Rescue deal close for Nine but administrators on standby
Nine Entertainment is inching closer to a deal to save the beleaguered network after meetings between the network's major stakeholders resumed today following a last ditch effort to save the company yesterday.
Nine must get its lenders, who are owed more than $3.2 billion, to agree on a capital restructure through a debt-for-equity swap, otherwise the network has said it will be forced to appoint administrators.
PPB Advisory is reported to have been tapped by Nine to act as administrators should the rescue package fail.
However, after a day of meetings yesterday, Nine chief executive David Gyngell told Fairfax he was "quietly optimistic" that hedge fund senior lenders led by Oaktree Capital and Apollo Global Management and second-tier debt-holder Goldman Sachs would agree to a deal.
Steve Allen, chief executive of media consultants Fusion Strategy, told SmartCompany that Gyngell was certainly not saying the deal was over the line but obviously progress had been made.
"A large part of yesterday was coming to agreement on what the enterprise value of Nine Entertainment is now," says Allen.
"Until they get that, everything else is second place."
Allen says the most important issue is what to do with Nine's $3.2 billion in debt, but agreeing a valuation was key as you can't convert debt to equity until you know what the equity is worth.
He says now it is a matter of how much, if anything, do the mezzanine debt-holders led by Goldman Sachs get in shareholding and warrants – and that is what is likely to be hammered out today.
"I think it's looking more optimistic than yesterday but it could all go pear-shaped, you only need one person to hold out," says Allen.
"The directors are in a difficult position as if there is no prospect they really have to call the administrator in, which will trigger the receiver from the other side."
Allen says the other interesting thing to come out of yesterday's meeting is reports that Gyngell has committed to stay with the business.
"If that is true, he is hosing down speculation that if it goes into administration he might zip off to Seven West," Allen says.
A spokesperson for Goldman Sachs told SmartCompany the bank was unable to comment as discussions were continuing.
Nine Entertainment declined to comment.