There has been a new offer in the Silver Lake saga after recent key developments. Liam Napier reports.
The long-running Silver Lake saga is inching closer to an agreement as New Zealand Rugby and the Players' Association consider the latest $262 million offer from the US technology investment giants.
Whilethe landmark private equity deal won't be struck this year, with conditions and details still to be worked through, the Herald understands Silver Lake's $262m offer for a 7.5 per cent stake of NZ Rugby's commercial rights has sparked recent optimism that a resolution will be reached.
NZ Rugby and the Players' Association have been locked in negotiations over the Silver Lake deal for eight months. The Players' Association, through their collective bargaining process, hold the power of veto and that has led to an at times bitter public dispute.
With the deal at a delicate stage both parties have largely gone to ground on specifics in recent times but negotiations have continued in the week before Christmas and discussions are believed to be increasingly constructive - to the point the NZ Rugby board is understood to have discussed the deal on Thursday.
At a board meeting in Wellington last week New Zealand's provincial union bosses were informed of the latest developments.
While an IPO is off the table the Herald understands the deal, should it be agreed in its current form, could include scope for Silver Lake's $262m investment to be scaled down and substituted by pursuing $30 to $60m from a New Zealand institutional investor group – the likes of ACC, KiwiSaver or the NZ Super Fund.
The deal may also be brokered as a convertible note featuring a three-year period at the end of which NZ Rugby and Silver Lake would have exit and extension options. This approach would involve Silver Lake's initial investment starting as short-term debt before converting into equity.
Those potential terms would signal a significant shift from the originally proposed deal – Silver Lake's $387.5m offer for a 12.5 per cent stake – that the 26 provincial unions unanimously signed off at the Annual General Meeting in April, only for the Players' Association to step in and halt proceedings.
Compromise has since been evident from both sides, with the Players' Association relaxing their vehement objections to getting into bed with the US equity firm and NZ Rugby forced to be flexible and creative in its approach to securing funds to safeguard the game and link with established capability to monetise much of its untapped global fanbase.
Other stipulations put forward by the Players' Association such as a wide-ranging governance review, and attaining a seat on the Commercial Co board, are under consideration.
NZRPA CEO Rob Nichol. Photo / Photosport
Should NZ Rugby and the Players' Association work through these details and reach an agreement in the New Year, the deal will need to be presented again to the provincial unions at a Special General Meeting before it can be signed off.
Some provincial unions indicated to the Herald that may not be a straightforward process.
NZ Rugby executives and Players' Association boss Rob Nichol declined to comment on the latest remodelled Silver Lake offer.
Following last week's board meeting NZ Rugby chief executive Mark Robinson outlined the national body's determination to secure private investment by committing significant funding to bolster its commercial team and explore alternatives to Silver Lake.
"We're still carrying on working with the RPA, our stakeholders and Silver Lake around the deal but parallel to that we'll get moving and provide some real action in terms of supercharging the revenue opportunities we believe sit for New Zealand Rugby globally and domestically," Robinson said.
"We believe the world is moving on. With my time in the Northern Hemisphere recently the introduction of investment partners is having an immediate impact. We're seeing significant revenue growth ourselves, but we believe it can be far greater if we have the necessary investment to grow that further.
"We hope we can still conclude a deal quickly but alongside that we're not prepared to lose any more time."
It won't arrive in time for Christmas but there is now renewed optimism the Silver Lake deal could soon be concluded.
