Analysts to Nine lenders: 'Take the deal'

By By David Blight | 10 October 2012

Market analysts have argued Nine's lenders should take the deal offered to them by the company's executives during a conference call yesterday, which has been described as “the best compromise yet”.

According to a report in The Australian this morning, Nine Entertainment Co chairman Peter Bush and chief executive David Gyngell proposed a deal yesterday that would see the company's mezzanine debt holders - led by Goldman Sachs - walk away with between 6% and 7% in equity, while senior debt holders - spearheaded by Apollo Capital and Oaktree Global Management - would take over 90%.

The senior debt holders have been pushing for 100%, while Goldman Sachs was initially pushing for 30%, which it later revised to 20%. Neither party has been able to come to an agreement, causing Nine's executive to come forward with the deal currently on the table. Nine has to pay over $2.2 billion in senior debt by February if it wants to stave of receivership.

The deal was offered during a conference call yesterday between Nine executives and the lenders.

Multiple market analysts have argued the lenders should take the deal because it is the best compromise on the table.

One analyst, who wished to remain unnamed, said: “Something close to a 90/10 split is fair. It is in everyone's benefit to avoid receivership.

“The deal sounds pretty fair, and if it means avoiding a lengthy, drawn-out drama then it is good for everyone.”

Another market expert said: “It's a bloody good deal, particularly for Goldman Sachs. It is the best compromise we have seen, because it offers the mezzanine debt holders something, when many might argue they should not get anything.

“No one is going to get everything they want out of this. The only real winners in this situation are Seven West Media.”

Cox Media principal Peter Cox told AdNews: “It's up to the lenders whether they will take the deal. In this case, both parties will come out with something, but if Goldman Sachs has been offered 6% or 7%, then you would think there might be a couple of per cent left on the negotiating table.

"Maybe it will come up to the 10% mark. Taking 6% would be a pretty hard, bitter pill for them to chew.”

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