Australian private equity firm Ironbridge is likely to lose control of MediaWorks after TPG Capital launched a bid to take over the troubled broadcaster's debts.
The Australian Financial Review today reported TPG Capital, one of the world’s largest private equity firms, had acquired $70 million of debt owed by MediaWorks to the Commonwealth Bank of Australia. The deal makes TPG the largest individual lender to the ailing media company.
Terms of the deal were not disclosed, but the National Business Review understands the debt was acquired for 70c in the dollar. Five months ago Allied Irish reportedly sold its MediaWorks debt for 63c.
Ironbridge is widely considered to have overpaid when it acquired the company in 2007 for $721 million. The global financial crisis and short-term demands to service $562 million of debt have put pressure on MediaWorks’ earnings and ebita is understood to have slid below $40 million,
MediaWorks operates free to air channels TV3 and TV4 and a suite of radio stations including Radio Live and The Rock.
The NBR understands the CBA buyout – giving TPG 20% of senior debt owed by MediaWorks - is the first step in plans by the Texas-based firm to take over the company.
Negotiations with other lenders including and the Bank of New Zealand, Westpac, the Royal Bank of Scotland, BOSI and Goldman Sachs are expected to commence in the New Year.
TPG is understood to have sounded out the government over its plans and the Crown's $42.3 million loan to Mediaworks to cover radio broadcast licences will not be subject to any haircuts.
TPG have a modest presence in New Zealand, but has been more active across the Tasman and last year led a $A2 billion recapitalisation of utility Aline Energy last year.
The Alinta deal, where the company’s debt loading was slashed in half in preparation of the company being resold in the next three to five years, may be a guide as to the Texas firms' plans for MediaWorks.
TPG made headlines in Australia earlier this year after tax authorities stepped up a $A739 million claim against the company related to the private equity's channelling of $A1.5 billion offshore following the sale of Myers. However, an Australian court decided the Australian Tax Office action had no basis and the matter has not progressed.