Wednesday was a big day for Nine CEO David Gyngell, marking the birth of his son and the rebirth of his television station.
After two days of grinding negotiations, punctuated by the arrival of Mr Gyngell and wife Leila McKinnon’s first child early on Wednesday morning, the relieved and reinvigorated-looking Nine boss strode out of talks in Sydney telling reporters: “there’s a deal”.
“We have a fully capitalised business,” Mr Gyngell told reporters.
“All those doomsayers out there are going to have to eat their words.
“We have never had a more powerful balance sheet.
“We are ready to rock and roll for next year.”
Nine Entertainment, the parent of the Nine Network, NBN Television and the Ticketek events ticketing business, had faced going into administration if lenders owed $3.3 billion could not agree on how to divide up ownership of the company in return for their debt.
Nine owed $2.3 billion to US hedge funds Apollo and Oaktree and a further $1 billion to investment bank Goldman Sachs.
The hedge funds’ debt fell due for repayment in February next year and Nine had no way to meet the call, meaning a debt-for-equity swap was its only chance for survival.
Goldman Sachs, whose debt ranked behind that of the hedge funds in priority for repayment, insisted on an equity stake as well.
On Wednesday, Mr Gyngell told reporters Goldman Sachs had received “a certain percentage of equity” in Nine.
“The rest of the company will be controlled by the hedge funds,” he said.
It is understood the hedge funds will control 95.5 per cent of Nine Entertainment, while the so-called “mezzanine lenders”, led by Goldman Sachs, take the remaining 4.5 per cent.
The deal values Nine Entertainment at about $2.3 billion.
A source close to Goldman Sachs Mezzanine Partners said the key terms of a deal to recapitalise Nine Entertainment had been agreed in principle, “however, a large amount of detail remains to be worked out ahead of the deal being finalised and we look forward to concluding that soon”.
All the existing senior and mezzanine debt would be converted to equity and the group would have no debt, as soon as the restructure was effected, Nine said in a statement late on Wednesday.
Nine Entertainment chairman Peter Bush said the restructuring was 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 in the statement.
He said the trading and operating activities of Nine Network and Ticketek would continue as normal.
Customers, employees and business partners of both businesses would be unaffected by the restructure.
“Nine’s back! And back in a huge way with zero debt, which is the best possible news for our stakeholders, Nines viewers, our clients, our partners and our staff,” Mr Gyngell said in the statement.
