MediaWorks in receivership

By Ben Chapman-Smith

The owner of TV3 and half of the country's radio stations is going into receivership this morning. Photo / NZ Herald
The owner of TV3 and half of the country's radio stations is going into receivership this morning. Photo / NZ Herald

New Zealand television audiences should not be worried about losing popular shows like X Factor and The GC, say the receivers of MediaWorks.

MediaWorks NZ, the broadcaster whose stable includes TV3 and Four, and radio stations including Radio Live, the Rock and MoreFM, was placed into receivership this morning.

KordaMentha's Brendon Gibson and Michael Stiassny, who have been appointed to oversee the restructuring plan, said customers should expect no change in programming because of the receivership.

"We expect them to continue to receive the same quality of service that they've received up to today and we'll be stressing to them that it will be business as usual," Gibson said at a press conference today.

MediaWorks' 1400 employees would keep their jobs and contracts would be transferred unchanged to the new owners in due course.

The company's debt stood at "circa $700 million" and all its assets would be transferred to a new entity called Newco, led by the senior lenders of the current business.

It is understood those lenders include Westpac Banking Group, Rabobank, RBS Group, TPG Capital, Oaktree Capital and JP Morgan.

Stiassny said MediaWorks' businesses were trading well in the current environment. The company's problems were related to debt, which was a legacy issue from "the heady days" of 2007.

"The businesses are working well. Everyone will have a view on whether they can be managed better or worse but that's almost irrelevant. This is a story about a debt structure which has killed a business," Stiassny said.

The receivers said they were working through the transfer as quickly as possible but aiming for a resolution in weeks, rather than months, could be a little ambitious.

Prominent Australian businessman Rod McGeoch will chair the new company's board and former Eyeworks Touchdown boss Julie Christie, best known in New Zealand for a string of reality TV series, will join him on the board.

McGeoch said the new capital structure would cut the broadcaster's debt to less than $100 million, leaving it in "a much stronger financial position."

The Auckland-based broadcaster has been looking at ways to reduce its debt burden after Australian private equity firm Ironbridge Capital bought CanWest's 70 per cent stake in 2007 for some $741 million. The company's $387.7 million senior facility was fully drawn down as at August 31, 2011 as was its $15 million working capital facility, according to its latest financial statements lodged with the Companies Office.

MediaWorks managing director Sussan Turner said management had been working with the company's funders for some time to reduce its level of debt, which had been unsustainable after the global financial crisis.

"Our core business is strong and all divisions are trading well," Turner said. "We are confident that we can successfully build on this solid platform."

MediaWorks' holding company, GR Media Holdings, wrote down the value of goodwill by $241.6 million in a capital restructure last year that brought in US private equity investor Oaktree Capital Management holding a chunk of its debt. As at August 31, 2011, the broadcaster's goodwill was valued at $142 million.

That restructure was to see MediaWorks moved into a new holding company for a second time, a write down in the value of its existing debt, new finance facilities provided, and lending covenant terms established.

The media company's lenders didn't pursue some $266.7 million owed by the previous holding company, HT Media Holdings, after agreeing to a restructure that gave them equity in the broadcaster, according to the company's first liquidator's report.

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