Nine Entertainment, Owners Seek Up to A$697 Million in IPO

Nine Entertainment Co. and its owners are seeking as much as A$697.3 million ($660 million) in Australia’s largest initial public offering in almost three years to repay debt and return funds to existing investors.

Nine will sell 125 million new shares and 179.7 million existing shares at A$2.05 to A$2.35 apiece, the Sydney-based company said today in a prospectus published on its website. Nine, which will have a market capitalization of as much as A$2.2 billion after the IPO, will raise as much as A$294 million from the sale of new stock, based on the price range.

The share sale values Australia’s second-largest media company at as much as A$2.77 billion including debt, the prospectus shows. Nine shares will be priced on Dec. 5 and start trading the next day.

Apollo Global Management LLC, Oaktree Capital Group LLC and other funds took control of Nine last year in a debt-for-equity swap that saw previous owner CVC Capital Partners Ltd. lose the majority of its investment. The company, which also owns a ticketing business and the country’s largest indoor music venue, in the past two months bought an affiliate station in Western Australia state and Microsoft Corp.’s 50 percent stake in the Mi9 joint venture.

Nine forecast sales of A$1.57 billion for the year to June 30, 2014, and earnings before interest, tax, depreciation and amortization of A$305 million, according to the prospectus. The company estimated profit for the financial year will rise to A$139.5 million from A$136.7 million in the previous 12 months.

Gyngell Bonus

Oaktree will cut its stake to 14.3 percent from 27.8 percent while Apollo’s holding will be reduced to 22 percent from 25.6 percent as part of the IPO. Other funds that are among Nine’s owners will trim their collective holding to 30.2 percent from 46.5 percent.

Under the restructuring plan agreed last October, about 60 percent of a A$5.75 billion debt and equity investment by CVC was wiped out. Senior lenders including Apollo and Oaktree received A$573 million in cash and a 95.5 percent stake in Nine, according to Federal Court documents in December. London-based CVC had bought the broadcaster from billionaire James Packer’s Publishing & Broadcasting Ltd.

Chief Executive Officer David Gyngell will receive a A$2.5 million cash bonus for completing the IPO and 4.55 million shares, according to the prospectus. The broadcaster will also issue 4.9 million shares to non-executive directors and another 1.1 million shares to employees. It will have a total of 931 million shares.

Sale Managers

UBS AG, Morgan Stanley, Macquarie Group Ltd. and Commonwealth Bank of Australia are among banks leading the share sale, according to the prospectus.

Los Angeles-based Oaktree, the world’s biggest investor in distressed debt, in September took control of Australia’s Billabong International Ltd. together with Centerbridge Partners LP after the funds won approval for a plan to refinance the surfwear maker’s debt.

Apollo, the private-equity firm run by Leon Black, is on track to raise $15 billion for a new buyout fund, the largest since Blackstone Group LP raised $21.7 billion in 2007, people with knowledge of the matter said Oct. 7.

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