MediaWorks owner teams up with former rival on restructure

BUSINESSDESK: MediaWorks NZ owner Ironbridge Capital has teamed up with former rival TPG Capital to put forward a restructuring proposal to the broadcaster's lenders.

The MediaWorks board, made up of Ironbridge's Mike Hill and Kerry McIntosh, and independent chairman Brent Harman, endorsed a deal between Ironbridge and Texan private equity firm TPG.

The deal will inject cash to repay the remainder of the $43 million debt owed on its spectrum licence, and fund programming and sales initiatives for the company, it said in a statement. It will materially reduce debt levels.

"The package has gone to senior lenders who are reviewing all their options," MediaWorks said. "We await what we hope will be a speedy agreement on a robust financial structure that will underpin the company's competitive position."

TPG emerged as a rival to Ironbridge last year when it bought up discounted MediaWorks loans and hired former chief executive Brent Impey as an adviser.

The debt was part of MediaWorks' $388 million loan with other senior lenders, including Bank of New Zealand, Westpac, Bank of Scotland International, which is now part of Lloyds Banking Group, JP Morgan and Rabobank.

MediaWorks, whose stable includes TV channels TV3 and Four, and radio stations including the Rock and MoreFM, has been strapped for cash since Ironbridge bought CanWest’s 70% stake in 2007 for some $741 million in a leveraged buy-out.

GR Media Holdings, MediaWorks’ holding company, made a loss of $50.5 million in the 12 months ended August 31, 2010, mainly reflecting its $50 million finance costs in the period.

On its preferred measurement, earnings before interest, tax, depreciation and amortisation, it reported earnings of $50.1 million. It was still saddled with some $562 million of total borrowings at the end of the balance date.

Last month the broadcaster said it planned to spend more on local television programmes as it winds down its deal with CBS Broadcasting and stops taking new shows from the most-watched network in the US.

Ironbridge is also mulling a sale of New Zealand waste management company EnviroWaste and has appoint Macquarie Group to undertake a strategic review of the assets.