AUCKLAND (Pacific Media Watch / 3 News): The owner of New Zealand's TV3 and half of the country's commercial radio stations went into receivership this morning.
However, MediaWorks Group managing director Sussan Turner said there were no plans to make any of the company's 1400 staff redundant. All contracts would be honoured, suppliers would be paid and it was "business as usual", she said according to 3 News.
Debt
MediaWorks has around $700 million in debt. That is a result of the sale of the company to Australian private equity firm Ironbridge in 2007, by Canada's CanWest Global Communications.
The deal was largely funded by borrowed money, and the broadcaster has been struggling to pay the interest bills ever since.
The company's lenders Westpac and Royal Bank of Scotland have appointed KordaMentha as the receivers. It is hoped the company will emerge from the receivership in a restructured form, with debts of less than $100 million.
"We are working with a strong management team and assuring current employees, customers and suppliers that it is business as usual," said KordaMentha's Brendan Gibson.
"We are in a fortunate position whereby MediaWorks' funders have provided funding and are committed to the future of the business. This extends to a commitment that all those who have supplied goods or services to the companies before receivership, will be paid what they are due."
"Arrangements are well advanced with a proposal to transfer the business to new ownership suitable for the long term. We anticipate that this will be concluded quite soon."
Inevitable
Turner said that moving to a new structure was inevitable.
“For some time now, management has been working closely with our funders to settle on a structure that will enable MediaWorks to reduce its debt burden. The debt structure that was adopted when MediaWorks Limited changed hands in 2007 was unsustainable after the global financial crisis."
"Our core business is strong and all divisions are trading well. We are confident that we can successfully build on this solid platform," the director said.
Australasian director Rod McGeoch has confirmed it is proposed he will be chairman of the company that intends to purchase the businesses of MediaWorks NZ Limited.
TV producer Julie Christie will also be appointed to the board, along with two more directors who are yet to be announced.
"I'm upbeat about the opportunities ahead for the business," said McGeoch.
"It goes without saying that the new company needs the right capital structure to continue successfully. We have put in place a capital structure that will see debt levels reduced from over $700 million to less than $100 million. This puts the company in a much stronger financial position."
It is understood Ironbridge and its co-investors have lost all of the money they had invested.
New company
American private equity firms Texas Pacific Group and Oaktree Capital Management have bought some of the company's debt at heavily discounted rates from the banks.
Rabobank and JPMorgan are among the other lenders to MediaWorks. According to 3 News, TPG, Oaktree and the four banks all hope to be involved in a restructured company.
However, the receivers will look at potential bids from other interested parties.
MediaWorks operates the TV networks TV3 and FOUR. Its nationwide radio networks include MORE FM, RadioLIVE, The Sound, The Edge, The Breeze, The Rock, LiveSPORT, and Kiwi FM.
Its regional stations include Mai FM, Times FM, Radio Dunedin, Coromandel FM and George FM.
It has also launched a new media division, MediaWorks Interactive, that includes 18 websites and a mobile network. This is the second time the receivers will have been called in to TV3. It was placed in receivership in 1990, before being bought by CanWest.
Taxpayers
According to New Zealand Herald, taxpayers may end up covering a $22 million bill as a result of the restructuring of the company.
That is because restructuring deal may free MediaWorks from a $22 million obligation to the Inland Revenue Department (IRD).
The IRD declined to make a comment to the newspaper about the status of the dispute which is over tax avoidance.
This work is licensed under a Creative Commons Attribution-NonCommercial 3.0 New Zealand Licence.
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