Dec. 20 (Bloomberg) -- Nine Entertainment Co. debt holders won court approval for a restructuring vote that would result in the failure of a A$5.75 billion ($6 billion) leveraged buyout by the broacaster’s owner CVC Capital Partners Ltd.
CVC gets A$4.5 million and a 0.75 percent stake in the restructured company under the plan. The buyout firm bought the Australian television network starting in 2006 from billionaire James Packer’s Publishing & Broadcasting Ltd.
Federal Court Justice Peter Jacobson in Sydney today rejected opposition to the plan from lenders who sought to prevent a meeting of Nine’s creditors to approve the deal. The debt holders, which include BNP Paribas SA, objected to being forced to accept equity in the company and giving control to two U.S. funds that hold 45 percent of the senior debt.
The proposed plan is the “only opportunity to the company to repay the senior debt,” Jacobson said in delivering his ruling. Otherwise it would be “highly likely” the company would be placed in receivership, he said.
Nine has A$2.2 billion of senior debt, according to court filings, which is due to mature Feb. 7. Apollo Global Management LLC and Oaktree Capital Group LLC, the U.S. funds, hold A$893 million of the debt. Under the reorganization plan, they will be able to appoint the majority of Nine’s board in the first year.
Opponents to the plan can consult with other senior lenders to see if a compromise can be reached on the board appointments, Jacobson said. The plan must still go before the judge for final approval, when he’ll have to determine whether it’s fair to all creditors. That hearing is currently scheduled for Jan. 29.
Other lenders who sought to block the meeting include Rabobank International, Credit Agricole SA, CIC, National Australia Bank Ltd., Portigon AG, Royal Bank of Scotland Group Plc and, as a trustee, GE Capital Finance Pty.
Portigon holds senior debt of A$63 million. GE Capital has senior debt of A$25 million and CIC holds A$19 million, according to court filings.
Requiring unanimous consent from debt holders would make debt-for-equity swaps almost impossible and would “emasculate” the law governing such arrangements, Jacobson said in rejecting the opposition.
Nine owns Australia’s second-most watched television channel as well as the country’s largest indoor music venue and Ticketek, an event ticketing company. Its most popular television programs include the Australian version of Big Brother, British motoring show Top Gear, and CBS Corp.’s crime drama the Mentalist.
Set up by James Packer’s grandfather Frank Packer in 1956 as Australia’s first television station, Nine’s maiden broadcast was presented by Bruce Gyngell, father of the current chief executive.
This isn’t the first time an investor has lost money on Nine. James Packer’s father Kerry sold the network to Australian investor Alan Bond in 1987 for A$1 billion, buying it back for A$250 million when Bond went bankrupt less than three years later.
“You only get one Alan Bond in your lifetime,” Kerry Packer remarked, according to Paul Barry’s 1993 biography, “The Rise and Rise of Kerry Packer.”
The case is In the Matter of Nine Entertainment Group. NSD2079/2012. Federal Court of Australia (Sydney).
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