Oaktree wraps $2m collar around Weldon's MediaWorks management
Oaktree Capital, the US hedge fund that owns MediaWorks Investments, has imposed restrictions on spending or liabilities the media company's executives can incur without recourse to the board.
The MediaWorks constitution sets a $2 million annual limit on any new investment, liabilities, or litigation by chief executive Mark Weldon and his team that hasn't been approved by directors.
The constitution, prepared with the help of law firm MinterEllisonRuddWatts, replaces the version from 2013 when the media company's lenders seized control and pushed out former owner Ironbridge Capital.
Tokyo Opportunities BV, the Oaktree vehicle used to house its MediaWorks stake, bought out minority shareholdings from Westpac NZ, Royal Bank of Scotland, TPG Capital and Bain Capital last year. Oaktree became a creditor of the free-to-air broadcaster in 2012 after buying $125 million of the group's outstanding loans at a reported discount of 50%.
Oaktree appears to be drip feeding MediaWorks to ensure it can meet debt payments, based on Companies Office filings that show it was issued with 17.08 million shares on December 24, the same number as the $17.08 million of debt it had listed as a current liability in its financial statements for the September 2014 year, the last accounts it has filed. That was part of a fully-drawn $90 million debt facility that runs until 2018. It also had a $20 million working capital facility.
More recently, Oaktree appears to have pumped in a further $10 million, via the issue of 10 million shares on March 4.
The new constitution has a section on reserved matters, a reference to activities that must be ratified by the board. They include any material change in the nature or scope of the business; any acquisition or asset sale other than in the ordinary course of business; any new business plan or departure from current business involving non-budgeted or re-allocated spending in a 12-month period exceeding $2 million.
Also reserved is litigation or other matters that might involve in excess of $2 million including costs.
The company appointed former NZX boss Mark Weldon as chief executive in 2014 and among his changes has been the merger of the company's TV, radio and digital operations into a single entity, Newshub, which launched on February 1 "with a strong emphasis on digital, servicing web, mobile devices, and social media."
BusinessDesk has approached Mediaworks but was advised chairman Rod McGeoch wouldn't be immediately available for comment.