Mixed reports have emerged from marathon negotiations to save Nine Entertainment.
It’s been a vigorous debate around valuation.
The media group’s boss David Gyngell told BusinessDay he is ‘‘quietly optimistic’’ the group will avoid collapse after leaving meetings this afternoon while admitting that the chances of Nine’s survival are still 50:50 and will come down to further negotiations tomorrow.
‘‘It’s been a vigorous debate around valuation’’ ... David Gyngell. Photo: Dallas Kilponen
Parties close to the negotiations later said the warring lenders had reached an agreement, although this was denied by a source close to mezzanine lender Goldman Sachs.
‘‘Our position remains unchanged and talks will continue tomorrow,’’ the source said.
Mr Gyngell said negotiations will reconvene tomorrow adding: ‘‘I think we’ll have some sort of outcome to discuss’’ whether good or bad.
‘‘It’s been a vigiourous debate around valuation,’’ Mr Gyngell said of the meeting which started at 9am at the offices of Gilbert and Tobin.
If the lenders fail to reach a deal, Nine’s directors are expected to pull the plug on the business. This will not force the television network itself to pull the plug on viewers who will still be be able to see their favourite shows whatever the outcome.
Nine will not be deprived of its inspirational leader either. Mr Gyngell confirmed to BusinessDay he will remain with Nine even if the board is forced to put the company into administration.
Nine is at the mercy of its lenders who are owed $3.2 billion, and the company needs to restructure this debt to remain viable.
The senior lenders, lead by US hedge funds Oaktree Capital and Apollo Global Management, clould end up in control of Nine by swapping their debt for ownership of the business. But there has been a ferocious battle over whether the Goldman Sachs-lead mezzanine lenders should also get part of the business in return for $1 billion of debt that might be worthless.
Second-ranked mezzanine lenders agreed to a deal that was put to all debt-holders last week by Mr Gyngell, and Nine chairman, Peter Bush, which hands them a $150 million stake in the company and refused to negotiate further.
The hedge fund lead senior lenders have resisted the deal and have attempted to renegotiate the terms of the proposal.
According to sources, they succeeded today with Goldmans accepting a compromise deal offering mezzanine lenders a smaller equity stake than had been proposed by Nine management and no warrants.
Goldmans has yet to comment.
Some of the original senior lenders have told Nine’s management they will support a deal as long as their debt gets rolled over at par.