Nine's Mexican stand-off closer to resolution

By By David Blight | 17 October 2012

Nine Entertainment Co looks like it might not go into receivership after all, with the debt-laden company's warring lenders coming close to an agreement after intense discussions yesterday.

Nine's senior lenders – led by Apollo and Oaktree – met yesterday with mezzanine debt holders – spearheaded by Goldman Sachs. For some weeks the two parties have been at loggerheads over how to restructure Nine's $3.3 billion in debt, $2.3 billion of which must be paid by February.

According to reports, the battling parties are close to reaching an agreement. Nine boss David Gyngell told The Australian Financial Review that he was “quietly optimistic” a deal will be struck.

It has been reported that the current deal - put on the table by the senior lenders - would see Goldman Sachs take equity in the value of $100 million, while the senior debt holders would take control of more than 90% of the company.

Despite the optimisim a deal is close, discussions will be ongoing and a final decision has not yet been made. According to the Sydney Morning Herald, Gyngell has also said that the survival of Nine was 50:50 and would depend on today's discussions.

While a debt-for-equity swap has always been on the table, the question mark has lingered over who gets what. Goldman Sachs initially wanted 30% equity while the senior lenders argued Goldman Sachs deserved nothing.

When tensions reached a climax at the beginning of the month, Nine threatened to put the company into receivership if the warring parties did not come to an agreement by yesterday.

Nine executives Peter Bush and David Gyngell put forward a plan which would give Goldman Sachs around 7.5% of the company, and urged the company's lenders to come to an agreement to stave of ad administration. While Goldman had agreed to Nine's plan, the senior lenders had not.

However, the plan which was put on the table yesterday by the senior lenders would see Goldman Sachs take about 4% of the company, indicating the senior lenders had budged from their position that Goldman deserved nothing.

It has been reported Goldman Sachs has agreed to this deal in principle, but is pushing for warrants in the value of $60 million in addition. However, sources close to Goldman Sachs have denied that any agreement has been reached, showing that the deal is by no means complete.

More discussions will be held today.

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