Mediaworks in receivership pending sale

Mediaworks New Zealand has been placed into receivership, pending a transfer to new owners, this morning.

It is an unusual kind of receivership in that it is more a mechanism by which to restructure debt and transfer ownership of the business.

Mediaworks as a business is doing well, and delivering strong earnings, however not enough to make any impact on the massive debt of $700m the business is carrying.

The interest payments on $700m of debt alone have crippled any chance of trading out of the financial hole. Mediaworks $700m debt will reduce to under $100m once the ownership transfer has been completed, a very manageable figure.

The new owners are believed to be a syndicate of lenders who currently hold senior debt over the business, and will be presumably converting debt to equity.

As part of the transfer of ownership the new Chairman of Mediaworks will be Australian businessman Rod McGeogh, and the new owners have agreed that all staff will be retained on current terms and conditions, meaning no job losses as part of the transfer.

MediaWorks managing director Sussan Turner commented;

"Our core business is strong and all divisions are trading well, we are confident that we can successfully build on this solid platform."

Mediaworks is currently owned by Australian private equity firm Ironbridge, who purchased a 70% stake in 2007 for $741m, Ironbridge subsequently acquired further shares on-market, before delisting the company. The acquisition, which has been burdened by debt, has been a troubled one for Ironbridge, who had been attempting to refinance the business without success.

It is believed the transfer of ownership will be completed by mid-August.

Mediaworks radio brands are; Mai FM, The Rock, The Edge, George FM, More FM, The Breeze, The Sound, Radio Live, Live Sport and Kiwi FM. The company also operates television stations in New Zealand.