Rival private equity firm snaps up CBA loan to MediaWorks

Friday 16th December 2011

TPG Capital, the private equity firm that floated Australian retailer Myer in 2009, has bought a $70 million loan to MediaWorks, making it the biggest lender to the struggling media group.

The media company’s private equity owner, Ironbridge Capital, confirmed the sale of Commonwealth Bank of Australia’s loan, which makes up 17 percent of MediaWorks’ bank debt. BusinessDesk understands the debt was sold at a discounted rate of about 68 cents or 69 cents in the dollar.

“Yes we can confirm that they have acquired that debt,” said Kerry McIntosh, Ironbridge NZ partner, who said the terms of the sale were confidential.

The debt is part of MediaWorks' $388 million loan with other senior lenders including BNZ, Westpac, Bank of Scotland International, which is now part of Lloyds Banking Group, JP Morgan and Rabobank.

MediaWorks has been strapped for cash since Ironbridge bought CanWest’s 70 percent stake in 2007 for some $741 million in a leveraged buy-out.

GR Media Holdings, MediaWorks’ new holding company, made a loss of $50.5 million in the 12 months ended Aug. 31 last year, mainly from its $50 million finance costs in the period.

On its preferred measurement, earnings before interest, tax, depreciation and amortisation, it reported earnings of $50.1 million. It was still saddled with some $562 million of total borrowing, as at Aug. 31.

The company got into strife earlier this year when a note in its financial statements indicated it had been granted approval to pay its broadcasting licence over a four year period. The decision to grant the deferred repayment, logged as a $43 million debt, went against official advice, which was over-ruled by Communications Minister Steven Joyce.

MediaWorks also faces substantial tax bills, assuming the Inland Revenue Department’s pursuit of the company’s use of Optional Convertible Notes, is upheld. Earlier this week, the tax department won its first prosecution against Alesco over the use of the convertible debt securities.

MediaWorks operates free to air channels TV3 and TV4 and a suite of radio stations including Radio Live and The Rock.

TPG has a relatively small presence in New Zealand compared to in Australia where it made headlines earlier in the year for channeling A$1.5 billion off shore following the sale of department store Myers.

BusinessDesk.co.nz

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