MEDIAWORKS New Zealand, the broadcaster whose stable includes TV3 and Four, and radio stations including Radio Live, the Rock and MoreFM, is expected to be put into receivership today after a planned recapitalisation failed to win over its lenders.
KordaMentha will run the receivership as part of a restructuring plan to switch assets into a new entity, write down the company's debt, and allow the broadcaster to continue operating.
The Auckland-based broadcaster has been looking at ways to reduce its debt burden after Australian private equity firm Ironbridge Capital bought CanWest's 70 per cent stake in 2007 for some $741 million.
MediaWorks' holding company, GR Media Holdings, wrote down the value of goodwill by $241.6 million in a capital restructure last year that brought in US private equity investor Oaktree Capital Management holding a chunk of its debt.
That restructure was to see MediaWorks shuffled into a new holding company for a second time, a write down in the value of its existing debt, new finance facilities provided and lending covenant terms established.
The media company's lenders didn't pursue some $266.7 million owed by the previous holding company, HT Media Holdings, after agreeing to a restructure that gave them equity in the broadcaster, according to the company's first liquidator's report.
In a statement issued this morning, KordaMentha partners Brendon Gibson and Michael Stiassny said they were working with MediaWorks' management team and that it was "business as usual".
"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."
Gibson said arrangements were well advanced and the transfer to new ownership would be concluded "quite soon".
The proposed new structure would provide certainty for staff, customers and external stakeholders, he said.
MediaWorks group managing director Sussan Turner said 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 adopted when MediaWorks changed hands in 2007 was unsustainable after the Global Finanical Crisis, Turner said.
"Our core business is strong and all divisions are trading well. We are confident that we can successfully build on this solid platform."