Nine CEO David Gyngell after yesterday's deal. Photo: Ben Rushton
NINE Entertainment's rivals face the emergence of a rejuvenated and debt-free competitor after the group's warring lenders agreed to a deal that will wipe out loans that threatened Nine's survival.
''All those doomsayers out there are going to have to eat their words. We have never had a more powerful balance sheet,'' Nine chief executive David Gyngell said.
''We are ready to rock and roll for next year.''
A formal agreement had not been put in place - but none of the parties involved were disputing that the broadcaster was now safe.
"The key terms of a deal to recapitalise Nine Entertainment have been agreed in principle,'' said a source close to Goldman Sachs, which leads the lower-ranked mezzanine lenders.
''However, a large amount of detail remains to be worked out ahead of the deal being finalised and we look forward to concluding that soon.''
Nine has operated at the mercy of its lenders for some time and it needed to sell assets, or restructure its debt, to remain a going concern.
Both classes of lenders have agreed to a deal that will wipe out all of the $3.2 billion debt that threatened to sink the media group and take ownership of Nine instead.
Senior lenders will end up with a 95.5 per cent stake in Nine and the Goldman Sachs-led mezzanine lenders, who faced losing the entire $1 billion they had invested in second-ranked debt, will receive a 4.5 per cent stake valued at $100 million.
Goldman's support was needed because the deed of company arrangement that will bring the debt-for-equity swap into effect needs the separate approval of all classes of stakeholders.
This includes Nine's present owner, CVC, which stands to lose all of its $2 billion investment.
Effective control of the company will fall to two US firms that own most of the $2.2 billion of senior debt, US hedge funds Oaktree Capital and Apollo Global Management.
Alongside the US hedge funds as shareholders will be some of Nine's original senior lenders, which had hoped to retain their debt in the company rather than equity. They are not expected to be an obstacle.
The US hedge funds, advised by Moelis & Co, are believed to have the support of enough senior lenders to push through the deal.
Nine said full details of the restructure would be in the scheme booklets expected to be lodged with ASIC late next month.
With a clean balance sheet, Nine will be free to secure its NRL rights contract and ensure it is in a strong position to retain cricket rights and other programming to build on its ratings momentum this year.
''The business has great momentum and strong cash flow, and now it will have the strongest balance sheet in the industry,'' Nine chairman Peter Bush said.