KEY POINTS:
Australian private equity company Ironbridge Capital looks as if it will have to keep MediaWorks listed on the sharemarket after Brook Asset Management rejected its takeover offer yesterday.
Brook executive chairman Simon Botherway said the fund manager had turned down Ironbridge's offer of $2.33 per share for the
TV and radio company.
With 8.6 per cent of MediaWorks, Brook does not have quite enough shares on its own to stop Ironbridge reaching the 90 per cent it needs for a compulsory takeover of the whole company.
However, only a handful of other shareholders would need to reject the offer as well to keep the media company listed on the NZX.
While the revelation yesterday indicated MediaWorks' future is still in the balance, it coincided with a new initiative for breakfast television that suggests Ironbridge is prepared to invest in the business.
Botherway said he would be looking for a meeting with Ironbridge on the new capital structure and to understand its approach to the level of debt.
It would be the first time Brook had been in such a relationship with a private equity company.
Just hours before its offer was due to close yesterday, Ironbridge issued a notice to the NZX that it had obtained 80.29 per cent.
Brook's rejection means Ironbridge must win acceptance from 10 of the remaining 12 per cent, which would be unlikely. The final takeover result will be released today.
Ironbridge Capital New Zealand operational partner Kerry McIntosh - who is also the newly appointed chairman of MediaWorks - was not available for comment.
Botherway said he turned down the offer because it undervalued the company. He said he had no discussions with other shareholders.
Brook wanted to know more about Ironbridge's strategy.
Private equity companies typically put large amounts of debt into a business and use cashflow to pay it down.
"If there is any conflict between the likes of us as an asset management company and a private equity player like Ironbridge it may be over the degree of risk tolerance for debt," he said.
"Having said that we think that MediaWorks now is conservatively geared for debt."
Shares in MediaWorks closed up 1c at $2.35 yesterday.
Meanwhile, Ironbridge has given the go-ahead for a new breakfast programming initiative.
TV3 head of news and current affairs Mark Jennings said that the breakfast TV project - called Sunrise - had been put on hold when majority stakeholder CanWest Global Communications decided to sell.
That process had taken eight months, though he said he had previously delayed the project because he wanted to bed in the 7pm daily Campbell Live show.
Sunrise will screen on weekdays from 6.30am until 8.30am, competing directly with the TV One programme Breakfast. The advertising industry has anticipated the new show for the past three years.
Sources associated with the company said the new programming costs would not be particularly high, possibly around $3 million to $4 million.
While viewing numbers for Breakfast are small it is understood the costs for TVNZ have been kept low and it has been profitable. TV3 is expected to be even more frugal.
Sunrise is expected to launch in late August or early September and Jennings expected it to break even in its first year and then make a profit.
The launch of Sunrise coincides with TV3's exclusive hosting of the 2007 Rugby World Cup, meaning viewers will be watching a lot of TV3 in the early morning during September and October.
The players
* MediaWorks owns TV3, C4 and half New Zealand's radio stations.
* Ironbridge bought CanWest's 70 per cent of MediaWorks for $2.33 per share, gaining control of the company.
* The offer for the remaining shares closed yesterday.
* Ironbridge has picked up another 10 per cent but second biggest investor Brook Asset Management has turned down the offer.
