In a bid to stave off receivership at Nine Entertainment by throwing a bone to the hedge funds, private equity group and owner of Nine, CVC Asia Pacific, has decided to take Adrian MacKenzie off the board of Nine.

It follows a decision last month that MacKenzie would retire from the post of CVC’s CEO at the end of the year.

It is understood that the hedge funds who are owed $2.3 billion in debt have been complaining about the potential conflict of interest with MacKenzie, who is CEO of CVC and who is also on the board of Nine, at such a crucial time in negotiations.

To remove any stench of independence issues, CVC has agreed that Mr MacKenzie will step down immediately to allow discussions to continue.

Few companies have been given as much air time about whether they will be doomed to receivership or saved by the bell than Nine, but after months of jawboning discussions are now getting to the pointy end.

Scramble for compromise

All parties have thrown their proposals into the mixing pot and the discussions are now about trying to get a compromise before the end of the month to get a scheme of arrangement in place.

There is $3.3 billion of debt due, and the hedge funds, which are most exposed, want 100 per cent equity in Nine, while Goldman Sachs, which has sunk $1 billion in mezzanine debt into the group wants 20 per cent of Nine’s equity, a percentage of which will be shared with private equity group CVC Asia Pacific. If the hedge fund proposal gets up it means zero for Goldman Sachs and CVC, which is an unlikely outcome.

The Nine management jumped into the fray yesterday and cooked up another deal designed to get the parties to meet somewhere in the middle.

If a compromise isn’t reached then it is receivership, here we come.

In its new proposal, Nine management suggested that Goldman receive 5 per cent to 10 per cent equity in Nine, lower debt and 15 per cent warrants over the future sale of the company if it manages to get a price tag of more than $2.3 billion.

Haircut for all parties

It means a haircut for all parties but at least it keeps the group out of receivership, which would be damaging for the business. Indeed, the only real winners in a receivership are the receivers.

But if the company is worth more than $2.3 billion and a deal can’t be had, then receivership might be the best shot for Goldman’s as it would get something back, as opposed to what the hedge funds are offering, which is nothing.

There is a lot of posturing going on between all parties but as they get closer to the deadline, the belief is that commonsense will prevail and a compromise will be had. Meanwhile, there will be a lot of interested parties waiting in the wings hoping for a receivership to buy the assets at bargain basement prices.

It has long been speculated that media mogul Bruce Gordon, who owns the Nine stations in Adelaide and Perth through his Win Corp is interested in buying Nine Network if it is put up for sale - at a reasonable multiple.

Preliminary discussions are believed to have taken place. Gordon also has a stake in Ten Network.