Seven are picking at their bones. The whole industry is going through massive change forced upon them by market fragmentation. The effects of the NBN will be devestating.
Another sad day for rugby league. Was hoping nine would go under and the rights would move onto Ten.
Good to see gyngel still at his arrogant best ““All the doomsdayers out there will have to eat their words,” Gyngell said.” This rubbish from a guy who was responsible for nine losing its number 1 crown over the past few years.
David Gyngell’s announcement of Nine being debt free and now having a powerful balance sheet is wonderfully misleading. I too could become debt free if my bank agreed to roll over my house mortgage into an equity investment. The deal that had to be done was relatively simple. It was just a question of how much the 2nd tier lenders would lose and really in the current climate they couldn’t afford to call anybody’s bluff as a fire sale of Nine would have given them nothing. The question is what upside there is for Nine in the next years prior to it being floated again on the stock exchange or whether there is another private consortium which may appear in that period to buy out a hedge fund. If David Gyngell’s job is going to be secure he’s going to have to pull a rabbit out of the hat to make Nine far more profitable. Seeing this all play out in an era of new media will be interesting.
I bet the deal has something to do with Gyngell’s newest arrival.
Still, I didn’t think that Nine would go into receivership.
I loved his comment afterwards “We the bankers all happy” David….”I would not say that”
The reality is they’ll float Nine as soon as the stock market has the confidence for a very public listing.
If you take a look at the fortunes of Ten under new management and Nine’s comeback this year, i don’t think the new owners will want anything other than a strong Nine prior to the float (given we’ve had a soft ASX for the past five years – maybe they’re thinking end of 2013-2014 for the float?).
Don’t think anybody is suggesting the new owners are looking at Nine as a low cost, long term revenue earner??
I’m personally happy to have two very healthy commercial networks prepared to battle it out next year!
So I guess 9 can no longer boast ‘proudly australian’…. David, just who does own 7,9, 10 and SBS ??
If I was a staff member at NBN Newcastle or Channel 9 Darwin, i’d be looking for another job right now. Those channels will be the first to rack in revenue if sold.
@cglenn1988 – you might want to take those rose-tinted glasses off for a minute. Pertinax has summed it up well – have a read.
It’s not all doom-and-gloom for NEC but you can bet your bottom dollar (on second thoughts – hold on to it) that its new owners (US hedge funds, remember) will be looking to offload it in a few years. In order to make it an attractive proposition they will cut costs (usually including staffing) and then try to sell it before the impact of those cost cuts hits home.
Yes, today was a good outcome, but it now moves into a new chapter and it’s called, “What do they want?”
Channel 9’s staff are obviously happy that there will be no administration and some certainty after years of uncertainty. And they want to spin the story with them as the heroes and this being a great victory.
The reality was that this was just a game of poker between two US hedge funds and a US merchant bank and Channel 9 were merely the chips.
The 2nd tier debt, held by Goldman Sachs and their clinets, was worth nothing. They managed to extort $100m for it by threatening to put Nine in to administration and reduce the value Oaktree and Apollo’s asset. They will claim that as a win.
Oaktree and Apollo bought up 1st tier debt at 40c in the dollar at the height of the North Atlantic credit crisis. It was valued at the equivalent of 72c in the dollar last week. So they had already made a paper profit that has nearly doubled their money.
Nine had about $1.5b worth of debt (held by Packer’s holding company) when CVC bought it. CVC borrowed the rest against Nine to buy Nine off Packer. That is where most of the debt came from.
Having a strong balance sheet just means that Nine is a highly tempting takeover target. Someone can now easily borrow against Nine to take it over. The media ownership rules stop most of the people who would want to buy it from doing so though. Oaktree and Apollo will presumably sell out as soon as they get a good offer to lock in their profit.
Nine can talk up its @l^mp!c recovery but it’s programming depth is poor, it is paying way too much for US shows and will make a loss on NRL. Change wrought by digital technology is only just beginning to impact on TV here, and if the NBN works who knows what will happen.